Valuing 5G Spectrum - A Challenging Task for Operators and Regulators
Many will remember the hype around 3G in promising to revolutionise data communication over mobile networks and the subsequent high spectrum auction prices. The disappointment followed shortly after the introduction of 3G mobile broadband from around 2001. It was not until 2007 and the launch of smart phones that mobile networks started feeling the strain due to consumers beginning to appreciate the benefits of 3G. Nonetheless, 3G failed to deliver its initial promise in terms of anticipated data performance. What 3G failed to deliver was soon forgotten by the introduction of 4G, arguably a revolution in technology and mobile network data performance whilst it was an evolution in consumer behaviour.
Fast forwarding to 2018, the mobile industry must now contend with a new wave of hype as 5G is picking up momentum. Disregarding 5G deployment economic challenges (See “May 2018 Digest”) that mobile operators will have to face, there is a mammoth challenge of having to decide how much to pay for 5G spectrum due to uncertainty over standards, devices availability and their diversity, use cases, business models, and network architecture and performance. This issue is far more compounded for regulators in developing spectrum supply roadmap, rationalising 5G spectrum in conjunction with other bands, and estimating its value.
In this digest, we explore some of the main challenges that operators and regulators will face in valuing spectrum bands earmarked for 5G.
5G Traffic Classes
There are three classes of traffic typically associated with 5G: enhanced Mobile Broadband (eMBB), massive Machine Type Communication (mMTC) and ultra Reliable Low Latency Communication (uRLLC), as shown below together with spectrum bands mostly associated with them. The diagram is also a high level representation of what 5G is anticipated to create in terms of revenue streams and market opportunities highlighting it is no longer a simple voice and data bundle.