Windstream Turns Focus to Wireless

Windstream CEO Tony Thomas recently told investors that the company plans to stress wireless technology over copper going into the future. The company has been using point-to-point wireless to serve large businesses for several years. The company has more recently been using fixed point-to-multipoint wireless technology to satisfy some of it’s CAF II build-out requirements.

Thomas says that the fixed wireless technology blows away what could be provided over the old copper plant with DSL. In places with flat and open terrain like Iowa and Nebraska the company is seeing rural residential broadband speeds as fast as 100 Mbps with wireless – far faster than can be obtained with DSL.

Thomas also said that the company is also interested in fixed 5G deployments, similar to what Verizon is now starting to deploy – putting 5G transmitters on poles to serve nearby homes. He says the company is interested in the technology in places where they are ‘fiber rich’. While Windstream serves a lot of extremely rural locations, there also serve a significant number of towns and small cities in their incumbent service areas that might be good candidates for 5G.

The emphasis on wireless deployments puts Windstream on the same trajectory as AT&T. AT&T has made it clear numerous times to the FCC that they company would like to tear down rural copper wherever it can to serve customers with wireless. AT&T’s approach differs in that AT&T will be using its licensed cellular spectrum and 4G LTE in rural markets while Windstream would use unlicensed spectrum like various WISPs.

This leads me to wonder if Windstream will join the list of big telcos that will largely ignore its existing copper plant moving into the future. Verizon has done it’s best to sell rural copper to Frontier and seems to be largely ignoring its remaining copper plant – it’s the only big telcos that didn’t even bother to chase the CAF II money that could have been used to upgrade rural copper.

The new CenturyLink CEO made it clear that the company has no desire to make any additional investments that will earn ‘infrastructure returns’, meaning investing in last mile networks, both copper and fiber. You can’t say that Frontier doesn’t want to continue to support copper, but the company is clearly cash-stressed and is widely reported to be ignoring needed upgrades and repairs to rural copper networks.

The transition from copper to wireless is always scary for a rural area. It’s great that Windstream can now deliver speeds up to 100 Mbps to some customers. However, the reality of wireless networks are that there are always some customers who are out of reach of the transmitters. These customers may have physical impediments such as being in a valley or behind a hill and out of line-of-sight from towers. Or customers might just live to far away from a tower since all of the wireless technologies only work for some fixed distance from a tower, depending upon the specific spectrum being used.

It makes no sense for a rural telco to operate two networks, and one has to wonder what happens to the customers that can’t get the wireless service when the day comes when the copper network gets torn down. This has certainly been one of the concerns at the FCC when considering AT&T’s requests to tear down copper. The current FCC has relaxed the hurdles needed to tear down copper and so this situation is bound to arise. In the past the telcos had carrier of last-resort obligations for anybody living in the service area. Will they be required to somehow get wireless signal to those customers that fall between the cracks? I doubt that anybody will force them to do so. It’s not far-fetched to imagine customers living within a regulated telcos service area who can’t get telephone or broadband service from the telco.

Customers in these areas also have to be concerned with the future. We have wide experience that the current wireless technologies don’t last very long. We’ve seen electronics wear out and become functionally obsolete within seven years. Will Windstream and the other telcos chasing the wireless technology path dedicate enough capital to constantly replace electronics? We’ll have to wait for that answer – but experience says that they will cut corners to save money.

I also have to wonder what happens to the many parts of the Windstream service areas that are too hilly or too wooded for the wireless technology. As the company becomes wireless-oriented will they ignore the parts of the company stuck with copper? I just recently visited some rural counties that are heavily wooded, and which were told by local Windstream staff that the upgrades they’ve already seen on copper (which did not seem to make much difference) were the last upgrades they might ever see. If Windstream joins the other list of big telcos that will ignore rural copper, then these networks will die a natural death from neglect. The copper networks of all of the big telcos are already old and it won’t take much neglect to push these networks into the final death spiral.

Can Cable Fight 5G?

The big cable companies are clearly worried about 5G. They look at the recently introduced Verizon 5G product and they understand that they are going to see something similar over time in all of their metropolitan markets. Verizon is selling 5G broadband – currently at 300 Mbps second, but promised to get faster in the future – for $70 standalone or for $50 for those with Verizon cellular.

