Diversity of Operator
5. MANUFACTURING
3.6.2 FWA drivers
5G Value Creation and Capture
FIGURE 3.6.3
FWA AS AN INCENTIVE TO DEEPEN FIBRE USAGE IN 5G (SOURCE: SOLON CONSULTING)
Mix of fibre and legacy backhaul Cell site TCO (%)
Rich fibre backhaul Cell site TCO (%) FWA solutions as backhaul for
Small Cells
Core Network / Internet 4
Roof-mounted or semi fixed equipment in residential
premises 1
Roof-mounted or semi fixed equipment in business
premises 2
FWA units as backup connectivity
for enterprise 3 5G Base Station
or Small Cell
FWA Links
FWA
Fibre Links
Light Pole Street furniture
(e.g. bus stop) Light Pole FWA Links
HOME CENTRAL OFFICE
5G 4G AND PREVIOUS
Small cells Macro cells
Radius: 200 – 1,000m
10–30% of total cost 60–80% of total cost
Radius: 500 – 4,000+m
CABINET
FTTx
Fibre may terminate in the middle depending on the type of FTTx
Fibre Fibre
47. http://research.rewheel.fi/downloads/Capacity_utilization_fixed_mobile_broadband_substitution_potential_2017_PUBLIC.pdf THE 5G GUIDE
125
3.6.2.3 ‘Strategic competition’ with fixed broadband Cost and strategic leverage will inform many FWA launches
There is an ongoing industry debate on the merits of using FWA to compete with existing fixed broadband propositions. This will likely play out in at least two ways.
First, in a greenfield context, rolling out FWA is significantly cheaper than FTTx. The per subscriber capex estimates are $500-$1000 for FTTx versus $100-
$400 for FWA, so it is attractive to opt for 5G FWA if it can provide a customer experience that is close to FTTx. Operators who are driven by this cost analysis will justify FWA based on its lower total cost of ownership.
Second, operators with small or no fixed broadband market share could use FWA to boost their product portfolio and strengthen their competitive position.
This may be more so in markets where fixed-mostly companies (e.g. cable companies) are seeking to enter the mobile market in the 5G era. For this, the strategic benefits of launching FWA may not be immediately evident and may be indirect.
3.6.2.4 Competing with new FWA entrants
Operators should take the lead to chart the roadmap for FWA hotspots
Past experience suggests that operators may not be alone in the race to win valuable 5G spectrum for FWA.
A number of new entrants have competed for, and won, spectrum for 3G and 4G FWA services in the past.
For example, UK Broadband won around 120MHz of 3.5GHz spectrum in the 2013 UK 4G auctions, while new entrants, such as Smile, Surfline and Afrimax, have been assigned significant amounts of sub-1GHz spectrum in markets across Africa, sometimes ahead of established service providers.
Most of the new entrants have struggled to scale up:
those in developed regions have been constrained by well entrenched fixed broadband infrastructure and weak performance of 3G and 4G FWA, while a lack of resources and capability for large scale deployment is the primary limitation for those in developing regions.
Nonetheless, their activities impact operators’ ability to deploy 4G networks cost-effectively and, in many cases across Africa, distort value in the 4G market with deflationary pricing.
Operators must not risk a repeat of the 4G spectrum fragmentation, and its consequences, in the 5G era. To capitalise on the 5G FWA opportunity and avoid value erosion, operators should take the lead in proactively defining the 5G roadmap for their market, as opposed to taking a reactionary approach to potentially value- eroding events.
