2023 in telecoms: a wild year ahead
Telecoms consultant John Strand looks ahead to 2023 with the issues of China, 5G spectrum and OpenRAN
“2023 will be a wild, uncomfortable year: there is war in Europe, a global energy crisis, and inflation which has made almost everything more expensive and disrupted many financial markets,” says John Strand of Strand Consult in Denmark.
“China’s menace in Taiwan puts the world’s leaders on edge and imperils the supply of 90 percent of the world’s semiconductor manufacturing. Board leaders and directors should ask themselves what is their plan if case of China shutting down supply lines tomorrow.”
“This uneasy geopolitical reality affects the mobile telecom industry. Rising interest rates depress returns on capital, and investors willingness to invest in infrastructure. Relationships with authoritarian governments pose reputational risks.”
Spectrum allocation for 5G services will be an increasingly fraught issue, he says.
“While we can fault the Chinese government for its authoritarian ways, it deserves credit for allocating the right radio spectrum frequencies to its best technological use in the case of 5G,” he said. “Simply put, if you want to do 5G, you need mid-band spectrum in the 2.6-6 GHz range, the frequencies which maximize data transmission across distance. This is nothing more than basic physics and technocratic management, but US policymakers are failing on this front.”
He points to the three month extension of current spectrum licsing at the FCC in the US which expire in March 2023. “It’s hard to contemplate a modern nation being so irresponsible. We are talking about the ability of the US government to raise hundreds of billions of dollars being put on ice because the Defense Department can’t modernize,” he said. “Instead of upgrading to the most spectrally-efficient tools on the appropriate frequency, the Pentagon is entrenched with bloated legacy systems on the mid-band beachfront with 12 times the spectrum that’s available for 5G.”
To compete with China in the future, the US will need a more aggressive approach to making mid-band spectrum available for exclusive licensed use. He points to China unveiling a high-power, low-frequency P-band (216-450 MHz) radar that can detect and track low-orbiting satellites and functions around the clock in all weather conditions.
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Strand Consult is excited about 5G and the mobile industry’s continuous improvement of its networks. 5G for home broadband, also known as Fixed Wireless Access (FWA), is a game changer and can substitute for wireline broadband in many cases. While the tower is connected to a larger network with wires and/or radio links, no wires are required to the customer’s premises, only a wireless receiving device. FWA is soon expected to account for 10 percent of all US broadband connections.
What’s beyond home broadband is the bigger question for 5G. Many want to see 5G transform industry and bring a new era of advanced healthcare, transportation, and manufacturing. Some leading manufacturers already integrate 5G into their production like John Deere, Bosch, ASML and some carmakers. Even more exciting is the manufacturing renaissance afoot in the US led by small and mid-cap companies earning returns that rival the online tech/software sector. They are not widely known or discussed, but there are some 4000 of them, driving about $200b in revenue.
Their startup costs are relatively low, and they take advantage of 5G, and 5G enabled AI, robotics, automation, and cloud computing.
The big question is whether operators are positioned to capture the value in applications or services, or whether over the top (OTT) third parties be the winners. If 4G is any guide, the content and application providers took the prize, says Strand.
However he is pessimistic about Open RAN. “We said that advocates like to talk about it, but that mobile operators don’t buy it. In 2022 Parallel Wireless threw in the towel, and most experts agreed that OpenRAN is not ready for prime time,” he said.
Following the lead of Ofcom in the UK which is proposing to modernize its rules, Strand Consult predicts that European and Latin American telecom regulators will issue a call for evidence on the performance of net neutrality regulation. Invariably they will find that the policy is failing consumers, innovators, and investors. These countries want to move forward with 5G smart networks, but they have policy designed to maintain a dumb pipe. This can’t be resolved, even with the proffered “5G slicing” techniques, he says.
Green energy consumption is a big deal in broadband. Many mobile telecom operators have formalized in Environmental, Social and Governance (ESG) goals into key performance indicators. Yet the corporate maximization of ESG by some companies has led to “greenwashing”, deceptive marketing to create the illusion of goodness and to hide malpractice perpetuated by ESG practices and regulation, says Strand.
The Future-Fit Business Benchmark has emerged for clear, actionable guidance to perform without negatively impacting people, society and the planet. European solar power producer Better Energy uses Future Fit in its provision of Purchasing Power Agreements for certified green energy to mobile telecom operators and content/application companies, and its performance model is likely to be adopted even more widely, he says.
Another key learning is that operating parallel infrastructures with small cells is not sustainable. The business case for small cell is in network sharing. He points to mobile operators in the UK announcing trials of a shared small cell network which hosts all four mobile operators.