This is the nightmare scenario for them because they have finally grown to the point where they are approaching a near monopoly in most markets. They have successfully competed with DSL and quarter after quarter have been taking DSL customers from the telcos. In possibly the last death knell for DSL, both Comcast and Charter recently increased speeds of their base products to at least 200 Mbps. Those speeds makes it hard for anybody to justify buying DSL at 50 Mbps or slower.

The big cable companies have started to raise broadband rates to take advantage of their near-monopoly situation. Charter just recently raised bundled broadband prices by $5 per month – the biggest broadband price increase I can remember in a decade or more. Last year a major Wall Street analyst advised Comcast that their basic broadband price ought to be $90.

But now comes fixed 5G. It’s possible that Verizon has found a better bundle than the cable companies because of the number of households that already have cellphones. It’s got to be tempting to homes to buy fast broadband for only $50 per month in a bundle.

This fixed 5G competition won’t come over night. Verizon is launching 5G in urban markets where they already have fiber. Nobody knows how fast they will really implement the product, due mostly to distrust of a string of other Verizon hype about 5G. But over time the fixed 5G will hit markets. Assuming Verizon is successful, then others will follow them into the market. I’m already seeing some places where companies American Tower are building 5G ‘hotels’ at poles, which are vaults large enough to accommodate several 5G providers at the same location.

We got a clue recently about how the cable companies might fight back against 5G. A number of big cable companies like Comcast, Charter, Cox and Midco announced that they will be implementing the new 10 Gbps technology upgrade from CableLabs. These cable companies just recently introduced gigabit service using DOCSIS 3.1. It looks like the cable companies will fight against 5G with speed. It sounds like they will advertise speeds far faster than the 5G speeds and try to win the speed war.

But there is a problem with that strategy. Cable systems with the DOCSIS 3.1 upgrade can clearly offer gigabit speeds, but in reality cable company networks aren’t ready or able to deliver that much speed to everybody. Fiber networks can easily deliver a gigabit to every customer, and with an electronics upgrade can offer 10 Gbps to everybody, as is happening in parts of South Korea. But cable networks have an inherent weakness that makes gigabit speed problematical.

Cable networks are still shared networks and all of the customers in a node share the bandwidth. Most cable nodes are still large with 150 – 300 customers in each neighborhood node, and some with many more. If even a few customers start really use gigabit speeds then the speed for everybody else in the node will deteriorate. That’s the issue that caused cable networks to bog done in the evenings a decade ago. Cable companies fixed the problem then by ‘splitting’ the nodes, meaning that they build more fiber to reduce the number of homes in each node. If the cable companies want to really start pushing gigabit broadband, and even faster speeds, then they are faced with that same dilemma again and they will need another round, or even two rounds of node splits.

For now I have serious doubts about whether Comcast and Charter are even serious about their gigabit products. Comcast gigabit today costs $140 plus $10 for the modem. The prices are lower in markets where the company is competing against fiber, and customers can also negotiate contract deals to get the gigabit price closer to $100. Charter has similar pricing – in Oahu where there is competition they offer a gigabit for $105, and their price elsewhere seem to be around $125.

Both of these companies are setting gigabit prices far above Google’s Fiber’s $70 gigabit. The current cable company gigabit is not a serious competitor to Verizon’s $50 – $70 price for 300 Mbps. I have a hard time thinking the cable companies can compete on speed alone – it’s got to be a combination of speed and price. The cable companies can compete well against 5G if they are willing to price a gigabit at the $70 Verizon 5G price and then use their current $100+ price for 10 Gbps. That pricing strategy will cost them a lot of money in node upgrades, but they would be smart to consider it. The biggest cable companies have already admitted that their ultimate network needs to be fiber – but they’ve been hoping to milk the existing coaxial networks for another decade or two. Any work they do today to reduce node size would be one more step towards an eventual all-fiber network – and could help to stave off 5G.

It’s going to be an interesting battle to watch, because if we’ve learned anything in this industry it’s that it’s hard to win customers back after you lose them. The cable companies currently have most of the urban broadband customers and they need to act now to fight 5G – not wait until they have lost 30% of the market.

Is the Public Buying the 5G Hype?

T-Mobile recently conducted a survey, conducted by HarrisT, that looks in detail about how the public feels about the role of pending new technologies. They expect to repeat this survey quarterly to track how public perceptions of technology changes over time.

As you would expect, a significant number of the questions in the poll were about 5G. I’m sure that T-Mobile’s motivation for conducting the survey is due to the fact that they are one of the few companies in the industry that are not hyping 5G. They expect 5G to start creeping into the industry in 2020 and then taking as much as a decade to become a widespread reality.