5G Value Creation and Capture
126
99% connections
360 MHz 110 MHz
<1% connections
MTN Glo Airtel 9mobile ntel Bitflux Intercellular Smile
700 800 900 1800 2100 2300 2600
Extending the core product
Extending into non-core products DIFFERENTIATED CONNECTIVITY
(incl. Network Slicing and QoS Differentiation)
BASIC CONNECTIVITY (incl. Faux Consumers and basic IoT)
MANAGED SOLUTIONS (incl. managed services)
BEYOND CONNECTIVITY (incl. software and security)
0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
iPhone ASP GDP/capita
(constant US$) Unique subscriber ARPU CAGR (2007–2017)3.6%
CAGR (2007–2017)1.0%
-6.0%
CAGR (2007–2017)
60
20
20
20 30 10
20 30 10
30
30 20 20
10 30
10 20 30
10 20 20
FIGURE 3.6.4
SPECTRUM FOR NEW FWA ENTRANTS IN NIGERIA (2018) - NEARLY A QUARTER OF ASSIGNED SPECTRUM IS HELD BY OPERATORS WITH A COMBINED MARKET SHARE BELOW 1% (SOURCE: GSMA INTELLIGENCE)
3.6.2.5 Affordability of FWA devices
Adoption of 3GPP’s 5G specifications for FWA enables production of FWA devices to scale
The success of mobile communications, especially GSM (Global System for Mobile communications), stems from the fact that it is globally interoperable and enjoys global economies of scale. Unlike other technologies, GSM enabled devices and network equipment to be manufactured at global scale, reducing the cost of adoption for both operators and subscribers.
This also applies for FWA using 5G. If FWA customer premises equipment (CPEs) is based on 3GPP’s 5G specification, the operators will be able to enjoy global economies of scale in production of CPEs. Furthermore,
products based on 3GPP specifications have been developed by a robust ecosystem consisting of numerous vendors. 3GPP specifications also are peer- reviewed by number of experts, ensuring that mistakes and errors are minimized. This means that the operator will not only benefit from the potential cost reduction, but also have numerous alternatives in procuring its CPEs. Operators will then be in a position to adopt more competitive pricing for end users.
Device rental models can also be beneficial for both customers and operators. For example, FWA customers can benefit if the CPE is rented as it would be easier for operators to upgrade the CPE while potential upsell of services can also be possible with the upgrade.
5G Value Creation and Capture THE 5G GUIDE
127 12 noon
Illustrative only
Time of day Network Capacity UsageAverage selling price in US$
12 noon Average demand
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
336.8 348.6 332.5
305.8 291.1 276.2 261.3 245.1 229.4 214.7
0 30 40 50 60 70 80 90 100
0 5
10 15
20 25
30 35
40 45
50
Household Computer Penetration
Fixed Broadband Penetration Red Ocean:
Fierce Competition
Blue Ocean:
Existing pent-up demand
Desert:
Isolated or 'Oasis' of opportunities
Micronesia (Federated States Mongolia Viet Nam
Kyrgyzstan El Salvador
Honduras GuatemalaLibya Sri LankaSouth AfricaSamoa
Vanuatu Bhutan Iraq
Indonesia Marshall IslandsDjiboutNamibia
Lao People’s Democratc Nepal ZimbabweCameroonCuba Equatorial Guinea
Ghana
India KenyaMyanmar Pakistan São Tomé and Principe
Senegal Sudan Swaziland
Tajikistan Timor - Leste Turkmenistan Côte d’Ivoire BangladeshRepublic
Solomon Islands Nicaragua
Africa Angola Cambodia
ComorosGambiaNigeriaHait UgandaZambia10 Central African RepublicPapua New GuineaCongo Republic
GuineaMali Tanzania AfghanistanBurkina FasoBenin
Burundi Congo DRChad Ethiopia
Guinea - Bissau Kiribat Liberia MadagascarMalawi Mauritania Mozambique
Niger Rwanda Sierra Leone
Somalia South Sudan Togo Yemen Botswana Philippines Ecuador
Romania Lithuania
World Americas
Arab States
Asia & Pacific CIS
Europe
Albania Algeria Antgua and Barbuda Argentna
Armenia Australia
Austria
Azerbaijan Bahamas
Bahrain
Barbados Belarus Belgium
Belize Bolivia Bosnia and HerzegovinaBrazil
Brunei Darussalam
Bulgaria Canada
Cape Verde Chile
