I recently saw a short interview in FierceWireless with Balan Nair, CTO of Liberty Global. In case you haven’t heard of the company, they are the biggest cable company in the world with over 28 million customers.

One of the things he discussed was the practical widespread implementation of 5G gigabit technology. He voiced the same thing I have been thinking for the last year about the economics of deploying 5G. He was quoted as saying, “5G will be a ‘game-changer’ in its superior ability to transfer data, but the technology will not replace fixed-network broadband services anytime soon. The economics just aren’t there. You’re talking about buying hundreds of towers and all of that spectrum. And on the residential end, putting a device outside the window and wiring it back into the home. It’s a question of business model and if you plan on making any money. The economics benefit fixed.”

The big telcos are making a big deal out of 5G, mostly I think to appear cutting-edge to their investors. And I have no doubt that in certain places like dense urban downtowns that 5G might be the best way to speed up gigabit broadband deployment. But I look at what’s involved in deploying the technology anywhere else and I have a hard time seeing the economic case for using 5G to bring fast broadband to the masses.

5G will definitely make an impact in urban downtowns. You might assume that cities already have a great fiber infrastructure, but this often isn’t the case. Look at Verizon’s FiOS deployment strategy in the past – they deployed fiber where the construction was the most cost effective, and that meant suburban areas where they had existing pole lines or conduit. Verizon largely avoided much of the downtowns of eastern cities because the cost per mile of fiber construction was too expensive.

Now, 5G can be deployed from the top of high-rises to reach the many downtown buildings that never got fiber. New York City recently sued Verizon since the company reneged on its promise to build fiber everywhere and there are still 1 million living units in the city that never got fiber broadband. Verizon, or somebody else is going to be able to use 5G in the densely populated cities to bring faster broadband, and as Nair said, this might be a game changer.

But as soon as you get out of downtowns and high-rises the math no longer favors 5G. There are three components of a 5G network that are not going to be cheap in suburbia. First, 5G needs fiber. You might be able to use a little wireless backhaul in a 5G network, but a significant portion of the network must be fiber fed. And in most of the country that fiber is not in place. Deloitte recently estimated that the cost for just the fiber to bring 5G everywhere is $130 billion. There is nobody rushing to make that investment.

5G then needs somewhere to place the transmitters. This is more easily achieved in a downtown where there are many tall rooftops and existing towers. But the short delivery distances for millimeter wave frequencies mean that transmitters need to be relatively close the end-user. And in suburban areas that’s going to mean somehow building a lot of new towers or else placing smaller transmitters on existing poles. We know suburbia hates tall towers and it’s always a struggle to build new ones. And the issues associated with getting access to suburban poles are well documented. An ISP needs to affordably get onto poles and also get fiber to those poles – two expensive and time-consuming challenges.

And then there is the economics of the electronics. Because millimeter wave spectrum is easily disrupted by foliage or any impediments it means that there won’t be too many homes served from any one pole-mounted transmitter. But the 5G revenue stream still has to cover both ends of the radios as well as wiring into the home.

I build a lot of landline business plans and I can’t see this making any economic sense for widespread deployment. In many cases this 5G network might be more expensive and slower to deploy than an all-fiber network.

I instead envision companies using 5G technology to cherry pick. There will be plenty of places where there is existing fiber and poles that can be used to serve suburban apartment complexes or business districts. I can see strategic deployment in those areas and the technology used in the same way that Verizon deployed fiber – 5G will deployed only where it makes sense. But like with FiOS, there are going to be huge areas where there will be no 5G deployment, even in relatively dense suburbia. And the business case for rural America is even bleaker. 5G will find a market niche and will be one more technology tool for bringing faster broadband – where it makes economic sense.