Existing 4G Spectrum

I suspect that most people don’t realize the small number of frequencies that are used today to support cellular service. Below is a list of the frequencies used by each US cellular carrier for providing 4G LTE. Except for Sprint, they all use the same basic frequencies.

Frequencies (in MHz)

AT&T  – 1900, 1700 abcde, 700 bc

Verizon – 1900, 1700 f, 700 c

T-Mobile – 1900, 1700 def, 700 a, 600

Sprint – 1900 g, 850, 2500

The letters represent separate licenses for specific sub-bands of the various frequencies. For example, the 1700 MHz band has been licensed in bands a through f and the carriers own rights to various sub-bands rather than to the whole spectrum. The same is also true for 1900 MHz and 700 MHz spectrum. In many cases, the licenses for the various spectrum bands are not nationwide. This means the frequencies used in Cleveland by one of the carriers might be slightly different than the spectrum used in San Francisco.

The carriers are using these limited spectrum bands today to support both 4G voice and data. In metropolitan areas, the carriers are in big trouble. They are finding it impossible to satisfy customer requests for data service, which is resulting in customer blockages or greatly reduced broadband speeds.

One of the primary reasons that the carriers are running into blockages on 4G data is that they aren’t deploying enough different bands of spectrum for broadband. The carriers have three remedies that can be used to improve cellular data – use more bands of spectrum, build more cell sites (small cells), and implement 5G which will allow for more simultaneous connections.

The CTIA, the lobbying group for the wireless carriers has been heavily lobbying the FCC to allocate 400 MHz of additional mid-range spectrum for cellular data. The FCC is considering repositioning numerous bands of spectrum and the CTIA wants to grab everything possible for data purposes.

Unfortunately, spectrum alone is not going to provide the solution the wireless carriers are hoping for. One of the primary reasons that the cellular carriers only use a few different bands of spectrum today is to simplify handsets. There is a huge price to pay for using multiple bands of spectrum in a cell phone. The more bands of spectrum, the more antennas that must be supported and the more power that is used.

If the cellular companies try to load many more bands of mid-range spectrum onto cellphones they will have majorly overstressed the battery life of phones. Most cellphone customers are not likely going to want to trade faster data speeds for shorter battery lives. As I look forward at the strategies of the cellular carriers, the battery life of cellphones might be their biggest limitation. The question is not so much about how much data a cellphone can handle, but rather how much battery life must be sacrificed to gain broadband  performance. The only solution for this is likely some new battery technology that is not yet on the horizon.

I don’t believe that the average cellphone user values cellular data speeds in the same way that they value fast landline data speeds. 4G today is easily capable of streaming video and there’s no reason on a cellphone to stream more than one video stream at the same time. 4G is reasonably okay today at operating most celular apps. The one group of cellphone users that always want more bandwidth are gamers – but there is no way that cellphones are ever going to be able to match the capabilities of gaming systems or gaming computers using landline broadband connections.

I scratch my head every time I hear 5G claims about providing gigabit cellular service. I don’t want to sound like an old-timer who sees no need for greater speeds. But I think we need to be realistic and ask if superfast cellular bandwidth is really needed today – after all, there are still no landline applications for homes that require anything near to a gigabit of bandwidth. The primary reason homes need faster download speeds is to handle multiple big bandwidth applications at the same time, something that is not today a requirement for cellphones.

The idea of gigabit cellular is mostly coming from the imagination of the cellular company marketers. The 5G standard calls for eventual ubiquitous 100 Mbps cellular speeds. Even achieving that much speed is going to require tying together multiple mid-range bands of spectrum. I’m having a hard time seeing the additional revenue streams that will pay for the massive upgrades needed to reach the 100 Mbps goal. The cellular companies all know this but aren’t talking about it because that would dilute the message that 5G will transform the world.

Is There a Business Case for 5G Cellular?

Readers might think I spent too much time writing about 5G. However, I’m asked about 5G almost every day. Existing ISPs want to know if 5G is a real threat. Potential ISPs want to know if they should pause their business plans until they understand 5G’s impact. Cities want to know what to expect. The cellular companies have made such a huge deal about 5G that they’ve spooked the rest of the industry.

Today I ask perhaps the most fundamental question of all – is there a business case for 5G cellular? I’m not talking about 5G wireless loops to homes – I’m just asking if there is a financial justification for the cellular companies to upgrade their cell sites to 5G?

Before answering that question, it’s good to remember that the cellular companies badly need to implement 5G because their 4G networks are facing a crisis. After years of training customers to be stingy in using cellphone data, they are now encouraging users to stream video. The result of this shift is that total cellular data usage is now doubling every two years. Any network engineer will tell that that is deadly growth, particular for a cellular network. The existing 4G network can’t handle this growth for more than a few more years. While some of this growth can be temporarily mitigated by inserting small cell sites into the network, that doesn’t look like it is more than a band-aid fix if broadband keeps growing at this fast pace. Small cell sites will be overwhelmed almost as quickly as they are built.

