Apple recently announced the iPhone 16, which is a great device. The new phone has very nice design improvements, fantastic camera enhancements and Artificial Intelligence elements which Apple has cleverly termed “Apple Intelligence”. But what I didn’t hear in the announcements is how great 5G is and how it has enhanced the iPhone 16 user experience. It’s just not something that Apple or any other phone manufacturer really talks about. Why not?
Because it isn’t there.
Where is our true 5G?
In general, users of 5G networks do achieve somewhat faster performance than on 4G networks, but that really depends on coverage and how cell sites are connected to the core. The uplift is measurable but it’s no game changer; where there are multiple high-speed fiber connections to the core and good coverage, performance will be better whether it’s 4G or 5G. Users don’t see much of an improvement on 5G because the bandwidth (i.e. how much spectrum they can use) in most 4G and 5G markets will be the same.
In the US, most commercial markets still have between 10 MHz and 20 MHz bandwidth. 5G was designed to use much more than that – at least 80-100 MHz. In fact, the more the better for 5G, so if you have 100 MHz of useable spectrum, then performance will be significantly better than if you have 10 MHz or 20 MHz.
US carriers have not yet fully deployed to higher bandwidths for licensing and business-case reasons.
The so-called C-band is the overall set of licensable spectrum between 3.7 GHz and 4.2 GHz used for 5G, which is carved up between carriers. 5G is also best used in frequencies above 28 GHz, commonly referred to as millimeter spectrum (or mmWave).
While carriers acquired C-band licenses in 2020, the incumbents (satellite companies) have no real incentive to move. If carriers want satellite companies to move out of this spectrum quickly, they have to pay, despite having already paid billions to the FCC for these licenses. US carriers have therefore only steadily (and slowly) moved toward the goal of deploying 5G in C-band markets which have between 80 MHz and 100 MHz of useable spectrum bandwidth. The movement toward full deployment of 5G markets using C-band licenses will likely not fully occur until 2026, which means it will be a couple more generations of iPhones and Galaxies before they start marketing 5G as well as device improvements.
But what about millimeter wave markets? Well, millimeter waves are peculiar and use beam-forming technology which is ideally suited for this spectrum. The problem is that you essentially need line-of-sight physical characteristics to use mmWave cell sites.
If you have a warehouse with a strategically located 5G cell site (called a gNodeB), you can use this spectrum provided by a carrier with typically between 300 MHz and 600 MHz of bandwidth. That’s about three to six times what you would need to take advantage of 5G. If you use a mmWave gNodeB with about 600 MHz of bandwidth, you will most likely achieve about 1 Gigabits per second (1 Gbps) speed on your device. Now that’s cooking, and really would take advantage of 5G – but it’s not a common use case for consumers. Carriers are not deploying 5G cell sites for consumers using mmWave frequencies because of cost, benefits, and physics.
Advanced 5G applications: Not quite yet
What about AR/VR applications? Why aren’t Apple and others marketing AR/VR headsets and exploiting this emerging 5G market? Because commercial networks are not ready for them. An AR/VR application would consume significant bandwidth in current markets and if you have several users in a 5G cell site, the performance would be degraded for everyone. In essence everyone would complain and cancel their service because of a few AR/VR users.
So why don’t carriers implement Network Slicing to offer what would essentially be a dedicated virtual network for AR/VR applications and isolate them from other users?
The answer is somewhat complex, but the bottom line is that there is no compelling business case to do this. Carriers evaluate their business case for implementing expensive features such as Network Slicing on a case-by-case basis. Software, capabilities, and servers to enable Network Slicing are separate and require significant capital investment. If a carrier is deciding whether to deploy additional cell sites or implement Network Slicing, then the answer is simple – deploy more cell sites until someone is willing to pay for Network Slicing. The problem is it is not clear who would do this. Would Apple pay for it? Probably not. Would lots of consumers be willing to pay several hundred dollars a month for an AR/VR subscription to allow a carrier to spend the billions necessary to enhance the network? There’s just not a clear business case here.
That said, eventually, as technology evolves and become cheaper, carriers will be begin deploying advanced 5G capabilities, greater spectrum capacity, and advanced applications like AR/VR. But this will take time and capital that is not readily available today to support emerging but unproven business cases.
The future of 5G is fiber
So, what are carriers’ strategies in the shorter term to hold on to consumers and solidify their position?
In general, carrier plans are focused on the consumer interaction between fiber and mobile devices. If mobile carriers cannot implement a set of whizbang solutions to wow the market, then the strategy is to retain (or even gain) consumers with compelling offers. And the best way to do this is to deploy fiber to the home so carriers can link mobility plans to fiber plans.
For example, if you are getting high-speed internet through your fiber carrier at your home and that carrier makes you a super deal for your mobile network family plan, you will probably take it. That is why the major US carriers are deploying fiber with a frenzy because they know that mobile consumers will be poached by whoever gets there first. Again, this will take at least three to five years to become reality, but make no mistake: the major carriers are headed that way with their own capital deployments or partnerships. As for existing fiber companies – they will have to make a deal with a mobile carrier or will likely be acquired if they are a minor player.
So here we are in 2024, four years since the first 5G networks were deployed with marginal performance gains but impressive improvements in devices and a strategy to link fiber to future mobile sales.
The question is who is likely to best monetize this market. Probably the best indicator of future market behavior is the past.
Mobile carriers have provided the infrastructure over the last three decades but have not been able to fully monetize advancements in technology. Who has? Netflix, Facebook, Amazon – the list is long. Why? Because mobile carriers are shackled with regulation and a culture that prevents them from moving fast and experimenting.
Even when they have acquired media companies, they have failed miserably in their attempts to integrate media offers into 5G networks. If the past is an indication, mobile carriers will continue to derive revenue using a 30-year-old business model of users paying for subscriptions while innovative companies will take advantage of high-speed 5G, 5G+ and future 6G networks.
The future for consumers is bright because there is a market for advanced network services. However, monetization is questionable for mobile carriers if they continue to rely on old subscription-based models. Somebody else will take advantage of the huge forthcoming enhancements in speed and capabilities. Whoever does this will make a boatload of money.
Art Maria
Art Maria is Managing Director, XGC Advanced XG Consulting Solutions. He has 28 years’ experience at the vanguard of wireless technological innovation and strategic leadership, reflected in 93 patents, four master’s degrees, and as a graduate of executive education programs at Harvard, Cornell, Columbia, Wharton, Yale, SMU and the Stanford GSB LEAD program.