The survey started by asking if respondents had heard of various new technologies. The 5G hype isn’t fully pervasive yet with 57% having heard of the technology. For other technologies: Internet of Things – 29%; machine learning – 26%; virtual reality – 83%; artificial intelligence – 78%; cloud computing – 52% and blockchain – 19%.

One of the most interesting responses in the survey is the public expectation of when they expect to see 5G in the market place. Of those that have heard of 5G, 29% thought it was already here in late 2018. 35% more think they’ll see 5G in 2019 and another 25% expect 5G in 2020. This response has to reflect the flood of marketing hype and press releases extolling 5G. The public has been inundated for several years by articles and press releases that declare that 5G is going to solve our broadband problems by delivering huge data speeds wirelessly everywhere.

When asked more specifics about 5G, 64% were somewhat excited or very excited about 5G in general. They were also somewhat or very excited about the following attributes of 5G: faster upload and download speeds – 92%; wider network coverage – 91%; higher quality streaming video – 85%; higher quality voice calls – 89%; less lag time on mobile devices – 90%; more reliable mobile connections – 93%; greater number of connected devices – 80%; smart city data sensors – 68%; driverless vehicles – 50%; virtual reality in the work environment – 59%; smart energy grids – 75%; supercharged IoT – 64%; expanded use of drones – 47%; next generation artificial intelligence – 59%; telehealth – 68%; remote surgery – 59%; real time language translation – 72%; replacement of landline broadband connections – 75%; replacement of traditional cable TV – 75%.

Interestingly, only 27% of total respondents thought that 5G would have a big influence on their daily life.

In a finding that I find disturbing, 65% of respondents think 5G will have a positive impact on rural America. Even the biggest 5G proponents admit that 5G is going to be hard to justify in low-density areas. It’s not hard to understand this belief because I’ve seen numerous articles that make this claim. 79% think 5G will have a positive impact in cities.

When asked which companies would be leaders in 5G, the unsurprising responses include Verizon (43%), AT&T (36%), Apple (43%), Samsung (35%) and T-Mobile (20%). However, there were surprises on this list including Amazon (24%), Comcast (12%), Google (36%), Facebook (12%), Microsoft (34%) and Dish Networks (5%).

The public believes that 5G is going to bring price increases. 84% said they thought that 5G would result in higher cellular service prices. 77% said they thought 5G would lead to higher cable TV prices (this has me scratching my head). 81% said they thought 5G would lead to higher process for home broadband – but wouldn’t increased competition for home broadband bring lower prices? 86% expect the prices for smart phones to be higher.

Overall, the survey shows an unrealistic public perception about when we’ll see the benefits of 5G. It’s not hard to understand this misperception since there are untold articles making it sound like we’re on the verge of a 5G revolution. I’m guessing this might have been one of the motivations for T-Mobile to sponsor this survey since they are one of the most realistic voices in the industry talking about the 5G time line. It will be interesting to see what the public thinks in a few years after very little 5G has actually been implemented. But perhaps I’m just being overly skeptical since the big carriers like AT&T are now extolling their 4G LTE product as 5G – maybe the public will but it.

When Will Small ISPs Offer Wireless Loops?

I wrote last week about what it’s going to take for the big wireless companies to offer 5G fixed wireless in neighborhoods. Their biggest hurdle is going to be the availability of fiber deep inside neighborhoods. Today I look at what it would take for fiber overbuilders to integrate 5G wireless loops into their fiber networks. By definition, fiber overbuilders already build fiber deep into neighborhoods. What factors will enable fiber overbuilders to consider using wireless loops in those networks?

Affordable Technology. Number one on the list is cheaper technology. There is a long history in the wireless industry where new technologies only become affordable after at least one big company buys a lot of units. Fifteen years ago the FCC auctioned LMDS and MMDS spectrum with a lot of hoopla and promise. However, these spectrum bands were barely used because no big companies elected to use them. The reality of the manufacturing world is that prices only come down with big volumes of sales. Manufacturers need to have enough revenue to see them through several rounds of technical upgrades and tweaks, which are always needed when fine-tuning how wireless gear works in the wild.