The carriers need 5G because it will expand the capacity of each cell site by allowing many more customers to use a cell site simultaneously. By taking advantage of frequency slicing and the ability to mix and match multiple frequencies a 5G cell site will be a huge step-up in efficiency. The cellular carriers have not publicly admitted that they need 5G just to keep their networks running – but they really don’t have a choice.

The question, though, is if there is a new revenue stream to help pay for the 5G upgrades? To be honest, I can’t find any early 5G cellular application that will generate much revenue in the near future. The obvious new revenue source would be to charge a premium price to use 5G data on a cellphone. There might be some people willing to pay extra in the early stages of the 5G roll-out, but as 4G morphs over time into 5G, any willingness to pay more for data will melt away.

I also wonder if customers will really value faster cellular data speeds. First, we aren’t talking about a ton of extra speed. Forget the recent trials of millimeter wave 5G – that’s a gimmick for now that will not be available anywhere other than in dense urban centers. The 5G specification that matters to the real world is the goal for 5G speeds to increase over a decade to 100 Mbps.

Good 4G data speeds today are in the range of 15 Mbps and that is more than enough speed to stream data while performing any functions we want from a cellphone. Faster speeds will not stream video any faster. Over time perhaps our cellphones will be able to create augmented reality universes, but that technology won’t be here for a while. Faster data speeds are vitally important in a home where we run multiple large data streams simultaneously – but a cellphone is, by definition, one device for one user.

The real advantage of 5G is the ability to make large numbers of connections from a single cell site. It’s also hard to see an immediate path to monetize that. I talk to a friend many mornings as he commutes and he always gets disconnected at the Eisenhower bridge on the DC beltway – there are not enough cellular connections there to allow for handoffs between Maryland and Virginia. 5G will finally fix that problem, but I can’t see anybody paying extra to not be cut off on the bridge – they will finally be getting what they’ve always expected.

Eventually 5G will have big potential as the connection for outdoor sensors, IoT devices, smart cars, smart streetlights, etc. There is also likely to eventually be a huge market for wearables that might include fitness monitors, medical monitors, smart glasses, and even smart clothes. However, all of these applications will take time to come to market – there is a bit of chicken and egg in that these technologies will likely never take off until there is universal 5G coverage. There is very little revenue likely in the next few years for outdoor applications – although this might eventually be the primary new source of 5G revenue.

I look back to last fall when Ronan Dunne, an EVP of Verizon Wireless, made his case to investors for the potential for 5G. He included the outdoor sensors I mention above. He also cited applications like retail, where holograms might spring up near merchandise in stores. He talked about stock trading that takes advantage of the low latency on 5G. He mentioned gaming, which would benefit from lower latency. Most of these applications offer eventual potential for 5G. But none of these applications are going to produce giant revenues over the next three or four years. In the short run it’s hard to imagine almost any immediate revenue from these applications.

Predicting technology is always a crap shoot and perhaps new applications will arise that need 5G that even Verizon hasn’t imagined. The list of applications that Verizon gave to investors is underwhelming and reflects the fact that there is likely no 5G application that will significantly add to the bottom line of the cellular carriers in the immediate future.

This really brings home the idea that as a nation we are not in a worldwide 5G competition. The carriers need 5G soon to stop the collapse of the 4G data networks in busy neighborhoods. I have a hard time thinking they need it immediately for anything else – although eventually we will be surrounded by 5G applications.

The Impending Cellular Data Crisis

There is one industry statistic that isn’t getting a lot of press – the fact that cellular data usage is more than doubling every two years. You don’t have to plot that growth rate very many years into the future to realize that existing cellular networks will be inadequate to handle the increased demand in just a few years. What’s even worse for the cellular industry is that the growth is the nationwide average. I have many clients who tell me there isn’t nearly that much growth at rural cellular towers – meaning there is likely even faster growth at some urban and suburban towers.

Much of this growth is a self-inflicted wound by the cellular industry. They’ve raised monthly data allowances and are often bunding in free video with cellular service, thus driving up usage. The public is responding to these changes by using the extra bandwidth made available to them.

There are a few obvious choke points that will be exposed with this kind of growth. Current cellphone technology limits the number of simultaneous connections that can be made from any given tower. As customers watch more video they eat up slots on the cell tower that otherwise could have been used to process numerous short calls and text messages. The other big chokepoint is going to be the broadband backhaul feeding each cell cite. When usage grows this fast it’s going to get increasingly expensive to buy leased backbone bandwidth – which explains why Verizon and AT&T are furiously building fiber to cell sites to avoid huge increases in backhaul costs.

