The prospects of mmWave 5G fixed wireless access

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October 3, 2019

...countries with low FTTH penetration are looking forward to leveraging 5G to improve access to broadband, operators in countries with extensive FTTH deployments may be concerned about its impact on fibre take-up rates.

To date wireless and wireline services have been two workhorses for different user requirements, with the first offering mobility and flexibility while the second offers dedicated speed and reliability. As 5G emerges promising fibre-like speeds, many service providers are exploring the potential of 5G fixed wireless access (5G-FWA) as means of delivering ultrafast broadband. 5G-FWA is being considered from different angles. While countries with low FTTH penetration are looking forward to leveraging 5G to improve access to broadband, operators in countries with extensive FTTH deployments may be concerned about its impact on fibre take-up rates.

The physical layer of 5G is specified to be frequency agnostic. As such, the used spectrum band is more constrained by regulation than by technology. The most popular bands that have been auctioned for 5G use are the 700MHz at the low-band and 3.5GHz at the mid-band. At the higher end, bands in the 24-28GHz spectral range are the most popular (Exhibit 1). The 700MHz and 3.5GHz bands have limited spectrum available. As such, they will likely address the same fixed wireless market that has been addressed by 4G, with 700MHz being used in rural areas and 3.5GHz more suitable in urban areas. While the 3.5GHz band has more bandwidth (up to 400MHz) and will deliver more speed than the 1.8GHz to 2.6GHz bands used for 4G, it is still not sufficient to match fibre access speeds, given that the bandwidth is shared among many subscribers, with mobile services and used by multiple operators.

Exhibit 1: Spectrum auctions by frequency band from January 2015 to June 2019 [Source: Global Mobile Suppliers Association]

Spectrum auctions by frequency band

The 24-29GHz frequency bands, often considered as part of the millimetre waves range (30-300GHz), is where 5G starts to unleash its full potential. In these bands 5G has up to 5GHz of available bandwidth and can implement massive multi-input multi-output (MIMO) techniques more efficiently to provide Gbit/s user speeds. Being adjacent and favoured by regulators, the 24-29GHz bands also have the advantage of supporting economies of scale for equipment availability. However, the main limitation of millimetre wave (mmWave) solutions is the limited coverage, which is typically 200-300 metres at the 24-29GHz bands. This is around 10 times less than can be achieved by a 5G system operating at 3.5GHz. Other critical drawbacks include the need for line-of-sight as well as high penetration loss through walls and foliage. As such, customer premises equipment need to be mounted at windows (to avoid penetration loss), or outdoors on walls and rooftops to establish line-of-sight.

To test the case for mmWave 5G-FWA, we examined a sample urban area in an FTTH footprint (Exhibit 2). The area includes around 300 single and two-story buildings, mostly households, divided across four blocks. In such a scenario, a 5G base station operating at mmWaves can be placed on a 10-15m utility pole at the cross roads, with four sector antennas (each facing a block). The proportion of subscribers requiring outdoor units depends on many factors, including base station antenna height, foliage and variability in building heights. This proportion will vary from place to place and was used as sensitivity variable in our analysis.

Exhibit 2: Aerial view of an urban area in an FTTH footprint [Source: Network Strategies]

Aerial view of an urban area in an FTTH footprint

As 5G equipment is not yet widely commercialised, firm cost estimations cannot be made. However, using benchmark 4.5G equipment costs as a proxy, we can gain some insight into the viability of the mmWave 5G business case in urban areas. The deployment cost will be strongly dependent on take-up rate and the proportion of subscribers needing an outdoor unit. If the premises are already in an FTTH footprint, we estimate that a mmWave 5G FWA provider needs 30-40% take-up for the access connection cost to match the cost of fibre drop connection (including optical network terminal and router). However, the substantially higher operational cost of mmWave 5G-FWA is likely to make the business case unviable. This includes site rent, power consumption, maintenance, spectrum licence and backhaul capacity. The annual cost of leased backhaul alone is likely to surpass the capital investment cost of the cell site.

However, this by no means implies that mmWave 5G-FWA will be viable outside the FTTH footprint. The potential of mmWave 5G-FWA is only realised when the deployment and operational costs are kept relatively low compared to FTTH. The densification of cells requires a dense fibre backhaul network, to the extent that mmWave 5G-FWA will be effectively a last-mile extension of fibre. The question as to whether to use mmWave 5G-FWA to extend fibre or use fibre all the way to the premises will be subject to case-by-case cost and coverage analysis. Backhaul using high capacity microwave (at 70-80GHz) is possible, however, the range of these systems is typically limited to 2-4km and their capacity is not sufficient to aggregate the traffic of multiple  base stations. As such, they are typically used to connect a limited number of sites or for building small broadband access networks in highly dense urban areas. In these areas, point-to-point microwave links can take advantage of high rise buildings to establish unobstructed line-of-sight to a larger number of subscribers.  

The only case when mmWave 5G-FWA can be a serious competitor to fibre is when 5G mobile networks become so dense that mmWave 5G-FWA can be provided to subscribers at a marginal cost. Given the focus of operators on the 3.5GHz band, large scale mmWave 5G deployments are still years away and will only be justified in dense urban areas. Otherwise, the backhaul and coverage constraints of mmWave 5G FWA will limit its use to last-mile access scenarios where fibre is too costly or complicated. Small wireless Internet service providers (WISPs) may also leverage the technology to provide broadband services to highly dense urban areas in city centres, pockets of reasonably dense households in rural areas with access to sufficient backhaul capacity, tourist resorts, campuses, or temporary broadband access during special events. In most of these cases mmWave 5G-FWA will still be largely reliant on fibre. It will complement it, extend it, but will not ultimately replace it.