Verizon is the only company talking about deploying a significant volume of 5G fixed wireless equipment. However, their current first-generation equipment is not 5G compliant and they won’t be deploying actual 5G gear for a few years. Time will tell if they buy enough gear to get equipment prices to an affordable level for the rest of the industry. We also must consider that Verizon might use proprietary technology that won’t be available to others. The use of proprietary hardware is creeping throughout the industry and can be seen with gear like data center switches and Comcast’s settop boxes. The rest of the industry won’t benefit if Verizon takes the proprietary approach – yet another new worry for the industry.

Life Cycle Costs. Anybody considering 5G also needs to consider the full life cycle costs of 5G versus fiber. An ISP will need to compare the life cycle cost of fiber drops and fiber electronics versus the cost of the 5G electronics. There are a couple of costs to consider:

  • We don’t know what Verizon is paying for gear, but at the early stage of the industry my guess is that 5G electronics are still expensive compared to fiber drops.
  • Fiber drops last for a long time. I would expect that most of the fiber drops built twenty years ago for Verizon FiOS are still going strong. It’s likely that 5G electronics on poles will have to replaced or upgraded every 7 – 10 years.
  • Anybody that builds fiber drops to homes knows that over time that some of those drops are abandoned as homes stop buying service. Over time there can be a sizable inventory of unused drops that aren’t driving any revenue – I’ve seen this grow to as many as 5% of total drops over time.
  • Another cost consideration is maintenance costs. We know from long experience that wireless networks require a lot more tinkering and maintenance effort than fiber networks. Fiber technology has gotten so stable that most companies know they can build fiber and not have to worry much about maintenance for the first five to ten years. Fiber technology is getting even more stable as many ISPs are moving the ONTs inside the premise. That’s going to be a hard to match with 5G wireless networks with differing temperatures and precipitation conditions.

We won’t be able to make this cost comparison until 5G electronics are widely available and after a few brave ISPs suffer through the first generation of the technology.

Spectrum. Spectrum is a huge issue. Verizon and other big ISPs are going to have access to licensed spectrum for 5G that’s not going to be available to anybody else. It’s likely that companies like Verizon will get fast speeds by bonding together multiple bands of millimeter wave spectrum while smaller providers will be limited to only unlicensed spectrum bands. The FCC is in the early stages of allocating the various bands of millimeter wave spectrum, so we don’t yet have a clear picture of the unlicensed options that will be available to smaller ISPs.

Faster speeds. There are some fiber overbuilders that already provide a gigabit product to all customers, and it’s likely over time that they will go even faster. Verizon is reporting speeds in the first 5G deployments between 300 Mbps and a gigabit, and many fiber overbuilders are not going to want a network where speeds vary by local conditions, and from customer to customer. Wireless speeds in the field using millimeter wave spectrum are never going to be as consistently reliable and predictable as a fiber-based technology.

Summary. It’s far too early to understand the potential for 5G wireless loops. If the various issues can be clarified, I’m sure that numerous small ISPs will consider 5G. The big unknowns for now are the cost of the electronics and the amount of spectrum that will be available to small ISPs. But even after those two things are known it’s going to be a complex decision for a network owner. I don’t foresee any mad rush by smaller fiber overbuilders to embrace 5G.

Where Will 5G Find Fiber?

I was talking to one of my clients about 5G. This particular client is a fiber-overbuilder and they verified something I’ve suspected – they don’t plan to ever make any of their fiber available for a 5G provider wanting to deploy 5G small cell sites. They reason that 5G point-to-point radios, like Verizon is now launching, would compete directly with their retail broadband products and they can’t think of a scenario where they would assist a competitor to poach their own retail customers.

This is a break with the past because this client today provides fiber to a number of the big cellular towers and hopes to continue those sales. These are good revenue and help to offset the cost of building fiber to the towers. This leads me to ask the title question of this blog – where are the 5G providers going to find the needed fiber? A lot of the rosy predictions I’ve read for widespread 5G deployment assume that 5G providers will be able to take advantage of the fiber that’s already been deployed by others, and I’m not so sure that’s true.

I have no doubt that big backhaul fiber providers like Level 3 or Zayo will sell 5G connectivity where they have the capacity. However, much of their fiber network is not strategically located for 5G. First, 5G networks are going to need to get to numerous poles, and that requires fiber with existing access point. Much of the fiber built by companies like Level 3 was built to get to specific buildings or big cellular towers that anticipate the need for other access points. These fiber companies are also leery about tapping into fibers feed their largest customers, who often pay extra for guaranteed service. A lot of their fiber is underground and not easy to get to the needed pole connections.