5G will fix some, but not all of these issues. The growth is so explosive that cellular companies need to use every technique possible to make cell towers more efficient. Probably the best fix is to use more spectrum. Adding an additional spectrum to a cell site immediately adds capacity. However, this can’t happen overnight. Any new spectrum is only useful if customers can use it and it takes a number of years to modify cell sites and cellphones to work on a new spectrum. The need to meet growing demand is the primary reason that the CTIA recently told the FCC they need an eye-popping 400 MHz of new mid-range spectrum for cellular use. The industry painted that as being needed for 5G, but it’s needed now for 4G LTE.

Another fix for cell sites is to use existing frequency more efficiently. The most promising way to do this is with the use of MIMO antenna arrays – a technology to deploy multiple antennas in cellphones to combine multiple spectrum together to create a larger data pipe. MIMO technology can make it easier to respond to a request from a large bandwidth user – but it doesn’t relieve the overall pressure on a cell tower. If anything, it might do the exact opposite and let cell towers prioritize those that want to watch video over smaller users who might then be blocked from making voice calls or sending text messages. MIMO is also not an immediate fix and also needs to work through the cycle of getting the technology into cellphones.

The last strategy is what the industry calls densification, which is adding more cell sites. This is the driving force behind placing small cell sites on poles in areas with big cellular demand. However, densification might create as many problems as it solves. Most of the current frequencies used for cellular service travel a decent distance and placing cell sites too close together will create a lot of interference and noise between neighboring towers. While adding new cell sites adds additional local capacity, it also decreases the efficiency of all nearby cell sites using traditional spectrum – the overall improvement from densification is going to be a lot less than might be expected. The worse thing about this is that interference is hard to predict and is very much a local issue. This is the primary reason that the cellular companies are interested in millimeter wave spectrum for cellular – the spectrum travels a short distance and won’t interfere as much between cell sites placed closely together.

5G will fix some of these issues. The ability of 5G to do frequency slicing means that a cell site can provide just enough bandwidth for every user – a tiny slice of spectrum for a text message or IoT signal and a big pipe for a video stream. 5G will vastly expand the number of simultaneous users that can share a single cell site.

However, 5G doesn’t provide any additional advantages over 4G in terms of the total amount of backhaul bandwidth needed to feed a cell site. And that means that a 5G cell site will get equally overwhelmed if people demand more bandwidth than a cell site has to offer.

The cellular industry has a lot of problems to solve over a relatively short period of time. I expect that in the middle of the much-touted 5G roll-out we are going to start seeing some spectacular failures in the cellular networks at peak times. I feel sympathy for cellular engineers because it’s nearly impossible to have a network ready to handle data usage that doubles every two years. Even should engineers figure out strategies to handle five or ten times more usage, in only a few years the usage will catch up to those fixes.

I’ve never believed that cellular broadband can be a substitute for landline broadband. Every time somebody at the FCC or a politician declares that the future is wireless I’ve always rolled my eyes, because anybody that understands networks and the physics of spectrum can easily demonstrate that there are major limitations on the total bandwidth capacity at a given cell site, along with a limit on how densely cell sites can be packed in an area. The cellular networks are only carrying 5% of the total broadband in the country and it’s ludicrous to think that they could be expanded to carry most of it.

Trusting Big ISP Data

The FCC has finally come to grips with the fact that big ISPs are supplying bad data to the various FCC mapping efforts that are then used to distribute FCC funding and to set national policies. The latest mapping snafu come from one-time data collection from the cellular carriers last year showing rural cellular coverage. These maps were to be used to establish a new federal fund called the Mobility Fund II which will distribute $4.53 billion for the expansion of 4G cellular coverage to rural parts of the country that have little or no cellular coverage.

The big cellular companies have been lying about their cellular coverage for years. If you look at the nationwide 4G LTE coverage maps from AT&T and Verizon you’d think that they have cellular coverage virtually everywhere except in areas like deserts and mountains. But anybody living or traveling in rural America knows better. It’s not hard to drive very far off main highways and hit areas that never see a bar of cellular coverage. And even where there is coverage, it’s still often 3G or even older technology.

When the FCC collected data for the Mobility II funding the big carriers stuck to this same flawed mapping data. It turns out that overclaiming rural cellular coverage will keep funding from going to the smaller cellular companies that still serve in many parts of rural America. Luckily the FCC effort included a challenge process and the FCC was flooded with challenges showing that cellular coverage is far worse than is claimed by the big carrier maps. There were so many challenges that the FCC put the Mobility II award process on hold until they can sort it out.

This is just one of the mapping efforts from the FCC that have been used to award billions of dollars of funding over the last decade. The FCC relied on mapping data from the big telcos to establish the areas that were eligible for the billions of dollars of CAF II funding.

Since rural areas served by the biggest telcos have been neglected for years, and since the big telcos deployed very little rural DSL outside of towns it’s not hard to identify huge swaths of rural areas that have little or no broadband. But the big telco broadband coverage data contains a ton of inaccuracies. For example, there are numerous smaller rural towns that are listed in the telco databases as having decent broadband, when the reality on the ground is broadband speeds of a few Mbps at best. It looks like the big telcos often reported marketing speeds rather than actual speeds. This inaccuracy has stopped others from seeking federal grants and loans to upgrade such towns.

