The U.S. Federal Communications Commission is in a hurry to commercialize lots of 5G millimeter wave spectrum, and will finalize rules for an auction of 28 GHz and 24 GHz spectrum in August 2018, with bidding commencing in November 2018.
Then, in 2019, there is another auction of 37 GHz, 39 GHz, and 47 GHz bands.
There are huge implications. Spectrum scarcity might be replaced by spectrum abundance. Mobile spectrum could increase from an order of magnitude (10 times) to three orders of magnitude (1,000 times), based on the use of multiple technologies expected to be used in the 5G and millimeter networks.
All that capacity will have key business repercussions, affecting the cost of capacity, the use cases that capacity can support, the revenue the use cases might represent, a shift of revenue from one platform to others, and potentially enablement of even more competition in the access business.
Looking first at the cost of capacity (spectrum to run networks), the new millimeter spectrum represents more “real estate” than the combined total of all mobile and Wi-Fi bandwidth, dwarfing present allocations. That should lead to lower spectrum costs.
At the same time, huge amounts of additional spectrum will be made available on an unlicensed or shared basis, developments that also should lead to lower costs for wireless access capacity.
Bigger changes are possible because wireless use cases will expand. Up to this point, mobile and wireless networks have not been effective product substitutes for fixed networks. In the coming era, all that potentially will change, with the real possibility that wireless services will be feature, value and cost substitutes for fixed networks.
At the same time, new competitors might be encouraged to enter the access business, as the cost of building and operating access networks should be lower than in the past. At the very least, lots of useful spectrum will be available on an unlicensed basis, with new radio architectures developed to use much of that “free” spectrum.
What remains unclear are the business models that could develop. If access network costs drop enough, some other firms with business models dependent on high-quality, affordable internet access (either on a venue basis or more broadly) will be able to entertain ways that capacity might be used to support the core business they already are in.
That, in turn, could radically change the value of fixed access networks, relative to mobile platforms.
“As wireless broadband speed and functionality rises, we foresee a time in the next several years where it is very likely wireline broadband, like wireline voice and video before it, inflects negative,” say equity analysts at Merrill Lynch.
In other words, mobile substitution will happen to internet access as it has happened with voice. As fixed networks lose internet access accounts, as they have lost voice and video accounts, it will be imperative not only to reduce the cost of building and operating fixed networks, but also reimagine the strategic value and role of the fixed network in the overall communications business.
The biggest problem will be stranded assets, as fixed networks are less able to generate revenues high enough to pay for the building and operating of the networks.