Of more relevance is that these carriers are not going to own a lot of fiber that goes deep into neighborhoods where the 5G providers want to deploy. Most of the fiber built deep into residential neighborhoods has been built by fiber-to-the-premise overbuilders or cable companies. These companies use their fiber to sell retail broadband to residents and businesses. Fiber overbuilders, from Google Fiber down to the smallest municipal fiber network are not likely to sell fiber to the pole in neighborhoods where they are already a retail ISP.

The cable companies are not going to make their fiber available for 5G – they’ve made it clear that their future path lies in the DOCSIS 3.1 upgrades, including upgrading beyond gigabit speeds as needed. All of the major cable companies have said that have the ultimate end-game of fiber-to-the-premise. They’ve all cited 5G as one of the reasons they are increasing speeds and are not likely to sell access to a major competitor.

AT&T is the only other carriers with an extensive fiber network that goes deep into many neighborhoods. However, AT&T has been building FTTP connections in neighborhoods where they have fiber. For now, they don’t intend to mimic Verizon and are going to stick with FTTP rather than 5G. It would be tactically smart for AT&T to refuse to sell 5G connections to others. But AT&T is the hardest company in the industry to predict because they wear so many hats, and their retail fiber ISP business is in a different business silo than their wholesale fiber connection business – so who knows what they will do.

I don’t see a glut of existing fiber sitting waiting to sell to 5G providers. That seems to be the major hurdle for the rapid 5G deployment that the FCC, the White House and the cellular carriers have all been loudly touting. How many 5G companies are going to want to make the gigantic needed investment in fiber to get deep into neighborhoods?

I think the folks in Washington DC have gotten a false sense of the potential for 5G by seeing what Verizon is doing. But Verizon is taking advantage of the many billions of dollars of fiber they have already built over the years, and their 5G network is going to follow that fiber footprint. There are not many other companies with a glut of fiber that can be leveraged it in the same manner as Verizon.

Verizon has already announced that they will be passing roughly 11 million homes with fiber. They can be that specific because they know what’s close to their existing fiber. I doubt that they are going to expand anywhere else, just like they didn’t expand FiOS where the construction costs weren’t low. If Verizon can’t afford to deploy 5G where they don’t already have fiber, then how can anybody else justify it? Deploying 5G is like deploying any new network – it is only going to make financial sense where deployment costs are reasonable – and for now that means where there is already easy access to fiber. I think the opportunities for rapid 5G deployment are a lot less than what policy-makers think.

Are Millimeter Wave Radios Safe?

Deep inside the filing of the recent docket at the FCC that resulted in eased access to poles for 5G providers were comments that warned about the unknown health impacts of millimeter wave radiation. A group of 225 scientists from 41 countries filed comments in Dockets No. 15-79 asking that the FCC be cautious in implementing millimeter wave radiation without further scientific research into the impacts of prolonged exposure of the radiation to humans. These scientists have all published peer-reviewed papers on the topic.

As scientists are wont to do, their wording sounds cautious, but in scientific language is a stern warning: “There is scientific evidence to cause concern among independent scientists, that this new infrastructure, on top of existing electrical and wireless infrastructures, will cause more harm to mankind and nature . . . The FCC needs to critically consider the potential impact of the 5th generation wireless infrastructure on the health and safety of the U.S. population before proceeding to deploy this infrastructure.”

I looked around the web to find some of the research that’s been done in this area in the past. A quick web search showed:

·         The biggest impact of millimeter wave radiation is on the skin and 90% of the transmitted power is absorbed by the dermis and epidermis layers of the skin – meaning concerns about skin cancer.

·          A 1994 study showed that low levels of millimeter radiation created lens opacity in rats, which is linked to cataracts.

·         A 1992 Russian study found that frequencies between 53-78 GHz caused overall stress in rats that manifested by an increase in arrhythmia and other changes to heart rates.

·         A 2002 Russian study found that exposure to low level 42 GHz radiation had a profound impact on the overall immune systems in rats.

·         A 2016 Armenian study observed that millimeter wave radiation created changes in the cells of bacteria. They postulated that the radiation could do the same to humans. This study concluded that changes to bacteria could change result in increasing drug resistant.

·         Another Armenian study showed that the impact to plants might be even greater than to animals.

·         Dr. Joel Moskowitz of UC Berkeley says that the impacts of all of these other studies might be understated since 5G uses pulsed frequencies. The studies were all done using constant frequency and Dr. Moskowitz has shown that pulsed frequencies magnify the impact of radiation on organisms.

