Regulatory Levers to Stimulate Investment in LTE and 5G
5G has captured the imagination of policymakers but there is a gap between the political rhetoric and telecoms regulatory action to achieve mobile broadband and 5G policy objectives. With mobile operators and equipment vendors sounding cautious about the business case for 5G, a change in government policy is needed to stimulate investment.
The advent of 5G has spurred global interest among policymakers, heralding its potential to revolutionise industries, enable smart cities, and drive the fourth industrial revolution. Various countries and regions have articulated ambitious visions and initiatives to lead in 5G technology adoption and implementation.
However, there exists a substantial gap between political aspirations for 5G and the regulatory actions required to achieve these objectives. Despite the enthusiasm, telecom regulatory actions have not aligned sufficiently with the lofty promises made by policymakers. This misalignment, particularly in spectrum availability, pricing, and network deployment facilitation, impedes mobile operators from fulfilling political promises.
Investment in Mobile Broadband and 5G
- Mobile operators are investing significantly in 4G networks, especially in emerging markets where 4G deployment is still ascending.
- However, impediments like high spectrum fees have compelled some operators to curtail investments, hindering network development.
Spectrum Allocation and Network Infrastructure
- 5G deployment necessitates substantial infrastructure investment, including small cell networks and extensive fibre connectivity.
- The deployment of small cells and associated fibre networks demands unprecedented capital and operational expenses.
Operational Costs and Revenue Challenges
- Despite the expected surge in data traffic due to 5G, revenue growth from enhanced mobile broadband (eMBB) is limited.
- The potential of 5G beyond mobile broadband, including IoT applications and services, presents uncertain revenue prospects.
Spectrum Policies Impacting Investment
- Spectrum availability and pricing significantly influence the feasibility of 5G deployment.
- High spectrum costs, particularly in auctions, strain operator finances and deter substantial 5G investment.
Local and National Regulatory Challenges
- Municipalities face challenges in permitting small cell installations, impacting the speed and cost of 5G deployment in cities.
- National regulatory bodies need to align spectrum policies, including reasonable reserve prices, to foster a conducive investment environment for 5G.
Conclusion
To actualise the promise of 5G, policymakers must bridge the gap between rhetoric and regulatory action. Sustainable spectrum policies, streamlined site approvals, and cost-effective infrastructure access are vital to stimulate investment in 5G. Without addressing these hurdles, the ambitious visions for 5G may remain unfulfilled, impeding the potential of this transformative technology.
Other insights
The Case for Strategic Spectrum Renewal
As spectrum licences approach their expiry date, a strategic approach to spectrum renewal is crucial. Traditional presumption of renewal in favour of incumbents may no longer serve the industry’s needs. Instead, a more strategic approach to renewal can optimise spectrum assignments and improve spectral efficiency by up to 40%.
Best Practice Spectrum Management
The principles of best practice spectrum management are well established and their implementation can enhance the socio-economic value of spectrum and how much operators are prepared to pay to acquire new spectrum. Whilst most regulators in developed markets have adopted best practice, the same cannot be said for developing markets. Coleago recently studied the regulatory environments in 16 African markets and recorded the extent to which best practice had been adopted.
Learning From Best Practice Spectrum Management in Botswana
The Botswana Communications Regulatory Authority conducted a review of its spectrum management strategy to align with international best practice. The Authority was advised by Coleago and in this paper, Project Director Graham Friend highlights the lessons to be learned for other regulators in developing markets.
The End of Telecoms History? – Not Quite!
At the European 5G conference, Stefan Zehle highlighted that differences in mobile data usage across countries result from variations in price and network availability. While European policymakers celebrate 89% 5G coverage, gaps in both outdoor and indoor connectivity limit usage. William Webb’s prediction that data traffic will plateau at 20 GB per user per month by 2027 seems unlikely, given that top users already exceed 100 GB. To fully realise 5G’s potential, policymakers must address these coverage issues in a cost-effective manner.
Insights from a Strategic Spectrum Review
The mobile industry has accumulated a fragmented spectrum portfolio, consisting of various frequency bands that are sub-optimally allocated for modern technologies like 4G and 5G. As operators transition from legacy technologies such as 2G and 3G to newer, bandwidth-intensive solutions, the need for contiguous spectrum blocks has become critical.
The End of Telecoms History? Not Really
In his book The End of Telecoms History, William Webb uses extrapolation of mobile data usage growth curves to claim that mobile data user requirements are nearly met
and that we have all we need
. He predicts mobile data usage to plateau at around 15-20 Gbytes/user/month
. Webb claims that no further investment in 5G capacity is needed and that the only remaining problem is ubiquity, notably in-building coverage. This article provides evidence that, while the author makes some good points, his analysis with regards to mobile data usage is flawed and hence the conclusions he draws are quite wrong.