I fear that rural broadband mapping is on the verge of the next crisis. As a blogger I am contacted a lot by folks in rural America describing their broadband situation. I’ve heard enough stories to convince me that the big telcos have made only a half-hearted effort at implementing CAF II. I think many homes that should have seen CAF II broadband upgrades will see zero upgrades while many others will get upgraded to speeds that don’t meet even the measly CAF II goal of 10/1 Mbps.

The big telcos are not likely to come clean about having pocketed CAF II funding rather than spending every penny to make upgrades, and so they are going to claim that the CAF II areas have been upgraded, regardless of the actual situation on the ground. Rural households that didn’t see the promised upgrades will then be counted by the FCC as having better broadband. That will make these areas off limits to future federal funding to fix what the telcos botched. We already see the newest federal grant programs having a new requirement that no more than 10% of the homes covered by federal funding can have broadband today. Because of the falsified mapping, many homes without broadband are going to be deemed to be covered and it will be a massive challenge for somebody else to get funding to help such areas. These communities will be harmed twice – once by the telcos that aren’t upgrading speeds and second by the inaccurate mapping that will stop others from funding assistance to fix the problem.

The big telcos and carriers have huge incentives to lie about rural broadband coverage. None of the big telcos or cellular carriers want to spend any of their own money in rural areas, but they love the revenues they are receiving by a captive rural customer base who pays high prices for poor broadband. The big companies are fighting hard to preserve these revenues, which means they don’t want anybody else to get funding to improve broadband. To make matters worse, the big telcos continue to eliminate technicians and maintenance budgets in rural America, making it nearly impossible for customers to get repairs and service.

I unfortunately don’t have any easy solution for the problem of crappy mapping. Perhaps the FCC could entertain challenges to the broadband maps in the same way they are accepting challenges in the Mobility II process. I know a number of rural communities that would make the effort to create accurate broadband maps if this might bring them better broadband.

AT&T is Not Launching Mobile 5G

AT&T recently took the next step in the 5G hype race by announcing that it is releasing the first mobile 5G device. The announcement was made at end of the year to cover past AT&T announcements that the company would launch mobile 5G in 2018. The company can now say that they beat Verizon and Sprint to the market.

The AT&T announcement is referring to the device they are calling a puck. It’s a small Netgear modem that is being touted as a 5G mobile hotspot. The puck is based upon at least a few aspects of the 3GPP NR standard, allowing AT&T to claim it’s 5G. AT&T has not been fully forthcoming about how the device works. Where available the device will supposedly grab bandwidth from AT&T’s 5G cellular network – but since the 5G network is mostly still imaginary, in most places it will grab signal from the existing 4G LTE network. Within a home the puck will transmit WiFi, just like any other WiFi router.

There is no real product here. For at least three months AT&T will be giving away the puck and service for free to selected users. After that they’ve said the pricing will be $499 for the puck plus $70 monthly for bandwidth with an incredibly stingy 15 GB data cap. My prediction is that this product never makes it to market because it’s hard to envision anybody in an urban area willing to pay $70 a month such a small amount of WiFi bandwidth. The only market for the puck is possibly a few early adapters with money to burn who want to be able to say they owned the first 5G devices.

This announcement sets a new low for 5G hype. What I found most disturbing is that dozens of news sites picked up the story and basically spit back the AT&T press release and called it news. Those dozens of articles give the public the impression that 5G mobile is right around the corner, which is exactly what AT&T intended – they want the public to equate 5G and the AT&T brand name together. To be fair, there are several industry articles that didn’t buy into the AT&T hype.

The AT&T announcement also made this sound like a breakthrough technology by implying that this will deliver faster cellular speeds. There is a lot needed before there is a faster 5G cellular network. First, AT&T would need to install 5G transmitters on residential streets, requiring them to build neighborhood fiber networks. For the puck to work with millimeter wave spectrum AT&T would need to put a small antenna on the outside of a home to receive the signal since millimeter wave bandwidth won’t pass through the walls of a home. A network that will deliver residential millimeter wave cellular bandwidth is nearly identical to a network that would deliver 5G fixed broadband.

AT&T is not taking any of those needed steps. In fact, AT&T’s CTO Andre Fuetsch spent the fall repeatedly taking potshots at Verizon’s 5G deployment, saying that Verizon is making a mistake chasing the ‘fixed’ 5G market.

To further deflate this announcement, AT&T’s CFO John Stephens recently told AT&T investors to not expect any 5G revenues in 2019. He admitted it will take many years until there are enough 5G phones in the market to make a noticeable difference in revenues. It seems the only cellular carrier being truthful about 5G is T-Mobile which says it will begin introducing some 5G characteristics into their cell sites starting in 2020.