One of the handful of current uses of millimeter wave radiation is in airport scanners, which use frequencies between 24 – 30 GHz. Numerous studies have shown that the likely exposure from these scanners is safe, but made the conclusion based upon the relative short burst of exposure. The issue that has scientists concerned about 5G is continuous transmission from poles in front of homes, and perhaps eventually building some of this frequency into cellphones.

Obviously, no study has yet shown a direct health impact from pole-mounted 5G transmitters since they are just now starting to see their first deployments. The scientific evidence of the dangers of the prolonged low-level radiation has a lot of people concerned. I’ve been contacted by several groups that are starting to alert their local officials of this danger (the inbox of a blogger can be really interesting). Nationwide several local politicians have jumped on the issue.

The question these local groups are asking is if there is any way to use the health concerns to try to block 5G deployment in their neighborhoods. It looks to me like the recent FCC order for allowing small cell sites on poles doesn’t contain much ambiguity – pole owners have a federal mandate to connect the 5G devices. However, that order is being challenged in court by numerous states and cities and I imagine that the health concerns are going to be one of the issues raised in those appeals – with the primary legal tactic challenging if the FCC has the jurisdiction to override cities on pole issues.

Interestingly, Verizon has announced a timeline that seems to be going full bore on installation of 5G transmitters. The industry is usually cautious about relying on any FCC order until it’s been vetted by the courts, but perhaps Verizon is only concentrating on 5G deployment in cities that have invited them to deploy, like Sacramento. It won’t be surprising to see cities ask for an injunction against deployment until the courts decide on the issues.

Deploying 5G – It’s no Panacea

This was published last week as an article on WRAL Techwire, a Raleigh TV station. 

If you read many articles about 5G, you’d think that we’re on the cusp having wireless broadband brought to most homes in America, providing homes with another option for broadband. This idea was recently bolstered by news that Verizon plans to offer 5G wireless broadband to as many as 11 million homes over the next few years.

However, Verizon has one huge advantage over the rest of the market in that they already own an extensive fiber network that reaches to cellular towers, large businesses, schools, large apartment complexes and high-rise buildings. Verizon plans on leveraging this existing network to bring wireless broadband to neighborhoods lucky enough to be near to their fiber. It’s unlikely that anybody else will copy the Verizon business plan – the other big telcos with large fiber networks, AT&T and CenturyLink, have made it clear that they are not pursuing 5G broadband to homes.

Verizon has a second benefit that few others share. As a huge cellular carrier, Verizon will benefit by relieving the pressure on their cellular networks in neighborhoods where they offer 5G. The bandwidth being demanded on cellular networks is the fastest growing sector of the industry with total bandwidth requirements doubling every 18 months. Verizon will save a lot of money by not having to bolster their cellular backbones in 5G neighborhoods.

So, what would it take for anybody else to provide the same 5G wireless technology as Verizon? The 5G technology relies on the placement of small transmitters on utility poles or street lights and the FCC just passed rules making it easier for a provider to get the needed connections. Each transmitter will be able to wirelessly transmit broadband to homes or businesses in the immediate area. Verizon press releases say the effective distance for delivering a signal is up to 2,000 feet, but most of the industry thinks the realistic distance is closer to 1,000 feet. That means that any given pole-transmitter will be able to ‘see’ anywhere from a handful up to a few dozen homes, depending upon what’s called line-of-sight. The 5G spectrum requires a relatively clear path between the transmitter and a dish placed on the home – and that means that 5G is best deployed on straight streets without curves, hills, dense tree cover or anything that decreases the number of homes within range of a transmitter.

The first-generation Verizon technology claims broadband speeds of around 300 Mbps, with the goal to eventually reach gigabit speeds. That level of bandwidth can only be delivered to the pole-mounted unit in two ways – with fiber or with a high-bandwidth wireless link. If wireless backhaul is used to bring broadband to the poles there can be no obstructions between the pole units and the wireless basestation – unlike many kinds of wireless transmission, high-bandwidth wireless backhaul can’t tolerate any obstructions in the transmission path. That requirement for pure line-of-sight will make wireless backhaul impractical in many neighborhoods.

Where wireless backhaul won’t work a 5G network will require fiber to each pole transmitter. The cost of building fiber to neighborhoods is the biggest barrier to widespread 5G deployment. It’s expensive to string fiber in residential neighborhoods. The cost of putting fiber on poles can be expensive if there are already a lot of other wires on the poles (from the electric, cable and telephone companies). In neighborhoods where other utilities are underground the cost of constructing fiber can be exorbitantly high.

