Demand for 5G May Not Be High, Rollout May Take Years, TPI Told

A Verizon executive defended 5G, and a telecom expert from China noted her country is interested, too. Analysts were the biggest skeptics. FCC Chairman Ajit Pai said the U.S. is “in the lead on 5G,” at TPI earlier in the day (see 1808210038). “I don’t think any reasonable observer would say we’re lagging behind.” He mentioned two upcoming commission spectrum auctions.

Frank Louthan of financial firm Raymond James doesn’t “think we ever get to 50 percent 5G” deployment, he said in response to an audience question about that threshold. It’s very expensive to deploy, he said, adding later that it could result on the very low end as little as pennies more in monthly revenue per fifth-generation wireless subscriber. “5G effectively is going to be the first wireless technology that cannibalizes other wireless networks.” It’s difficult to see what an average person gets from 5G wireless that can’t occur with LTE, which the analyst called “a game changer.” Much-faster speeds won't “make a difference” for many, Louthan said: “Carriers have not been able to articulate a lot of demand.”

Verizon, “very excited” about it, expects to have mobile 5G next year, said Vice President-Public Policy David Young. He likened the skepticism to wireless-service providers moving to 4G. “People said that’s just a dumb idea” and would it really “make your flip phone better?” he recalled. “The standards weren’t quite ready yet, but we pushed the envelope.” Pre-4G, “no one would have anticipated Uber” and such, he said. Low latency, high speeds and supporting many more low-power IoT devices “are the types of things that I think are really going to enable use cases that we can’t even predict,” Young said.

“Regardless of all these challenges,” Comcast thinks “5G is very, very useful,” said Senior Vice President-Global Public Policy Rebecca Arbogast. There are additional uses, she said. On how quickly customers will buy such subscriptions, “nobody knows yet. We’re talking about a deployment and a takeup that is further out in terms of time than anybody can reliably predict. We’ll know more in a few years,” she responded to our question. There needs to be a return on investment for such “cool things,” she said: Questions include “who will pay?”

“Carriers and the equipment providers have so far done a very poor job of selling the use case,” Georgetown Center for Business and Public Policy Project Director Larry Downes was “sorry to say.” There “are really compelling ... stories” including smart cities, and “next-generation applications will certainly rely on 5G,” he said. He recommended a “sales pitch” to consumers, and one to Wall Street considering the “extremely high cost of investment.” Louthan thinks “it’s going to be a long time before it really gets deployed."

China, which like the U.S. is trying to close its digital divide, is also asking “what applications should we provide” via 5G, said China Academy of Information and Communications Technology President Liu Duo. She was among those saying Arbogast's slide about how the U.S. has lower population density than some advanced countries in Europe illustrates the hurdles. “China is a very large country and is a developing country, so we have many poor people who cannot access the broadband network,” she said. This “also is a very tough job” for China's government, the expert said. “Poor people do not know how to use broadband.” Training them to use a mobile phone or a PC for things like e-commerce and education can help the transition, she said. “All of these services can help poor people.”

Smartphones can help narrow the chasm in the U.S., said Young. "Smartphones have become a really viable, if not primary, means" to go online, he said, with about 10 percent of U.S. consumers using that as their only connection. "Smartphone access is often the primary if not only means for lower-income folks to access broadband." Downes said tablets could be particularly useful here, too.

"Remaining challenges are tough," said Arbogast. "If they were easy, either for deployment or adoption, we would have solved them." Low density makes it expensive to introduce the service to remaining areas, she and others said, with Arbogast saying "the enemy of full deployment is population density, so we need to overcome that." Some 2 percent lack access in urban areas, compared with 31 percent of rural residents, though the latter number narrowed by last December from about 55 percent in December 2012, she said. "It's going to take federal money" or other government funds, since "there is not a market case," the Comcast executive said. "Make it not tied to a particular technology or particular type of technology provider," she said, noting satellite services keep "getting better."

"You want a lot of variety of spectrum sizes … to provide the flexibility to the folks who are building out" networks, Arbogast responded to Clyburn. Size of spectrum blocks for big providers "doesn’t move the needle," Louthan said. The commission "really got it right with the CAF II auctions," he said of the Connect America Fund, though it's "coming slower than I’d like to see it, but it is happening." On the FCC proposal to cut Lifeline support to resellers, Young said such companies "play an important role, so I would like to see that reconsidered," on the "useful mechanism for people to get low-cost access to online services."