The bottom line is that AT&T just announced the release of a WiFi router that works off their 4G LTE network, but which supposedly will incorporate at least some aspects of the 3GPP NR standard. The company isn’t planning to charge for the product and it’s hard to envision anybody buying hotspot bandwidth at the prices they announced. But AT&T got what they wanted, which was dozens of news articles declaring that AT&T was the first to market with mobile 5G. I bet a decade from now that’s exactly what the Wikipedia article on 5G will say – and that’s all AT&T was really shooting for.

Private 5G Networks

One of the emerging uses for 5G is to create private 5G cellular networks for large businesses. The best candidates for 5G technology are businesses that need to connect and control a lot of devices or those that need the low latency promised by the 5G standards. This might include businesses like robotized factories, chemical plants, busy shipping ports and airports.

5G has some advantages over other technologies like WiFi, 4G LTE and Ethernet that makes it ideal for communications rich environments. Cellular network can replace the costly and bulky hard-wired networks needed for Ethernet. It’s not practical to wire an Ethernet network to the hordes of tiny IoT sensors that are needed to operate a modern manufacturing factory. It’s also not practical to have a hard-wired network in a dynamic environment where equipment needs to be moved for various purposes.

5G holds a number of advantages over WiFi and 4G. Frequency slicing means that just the right amount of bandwidth can be delivered to every device in the factory, from the smallest sensor to devices that must upload or download large amounts of data. The 5G standard also allows for setting priorities by device so that mission critical devices always get priority over background devices. The low latency on 5G means that there can be real time coordination and feedback between devices when that’s needed for time-critical manufacturing devices. 5G also offers the ability to communicate simultaneously with a huge number of devices, something that is not practical or possible with WiFi or LTE.

Any discussion of IoT in the past has generally evoked discussion of factories with huge number of tiny sensors that monitor and control every aspect of the manufacturing process. While there have been big strides in developing robotized factories, that concept of a concentrated communications mesh to control the factories has not been possible until the 5G standard.

We are a few years away from having 5G networks that can deliver on all of the promised benefits of the standard. The big telecom manufacturers like Ericsson, Huawei, Qualcomm and Nokia along with numerous smaller companies are working on perfecting the technology and the devices that will support advanced IoT networks.

I read that an Audi plant in Germany is already experimenting with a private cellular network to control the robots that glue car components together. Its robot networks were hard-wired and were not providing fast enough feedback to the robots for the needed precision of the tasks. The company says it’s pleased with the performance so far. However, that test was not yet real 5G and any real use of 5G in factories is still a few years off as manufacturers perfect the wireless technology and perfect the sensor networks.

Probably the biggest challenge in the US will be finding the spectrum to make this work. In the US most of the spectrum that is best suited to operating a 5G factory are sold in huge geographic footprints and the spectrum will be owned by the typical large spectrum holders. Large factory owners might agree to lease spectrum from the large carriers, but they are not going to want those carriers to insert themselves into the design or operation of these complex networks.

In Europe there are already discussions at the various regulatory bodies on possibly setting aside spectrum for factories and other large private users. However, in this country to do so means opening the door to allowing the spectrum to be sold for smaller footprints – something the large wireless carriers would surely challenge. It would be somewhat ironic if the US takes the lead in developing 5G technology but then can’t make it work in factories due to our spectrum allocation policies.

I’m Not a Fan of the 5G Hype

I read a lot of articles talking about what a huge deal 5G will be for the economy. The source of the excitement is the huge numbers being thrown around. For example, Qualcomm and IHS Technology issued a report in 2017 that estimated that 5G could enable $12 trillion in economic output around the world by 2035. That same report made the incredibly hyped claim that 5G could be as important to the world as the introduction of electricity. It’s no wonder that financial people are excited about the potential for 5G and why so many companies want to somehow grab a piece of this new market.

But I look around my own part of the world and I have a hard time seeing this kind of impact. I live in a town of 90,000 people. If we are like the average US market then roughly 85% of homes here already have landline broadband. Practically everybody here also has a cellphone, with the majority using smartphones.

People may read my blog and think I am not a fan of 5G – but that’s not true, I’m just not a fan of the hype. I would love for Verizon to offer me another choice of home broadband – I would consider changing to Verizon at the right price, as would many other households. My biggest question is how much value Verizon would create by introducing 5G in my town. Let’s say Verizon was to capture 30% of the broadband market here – that certainly creates an advantage to Verizon and gives them a significant new revenue stream. However, for every customer Verizon gains, Charter or AT&T would lose a customer, and overall that’s a zero-sum game. Further, if you assume that 5G competition would drive down prices a bit (it might not since oligopolies tend to not compete on price), then the overall spending on broadband in the town might actually decrease a bit.