To summarize, a 5G network need transmitters on poles that are close to homes and also needs fiber at or nearby to each pole transmitter to backhaul these signals. The technology is only going to make financial sense in a few circumstances. In the case of Verizon, the technology is reasonably affordable since the company will rely on already-existing fiber. An ISP without existing fiber is only going to deploy 5G where the cost of building fiber or wireless backhaul is reasonably affordable. This means neighborhoods without a lot of impediments like hills, curvy roads, heavy foliage or other impediments that would restrict the performance of the wireless network. This means not building in neighborhoods where the poles are short or don’t have enough room to add a new fiber. It means avoiding neighborhoods where the utilities are already buried. An ideal 5G neighborhood is also going to need significant housing density, with houses relatively close together without a lot of empty lots.

This technology is also not suited to downtown areas with high-rises; there are better wireless technologies for delivering a large data connection to a single building, such as the high bandwidth millimeter wave radios used by Webpass. 5G technology also is not going to make a lot of sense where the housing density is too low, such as suburbs with large lots. 5G broadband is definitely not a solution for rural areas where homes and farms are too far apart.

5G technology is not going to be a panacea that will bring broadband to most of America. Most neighborhoods are going to fail one of the needed parameters – by having poles without room for fiber, by having curvy roads where a transmitter can only reach a few homes, etc. It’s going to be as much of a challenge for an ISP to justify building 5G as it is to build fiber to each customer. Verizon claims their costs are a fraction of building fiber to homes, but that’s only because they are building from existing fiber. There are few other ISPs with large, underutilized fiber networks that will be able to copy the Verizon roadmap. With the current technology the cost of deploying 5G looks to be nearly identical to the cost of deploying fiber-to-the-home.

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.

The Millimeter Wave Auctions

The FCC will soon hold the auction for two bands of millimeter wave spectrum. The auction for the 28 GHz spectrum, referred to as Auction 101, will begin on November 14 and will offer 3,072 licenses in the 27.5 to 28.35 GHz band. The auction for 24 GHz, referred to as Auction 102, will follow at the end of Auction 101 and will offer 2,909 licenses in the 24.25 to 24.45 GHz and the 24.75 to 25.25 GHz bands.

This is the spectrum that will support 5G high-bandwidth products. The most unusual aspect of this auction is that the FCC is offering much wider channels than ever before, making the spectrum particularly useful for broadband deployment and also for the frequency slicing needed to serve multiple customers. The Auction 101 includes two blocks of 425 MHz and is being auctioned by County. Auction 102 will include seven blocks of 100 MHz and will be auctioned by Partial Economic Areas (PEA). PEAs divide the country into 416 zones, grouped by economic interest. They vary from the gigantic PEA that encompasses all of the New York City and the surrounding areas in Connecticut and New Jersey to PEAs that are almost entirely rural.

That means that every part of the country could see as many as seven different license holders, assuming that somebody pursues all of the spectrum. It’s likely, though, that there will be rural areas where nobody buys the spectrum. It will be interesting to look at the maps when the auctions are done.

This is the spectrum that can be used to support the fixed wireless broadband like Verizon is now deploying from poles. The spectrum has the capability of delivering big bandwidth, but for relatively short distances of 1,000 feet or more. The spectrum can also be used as a focused beam to deliver several gigabits of bandwidth for a mile to a single point, such as what Webpass is currently doing to serve downtown high-rise apartment buildings.

The industry consensus is that this spectrum will find limited use in rural areas for now since it’s hard, with existing technology, to deploy a 5G transmitter site that might only reach a few potential customers.

The FCC has released the names of the companies that will be bidding in the auction. As expected the big cellular companies are there and AT&T, Verizon and T-Mobile are bidding. Absent is Sprint, but the speculation is that they are relying on the merger with T-Mobile and have elected to sit out the auction.

The big telcos are also in the auctions with AT&T, Verizon, Frontier and Windstream all participating. Absent is CenturyLink, which further strengthens the belief that they are no longer pursuing residential broadband.

The only cable company of any size in the auction is Cox Communications. The other big companies like Comcast, Charter, Altice and many others are sitting out the auction. It doesn’t make sense for a cable company to deploy the spectrum where they are already the incumbent broadband provider. Wireless technology for end users would complete directly with their own networks. Since Cox is privately held it’s hard to know their plans, but one use of the spectrum would be to expand in the areas surrounding their current footprint or to move into new markets. It’s costly to expand their hybrid-fiber networks and 5G wireless might be a cheaper way to move into new markets.