Colombia Costa Rica Croata
Cyprus
Czech Republic Denmark
Dominica
Dominican Republic Egypt Estonia
Fiji Finland
France
Gabon Georgia
Germany
Greece
Grenada
Guyana Hungary
Iceland
Iran Ireland
Israel
Italy
Jamaica Japan
Jordan Kazakhstan
Korea, South
Kuwait
Latvia Lebanon Luxembourg
MalaysiaMaldives Malta
Mauritus
Mexico
of) Moldova
Monaco
Montenegro
Morocco
Nauru
Netherlands New Zealand
Norway
Oman
Panama
Paraguay Peru Poland
Portugal
Qatar
Russia
Saint Lucia
Saudi Arabia Serbia
Seychelles Singapore
Slovakia Slovenia Spain
Suriname Sweden
Switzerland
Syria TFYR Macedonia
Thailand
Tonga Trinidad and Tobago
Tunisia Turkey
Tuvalu Ukraine United Arab Emirates
United Kingdom United States
Uruguay
UzbekistanVenezuela Hong Kong
Palestne
Micronesia (Federated States Mongolia Viet Nam
Kyrgyzstan El Salvador
Honduras GuatemalaLibya Sri Lanka
Samoa South Africa Vanuatu Bhutan Iraq
Indonesia Marshall IslandsDjiboutNamibia
Lao People’s Democratc Nepal ZimbabweCameroonCuba Equatorial Guinea
Ghana India KenyaPakistanMyanmar São Tomé and Principe
Senegal Sudan Swaziland
Tajikistan Timor - Leste Turkmenistan Côte d’Ivoire BangladeshRepublic
Solomon Islands Nicaragua
Africa Angola Cambodia
ComorosGambiaNigeriaHait UgandaZambia10 Central African RepublicTanzania AfghanistanPapua New GuineaCongo RepublicGuineaMaliBurkina FasoBenin
Burundi Congo DRChad Ethiopia
Guinea - Bissau Kiribat Liberia MadagascarMalawi Mauritania Mozambique
Niger Rwanda Sierra Leone
Somalia South Sudan Togo Yemen Botswana Philippines Ecuador
Romania Lithuania
World Americas
Arab States
Asia & Pacific CIS
Europe
Albania Algeria Antgua and Barbuda Argentna
Armenia Australia
Austria
Azerbaijan Bahamas
Bahrain
Barbados Belarus Belgium
Belize Bolivia Bosnia and HerzegovinaBrazil
Brunei Darussalam
Bulgaria Canada
Cape Verde Chile
Colombia Costa Rica Croata
Cyprus
Czech Republic Denmark
Dominica
Dominican Republic Egypt Estonia
Fiji Finland
France
Gabon Georgia
Germany
Greece
Grenada
Guyana Hungary
Iceland
Iran Ireland
Israel
Italy
Jamaica Japan
Jordan Kazakhstan
Korea, South
Kuwait
Latvia Lebanon Luxembourg
Malaysia Maldives Malta
Mauritus
Mexico
of) Moldova
Monaco
Montenegro
Morocco
Nauru
Netherlands New Zealand
Norway
Oman
Panama
Paraguay Peru Poland
Portugal
Qatar
Russia
Saint Lucia
Saudi Arabia Serbia
Seychelles Singapore
Slovakia Slovenia Spain
Suriname Sweden
Switzerland
Syria TFYR Macedonia
Thailand
Tonga Trinidad and Tobago
Tunisia Turkey
Tuvalu Ukraine United Arab Emirates
United Kingdom United States
Uruguay
UzbekistanVenezuela Hong Kong
Palestne
There are several metrics that can be used to map the relative mass market FWA opportunity in different countries. On the supply side, home density vs.
population density provides a comparison on how costly it can be to provide mass market FWA coverage.
Spectrum choice (mmWave vs. 3.5GHz) determines the size of the cells for FWA coverage and the resultant cost of covering a given area.
But the demand side provides more helpful metrics to assess the addressable FWA market opportunity. As a broadband proposition to stationary and nomadic uses, FWA will be ‘competing’ with: 1. non-consumption of home broadband; and 2. alternative home broadband services.
For (1), the proportion of households with a computer is a good indicator of an appetite for home broadband.
Customers who can neither afford computers nor decide against having a computer are unlikely to be willing FWA customers. For (2), in households with computers, the level of fixed broadband penetration in each country will show the level of pent-up, addressable demand for FWA.
Figure 3.6.5 charts 160 countries on household computer penetration and fixed broadband
penetration, and shows that for FWA, most markets can be categorised as either Red Ocean, Blue Ocean or Desert. However, regardless of which category a country is in, there will always be ‘oasis’ of opportunities for FWA.