The same thing would happen with cellular 5G. The big four cellular companies will have to spend a lot to upgrade all of the cell sites here to 5G. We’re a hilly and heavily wooded City and it will take a lot of small cell sites just to fill in the existing cellular holes. But unless they can find a way to charge more for 5G cellular broadband, then cellphone broadband is also a zero-sum game. Everybody in town already has a cellphone and a data plan, and the long-term trend is for cellular data prices to drop. I don’t see the new revenue stream from 5G cellular that will pay for the needed upgrades. Perhaps faster cellular data speeds will attract more people to drop landlines, but that’s also a zero-sum for the market as a whole.

There is one new aspect of 5G that the cellular carriers are counting on to create a new revenue stream. Once the 5G technology has been developed, the 5G standard calls for the ability of a cell site to communicate with as many as 100,000 devices – a huge increase over today’s capabilities. The cell carriers are clearly banking on IoT as the new revenue opportunity.

However, that kind of transition isn’t going to happen overnight. There are a whole lot of steps required before there is a huge cellular IoT revenue stream. First, the technology has to be developed that will handle that huge number of IoT devices. The 5G core standards were just developed last year and it will take years for vendors and labs to achieve the various goals for 5G. As those improvements are realized it will take a lot longer to introduce them into the cellular networks. We are just now finally seeing the deployment of 4G LTE – AT&T is just now deploying what they call 5G Evolution into any major markets, which is actually fully-compliant 4G LTE. The same slow roll-out will occur with 5G – we’ll advance through 4.1G, 4.2G, etc. until we see fully-compliant 5G network in a decade.

We’ll also have to wait for the rollout of IoT sensors that rely on a 5G network. It will be a bit of a chicken and egg situation because nobody will want to deploy devices that need 5G until 5G is active in a sufficient number of neighborhoods. But eventually this will come to pass – to a degree we can’t predict.

The question is if IoT usage is the trillion-dollar application. I certainly look forward to a time when I might have an embedded chip for 24/7 health monitoring using a 5G network – that’s a service that many people will be willing to pay for. But there is no guarantee that the revenue streams will materialize for IoT monitoring to the extent envisioned by AT&T and Verizon. I’ve done the math and the only way that the carriers can see a trillion-dollar benefits from IoT is if future homes have an IoT monitoring bill of the same magnitude as our current cellular or broadband bills – and that may never come to pass. I would love to see a concrete business plan that predicts where these huge new benefits come from, but I’ve seen nothing specific other than the big claims.

There is one aspect of the hype that I do buy. While I can’t see any way to equate the value of 5G to be as important as electricity, it is likely to share the same kind of introduction cycle that we saw with the electric grid. It took 25 years for electricity to spread to the majority of US cities and another 25 years until it was in most of rural America. New technologies today deploy faster than the deployment of electric grids – but this still can’t happen overnight and is at likely to be many years until rural America sees 5G cellular and a lot longer for 5G fixed broadband.

If you believe the hype in the press, we’ll start seeing big benefits from 5G in 2019 and 2020. I can promise you a blog at the end of next year that looks to see if any of this hype materialized – but I already suspect the answer will be no.

More FCC Mapping Woes

The FCC has another new billion dollar grant program, this one aimed to improve rural cellular coverage. Labeled as the Mobility Fund II the program will conduct a reverse auction sometime next year to give $4.53 billion to cellular carriers to extend wireless coverage to the most remote parts of the country. For taking the funding a cellular carrier must bring 4G LTE coverage to the funded areas and achieve cellular download speeds of at least 10 Mbps. Funding will be distributed over 10 years with build out requirements sooner than that.

Just like with the CAF II program, the areas eligible for funding are based upon the FCC’s broadband maps using data collected by the existing cellular carriers. As you might expect, the maps show that the parts of the country with the worst coverage – those eligible for funding – are mostly in the mountains and deserts of the west and in Appalachia.

The release of the Mobility Fund II maps instantly set off an uproar as citizens everywhere complained about lack of cellular coverage and politicians from all over the country asked the FCC why there wasn’t more funding coming to their states. The FCC received letters from senators in Mississippi, Missouri, Maine and a number of other states complaining that their states have areas with poor or non-existent cellular coverage that were not covered be the new fund.

If you’ve traveled anywhere in rural America you know that there are big cellular dead spots everywhere. I’ve been to dozens of rural counties all across America in the last few years and every one of them has parts of their counties without good cellular coverage. Everybody living in rural America can point to areas where cellphones don’t work.

The issue boils down to the FCC mapping used to define cellular and broadband coverage. The maps for this program were compiled from a one-time data request to the cellular carriers asking for existing 4G coverage. It’s obvious by the protests that the carriers claim cellular coverage where it doesn’t exist.

In August, the Rural Wireless Association (RWA) filed a complaint with the FCC claiming that Verizon lied about its cellular coverage by claiming coverage in many areas that don’t have it. This is the association of smaller wireless companies (they still exist!). They say that the Verizon’s exaggerated coverage claims will block the funding to many areas that should be eligible.