There are some rural companies that are bidding for spectrum. It’s hard to know if the rural telcos and cooperatives on the list want to use the spectrum to enhance broadband in their own footprint or if they want to use the spectrum to expand into larger nearby markets. One of the most interesting companies taking part in both auctions is US Cellular. They are the fifth largest cellular company after the big four and serve mostly rural markets. They’ve already made public announcements about upgrading to the most current version of 4G LTE and it will be interesting to see how they use this spectrum.

The 5G Summit

There was recently a 5G Summit held at the White House to discuss how the administration could encourage the public sector to deploy 5G as quickly as possible. The purpose of the summit was summarized well by Larry Kudlow, the director of the National Economic Council who said the administration’s approach to the issue is ‘American first, 5G first”.

Kudlow went on to say that the administration wants to give the wireless industry whatever they need to deploy 5G quickly. The FCC recently took a big step in that direction by speeding up and cutting the costs for attaching 5G small cell sites to poles and other infrastructure in the right-of-way.

There are a few other ways that were mentioned about how the administration could foster 5G deployment. David Redl, the head of the NTIA called for the government to make the needed spectrum available for 5G. The FCC is in the process of having an auction for spectrum in the 25 GHz and 28 GHz bands. The FCC is also working towards finalizing rules for the 3.5 GHz and 3.7 GHz spectrum (the 3.5 GHz CBRS band will be the subject of tomorrow’s blog).

I hope that the fervor to promote 5G doesn’t result in giving all of the new spectrum to the big wireless carriers. One of the best things the FCC ever did was to set aside some blocks of spectrum for public use. This fueled the WiFi technology sector and most homes now have WiFi networks. The spectrum also powers the fixed wireless technology that is bringing better broadband to rural America. While 5G is important, the administration and the FCC need to set aside more public spectrum to allow for innovation and broadband deployment outside of the big ISP sector.

I found this summit to be intriguing because it’s the first time I recall the government so heavily touting a telecom technology before it was introduced into the marketplace. There was mention in the Summit that the US is in a race with China to deploy 5G, but I’ve never seen anybody explain how that might give China an advantage over the US. China is far behind the US in terms of landline broadband and it makes sense for them (and much of the rest of the world) to stress wireless technologies.

There certainly was no similar hoopla when Verizon first announced the widespread deployment of fiber – an important milestone in the industry. In fact, at the time the press and Wall Street said that Verizon was making a mistake. It’s interesting to see that Verizon is again the market leader and is the only company, perhaps aside from T-Mobile, that has announced any plans to deploy 5G broadband. It’s worth looking back in history to remember that no other big ISPs followed Verizon’s lead and for over a decade the only other fiber to residences was built by small telcos, municipalities and small overbuilders.

Even if the government makes it as easy as possible to deploy 5G, will other big ISPs follow Verizon into the business? For now, AT&T has clearly decided to pass on the technology and is instead investing in fiber to homes and businesses. The big cable companies have shown no interest in the technology. The cellular companies will upgrade mobile networks to 5G but that’s expected to happen incrementally over a decade and won’t be a transformational technology upgrade. 4G LTE is still expected to be the wireless workhorse for many years to come.

There was one negative issue mentioned at the Summit by Rep. Greg Walden of Oregon. While praising efforts to deploy 5G he also said that we needed to take steps to protect the supply chain for 5G. Currently the FCC has precluded the use of any federal funds to buy technology manufactured by Huawei. But a more pressing issue is the current tariffs on China that are inflating the cost of 5G electronics – something that will be a barrier to deployment if they remain in place for very long.

It’s likely that the Summit was nothing more than politicians climbing onto a popular bandwagon. There has been enough hype about 5G that much of the public views it as a cutting-edge technology that will somehow transform broadband. We’re going to have to watch the Verizon deployment for a while, though, to see if that is true.

The administration has it within their power to create more benefits for companies willing to invest in 5G. However, helping huge companies like Verizon, which doesn’t need the help, is not likely going to bring 5G to more homes. And federal money won’t transform 5G into a technology that can benefit rural America, since 5G requires a robust fiber network. I just hope this doesn’t signal more giveaways to the giant ISPs – but if the FCC’s small cell order is any indicator, that might be all it means.