Wireless carriers are competing fiercely to deploy 5G networks, and that could mean significant opportunity for wireline carriers as well.
“Wireless carriers will need small cells and fiber,” said Iain Gillott, president and founder of iGR, a market research consultancy focused on wireless, in an interview.
Fiber isn’t the only option for providing backhaul to small cells, but Gillott sees it as the most future-proof option. “Some would say you can do it with mesh networking and microwave, and you can, but it’s not going to last you as well as fiber,” he said.
Providing fiber backhaul connectivity to small cells will be a significant opportunity for wireline providers, said Gillott, who pointed to Zayo and Uniti Group as two companies that already are doing a lot of business in this area. There also may be opportunities for wireline service providers to offer edge computing that will be critical to the low-latency applications that 5G is expected to support, he said.
5G Opportunity for Wireline Carriers
As Gillott noted, wireless-only companies such as Sprint and T-Mobile will have to use other network operators to provide small cell backhaul. For companies such as AT&T and Verizon that have a wireline and wireless business, it will be a mixed bag, according to Gillott.
“Verizon is putting in all of its own stuff,” he said – including areas in and outside of its traditional local service territory.
AT&T, however, is more likely to use its own fiber within its local service territory, but to look for another carrier to provide connectivity outside its home turf.
The need for small cells is driven by several factors, Gillott explained. Carriers for several years have been deploying small cells supporting today’s 4G LTE networks to boost network capacity in high-traffic areas. Small cells have less range in comparison with traditional macrocells, thereby supporting denser cellsite infrastructure that enables spectrum to support more users.
Operators that already have deployed small cells to boost LTE capacity will be able to do a software upgrade to enable those cellsites to support 5G, Gillott explained. In addition, he expects to see new small cells deployed with the goal of boosting capacity.
How dense a carrier’s cellsite infrastructure will have to be also depends on the spectrum band that the carrier is using. All carriers are expected to use a mixture of frequency bands, including low-frequency, also known as low-band spectrum, along with mid-band and high-band spectrum. But high-band spectrum in the millimeter wave band is particularly appealing because wide swaths of this spectrum are currently unoccupied and available, or in the process of being made available, to support commercial wireless services. And wider spectrum bands can support higher-speed services.
The downside of using high-band spectrum is that the range it can support is less than for lower frequency bands – and that means 5G millimeter wave deployments also will drive the need for dense small cell infrastructure.
A third factor driving the need for more fiber to support 5G relates to a unique capability of 5G networks – lower latency in comparison with traditional wireless networks. 5G standards call for latency below 10 milliseconds, Gillott noted. The goal is to support low-latency applications such as virtual and augmented reality, autonomous vehicles and remote surgery. But applications such as those also will need local processing, also known as edge computing.
Like many of today’s wireless applications, low-latency 5G applications will rely on cloud-based computing resources. But unlike with today’s applications, carriers won’t be able to deliver those resources from a remote data center.
As Gillott explained, an application delivered from a remote data center via LTE might have a round trip latency of 70 milliseconds. But “if I take my application out of a central data center and move the application to put it by the base station, I can get latency down to 20 milliseconds or so,” he explained. “With 5G that goes to 10 milliseconds because of the radio protocol.”
Gillott envisions that “massive gaming over 5G,” for example, could be enabled through edge computing. And he sees edge computing as a possible opportunity for fiber network operators, as well as for tower operators and possibly others.
“If you’re a fiber company, maybe you need to think ‘What else can I do at that location? Does it make sense to have some edge compute there?”
How Big is the Opportunity?
Some industry observers have questioned how extensively small cells will be deployed outside of major metro markets.
Gillott’s take: “Will we see small cells in Tier 2 and Tier 3 markets? The answer is ‘yeah.’”
He also sees small cells being deployed in specific areas within rural markets such as at local stadiums or to support major businesses located in rural markets.
Defining the network edge opportunity is challenging because it depends on a range of factors, including the amount of data being exchanged and how critical it is for the application to perform perfectly. Computing resources supporting remote surgery, for example, “would have to be pretty local,” he said.