PRICING AND POLICY IN A 5G WORLD

By Stefan Zehle

Spectrum has always been the essential ingredient in a mobile business. The evolution of mobile networks from voice and narrow band data to mobile broadband in the form of 4G sharpened the focus on spectrum. What matters in a mobile broadband market is to deliver the best mobile broadband experience, which is a combination of geographic coverage, probability of coverage (notably indoor coverage), speed and consistency of speed. In a mobile broadband world, the term coverage is to be understood as ‘application coverage’. Put simply, what people want to do has to work wherever and whenever.
The evolution from 4G to 5G accentuates the focus on the user experience and application coverage. Enhanced mobile broadband (eMBB) is one of the key requirements for 5G, as are massive machine type communications (mMTC) and ultra-reliable and low latency communication (uRLLC). And three use cases drive overall demand for spectrum:
More sub-1 GHz spectrum is needed for wide area coverage – the original GSM 850/900 MHz band, depending on ITU region, as well as the first digital dividend in the 700/800 MHz band. The second digital dividend has more spectrum at 600/700 MHz.
Spectrum between 1 GHz and 5 GHz is required to provide capacity in high traffic density areas. Existing assignments include the familiar 1800/1900 MHz, 2100 MHz, and 2500/2600 MHz bands. Depending on the region, new bands include 1500 MHz, 2300 MHz and the C-band, i.e. 3400 to 3800 MHz which, if available for mobile, provides a massive 400 MHz of spectrum.
Above 5 GHz, several GHz of spectrum have been identified for 5G. Nominated bands for ITU WRC-19 studies fall in the range 24.25 to 86 GHz. The spectrum is also referred to as millimetre waves. The amount of spectrum to be allocated to mobile is measured in multiples of GHz rather than multiples of tens of MHz. For example, in 24 GHz the aim is to allocate 24.25 to 27.5 GHz to mobile, a massive 3 GHz, i.e. 3,000 MHz.
In summary, depending on the market up to the year 2020, the amount of spectrum assigned to mobile operators will increase by a factor of 1.7 to 2 times and beyond 2020 by a further 8 to 10 times (see figure overleaf). But current thinking about spectrum pricing and assignment needs to be revised to solve the economic equation to allow 5G to happen.