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Monday, May 21, 2018

Could 5G Wireless Disrupt the Broadband Status-Quo?

Across the globe, most wireline service providers operate in a monopoly or duopoly environment where competition is limited and somewhat predictable. The prior limitations of wireless broadband internet access have not impacted the wireline status-quo. That could change.

The worldwide fixed wireless broadband access market has been growing steadily over the past several years. ABI Research now forecasts that the market will grow by 30 percent in 2018 and will generate $18 billion in service revenue. That being said, let's explore the market dynamics.

Wireless Broadband Market Development

As 5G fixed wireless broadband access is about to be launched in North America during 2018, it's likely to expand and provide some telecom service provider customers with better quality service in the years to come.

Today, LTE is the most widely used technology to provide fixed wireless broadband service across the world. Fixed LTE is mainly deployed for residential broadband service in the areas where fixed broadband infrastructure is poor, enabling network operators to provide residential broadband service more cost effectively compared to wired broadband deployment.

Recently, United States’ operator Verizon Wireless announced its plans to launch 5G fixed wireless broadband service to a 'select' group of its residential customers in the second half of 2018.

Verizon plans to first launch 5G fixed wireless broadband service in California followed by additional markets later and expects initial 5G fixed wireless broadband deployment to cover around 30 million U.S. households.

In addition to Verizon, other network operators -- including AT&T and Charter -- are also carrying out 5G fixed wireless broadband tests in 'select' markets in the United States. 5G fixed wireless trials are not limited to North America.

In Europe, Orange, Elisa, and telecom infrastructure company Arqiva are performing 5G fixed wireless trials. In APAC, Australia’s Optus is planning for 5G fixed wireless service launch in 2019.

"5G fixed broadband access is expected to enable robust services with a reliable capacity to meet the need of residential broadband users. 5G technology can support a theoretical speed up to 20 Gbps with latency 1 ms, enabling operators to provide superior broadband access without installing fiber-optic cables to every single household," said Khin Sandi Lynn, industry analyst at ABI Research.

According to the ABI assessment, early 5G fixed wireless broadband access is likely to focus in dense urban areas and in rural areas when 5G is widely launched commercially. They forecast that the worldwide fixed wireless broadband market will grow at a CAGR of 26 percent, generating $45.2 billion in revenue during 2022.

Outlook for Increased Broadband Competition

Governments have an important role to play in setting public policies that encourage wireless broadband services to compete directly with incumbent wireline broadband service providers. The current 5G 'select' deployment plans seem to indicate that telecom service providers won't utilize the technology to increase competition.

If they're left alone to decide where they choose to deploy 5G services -- without government intervention -- then it's likely there won't be any meaningful disruption of the current status-quo. Furthermore, in North America, local telecom regulators -- such as the 'State Utility Commission' -- are unlikely to act in the interests of consumers, given their prior track record. Therefore, the Federal government is where consumer groups must seek policy change that results in more real competition.

In the Global Networked Economy, every nation competes via telecom infrastructure investment. In this environment, myopic thinking is the enemy of progress. Incumbent telecom service providers investment strategy typically focuses on their own commercial interest, not in the national interest.