The Mobility Fund II program allows carriers to challenge the FCC’s maps by conducting tests to identify areas that don’t have good cellular coverage. The smaller carriers in the RWA have been filing these challenges and the FCC just added 90 additional days for the challenge process. Those challenges will surely add new eligible coverage areas for this program.

But the challenge program isn’t going to uncover many of these areas because there are large parts of the country that are not close to an RWA carrier, and which won’t be challenged. People with no cellular coverage that are not part of the this grant program might never get good cellular coverage – something that’s scary as the big telcos plan to tear down copper in rural America.

The extent of the challenges against the Verizon data are good evidence that Verizon overstated 4G LTE coverage. The RWA members I know think Verizon did this purposefully to either block others from expanding cellular networks into areas already served by Verizon or to perhaps direct more of this new fund to areas where Verizon might more easily claim some of the $4.5 billion.

To give Verizon a tiny amount of credit, knowing cellular coverage areas is hard. If you’ve ever seen a coverage map from a single cell tower you’ll instantly notice that it looks like a many-armed starfish. There are parts of the coverage area where good signal extends outward for many miles, but there are other areas where the signal is blocked by a hill or other impediments. You can’t draw circles on a map around a cell tower to show coverage because it only works that way on the Bonneville Salt Flats. There can be dead spots even near to the cell tower.

The FCC fund is laudable in that it’s trying to bring cellular coverage to those areas that clearly don’t have it. But there are countless other holes in cellular coverage that cannot be solved with this kind of fund, and people living in the many smaller cellular holes won’t get any relief from this kind of funding mechanism. Oddly, this fund will bring cellular coverage to areas where almost nobody lives while not addressing cellular holes in more populated areas.

The Challenges of 5G Deployment

The industry is full of hype right now about the impending roll-out of 5G cellular. This is largely driven by the equipment vendors who want to stir up excitement among their stockholders. But not everybody in the industry thinks that there will be a big rush to implement 5G. For example, a group called RAN Research issued a report last year that predicted a slow 5G implementation. They think that 4G will be the dominant wireless technology until at least 2030 and maybe longer.

They cite a number of reasons for this belief. First, 4G isn’t even fully developed yet and the standards and implementation coalition 3GPP plans to continue to develop 4G until at least 2020. There are almost no 4G deployments in the US that fully meet the 4G standards, and RAN Research expects the wireless carriers to continue to make incremental upgrades, as they have always done, to improve cellular along the 4G path.

They also point out that 5G is not intended as a forklift upgrade to 4G, but is instead intended to coexist alongside. This is going to allow a comfortable path for the carriers to implement 5G first in those places that most need it, but not rush to upgrade places that don’t. This doesn’t mean that the cellular carriers won’t be claiming 5G deployments sometime in the next few years, much in the way that they started using the name 4G LTE for minor improvements in 3G wireless. It took almost five years after the first marketing rollout of 4G to get to what is now considered 3.5G. We are just now finally seeing 4G that comes close to meeting the full standard.

But the main hurdle that RAN Research sees with a rapid 5G implementation is the cost. Any wireless technology requires a widespread and rapid deployment in order to achieve economy of scale savings. They predict that the cost of producing 5G-capable handsets is going to be a huge impediment to implementation. Very few people are going to be willing to pay a lot more for a 5G handset unless they can see an immediate benefit. And they think that is going to be the big industry hurdle to overcome.

Implementing 5G is going to require a significant expenditure in small dense cell-sites in order to realize the promised quality improvements. It turns out that implementing small cell sites is a lot costlier and lot more expensive than the cellular companies had hoped. It also turns out that the technology will only bring major advantages to those areas where there is the densest concentration of customers. That means big city business districts, stadiums, convention centers and hotel districts – but not many other places.

That’s the other side of the economy of scale implementation issue. If 5G is only initially implemented in these dense customer sites, then the vast majority of people will see zero benefit from 5G since they don’t go to these densely packed areas very often. And so there are going to be two economy of scale issues to overcome – making enough 5G equipment to keep the vendors solvent while also selling enough more-expensive phones to use the new 5G cell sites. And all of this will happen as 5G is rolled out in drabs and dribbles as happened with 4G.

The vendors are touting that software defined networking will lower the cost to implement 5G upgrades. That is likely to become true with the electronics after they are first implemented. It will be much easier to make the tiny incremental 5G improvements to cell sites after they have first been upgraded to 5G capability. But RAN Research thinks it’s that initial deployment that is going to be the hurdle. The wireless carriers are unlikely to rush to implement 5G in suburban and rural America until they see overwhelming demand for it – enough demand that justifies upgrading cell sites and deploying small cell sites.

There are a few trends that are going to affect the 5G deployment. The first is the IoT. The cellular industry is banking on cellular becoming the default way to communicate with IoT devices. Certainly that will be the way to communicate with things like smart cars that are mobile, but there will be a huge industry struggle to instead use WiFi, including the much-faster indoor millimeter wave radios for IoT. My first guess is that most IoT users are going to prefer to dump IoT traffic into their landline data pipe rather than buy separate cellular data plans. For now, residential IoT is skewing towards the WiFi and towards smart devices like the Amazon Echo which provide a voice interface for using the IoT.

Another trend that could help 5G would be some kind of government intervention to make it cheaper and easier to implement small cell sites. There are rule changes being considered at the FCC and in several state legislatures to find ways to speed up implementation of small wireless transmitters. But we know from experience that there is a long way to go after a regulatory rule change until we see change in the real world. It’s been twenty years now since the Telecommunications Act of 1996 required that pole owners make their poles available to fiber overbuilders – and yet the resistance of pole owners is still one of the biggest hurdles to fiber deployment. Changing the rules always sounds like a great idea, but it’s a lot harder to change the mindset and behavior of the electric companies that own most of the poles – the same poles that are going to be needed for 5G deployment.

I think RAN Research’s argument about achieving 5G economy of scale is convincing. Vendor excitement and hype aside, they estimated that it would cost $1,800 today to build a 5G capable handset, and the only way to get that price down would be to make hundreds of millions of 5G capable handsets. And getting enough 5G cell sites built to drive that demand is going to be a significant hurdle in the US.

Lies, Damned Lies and 5G

4g-antennaI’m not sure that there is a major industry that lies more to its customers than the cellular industry. The whole industry has spent the last decade touting its 4G LTE networks, when in fact the industry is just now installing the first cell sites that actually meet the 4G standard.

And now we are starting this cycle all over again with the industry buzz about how 5G is right around the corner. But it isn’t. And I will take bets that within the next year or so one of the cellular companies is going to tell their customers they now have a 5G network.

Every once in a while somebody in the industry tells a little bit of the truth. At a Qualcomm summit recently in Hong Kong, Roger Gurnani, the EVP and chief information and technology architect at Verizon said that 5G is not a replacement for 4G and that LTE will be around for many years. And he is right, because it’s going to be at least ten years until a customer anywhere is going to be able use a cellphone that meets the full 5G standard. But there is no way that anybody at one of the cellular companies is ever going to say that.

The 4G standard was established around 2008 and we are just now seeing US cell sites that are implementing what they are labeling as LTE-Advanced, which is the first deployment that meets the full 4G standard. I say ‘about 2008’ because the effort to create the new 4G standard took two different paths with WIMAX and LTE, with different timelines. The standards for 5G are still under development and probably aren’t going to be finalized until late 2019.

How have the cellular companies been able to claim 4G all these years with a straight face (and without getting shut down by the Federal Trade Commission or hit with class action lawsuits)? The answer lies in the fact that the specifications for a standard like 4G or 5G contains a lot of different components. To use a simple analogy, if there are ten technology improvements needed to migrate from 3G to 4G, then the cellular companies started touting they had 4G after only one or two of the upgrades. But until all of the improvements have been implemented a customer cannot receive the actual promised benefits of the 4G standard.

A lot of this has to do with marketing hype. Think back to a decade ago when there was an arms race to be the first cellular company to have 4G. All the cellular commercials made 4G claims and we were bombarded by maps showing who had the best 4G coverage. But these claims were made by the marketing folks at the wireless companies and the fact is that all of those maps were a lie and nobody had 4G. Even now most people can’t get full 4G.

The cellular companies are also egged on by the cellular vendors. Right now that is all that the companies that make wireless equipment want to talk about – how they will be the first to support 5G. And so if you go to an industry forum right now that is all you will hear. I’ve noticed numerous 5G summits being announced around the world, mostly led by vendors, to talk about the next generation of cellphones for which the standards are not even finished.

I see several problems with the inflated hype from the cellular companies. First is that customers don’t see much evidence of the upgrades from one technology to another because the upgrades are made incrementally in little steps. The first customers that bought a 4G cellphone didn’t get very much faster speeds than they had on 3G.

Today the average data speeds in the US on 4G connections are just over 7 Mbps. Some customers in some instances can do much better than that, but that is the average for the billions of connections made. When 4G is finally everywhere (and full 4G may never be put into more rural cell sites) that average speed ought to creep up to about 15 Mbps as long as cell sites aren’t overloaded. The first phones cited as 5G are probably not going to do much better than 4G, but as upgrades are implemented over time the 5G speeds are supposed to creep towards 50 Mbps.

And that is the second problem I see with the inflated claims of the cellular companies. By touting that much faster cellphones are right around the corner they are causing those who would build fiber landline networks to pause. I am sure that this is on purpose – one only has to read an AT&T or Verizon press release to see that is part of their motivation. But nobody would pause in building fiber if these companies were to tell the truth and say that 50 Mbps cellphone coverage might be possible in ten years. That is the real harm from these lies.