NETLINK NBN TRUST (SGX:CJLU)
ASEAN Telecom Sector - Dawn Of The Era Of 5G
- 5G finally coming to ASEAN; Singapore leads the way with a pragmatic approach.
- Singapore has initiated a public consultation on the 5G framework, which suggests 5G rollout to be slower, more selective and pragmatic than 4G.
- 5G is likely to be targeted at enterprise customers initially as consumer devices and use cases are still underdeveloped.
What is 5G?
- The Next Generation Mobile Networks (NGMN) Alliance defines 5G as “an end-to-end ecosystem to enable a fully mobile and connected society. 5G empowers value creation to s customers and partners, through existing and emerging use cases, delivered with consistent experience, and enabled by sustainable business models”.
- The futuristic vision of 5G is expected to fulfil a number requirements including the following:
- 1 - 10 gigabit per second (Gbps) connections to end points in the field (i.e. not theoretical maximum).
- 1 millisecond (ms) end-to-end round trip delay (measure of latency).
- Ability to connect over 1m devices within a radius of 1km.
- 1000x bandwidth per unit area.
- 10 - 100x number of connected devices.
- (Perception of) 99.999% availability.
- (Perception of) 100% coverage.
- 90% reduction in network energy usage.
- Up to 10-year battery life for low power, machine-type devices.
Other than faster speeds and low latency, is there anything else appealing about 5G?
- Network Slicing is set to be a prominent feature of 5G to allow connectivity and data processing tailored to specific customer requirements whereas 4G provided quality assurance function only for voice, not data. Data was of the same quality in all service areas. With 5 ta services will have differentiated quality tailored for specific requirements. For example, ultra-low latency is of utmost importance for self-driving vehicles. In comparison, home IoT (Internet of Things) services require large scale low-powered connections even with higher latency.
- Network Slicing allows differentiated network services that can be tailored to fit different requirements such as the above, while Optimal Network Slicing is facilitated only by standalone 5G networks. The real value of 5G would be not just from speed and low-latency, but the ability of networks to be customized to meet different needs of customers.
How has 5G evolved from 4G?
- 4G telecommunications technology was implemented to enhance data transfer speed and capacity by improving spectral efficiency.
- The focus of 5G, however, will be to provide pervasive, low-latency connectivity that is reliable and available, regardless of the user’s or the device’s location. Through which, 5G would be able to support new applications that are incompatible with existing 4G networks.
What is the business case driving 5G development?
- 5G has long been touted as the next era of mobile technology to support a range of use cases that are however still very futuristic. The lack of use cases to fully utilize the features of 5G networks has long been a concern among industry players, and this coupled with the substantial investment required for 5G, has pushed regulators and Mobile Network Operators (MNOs) to be more pragmatic and opt for a slower roll-out of 5G networks compared to the pace of 4G.
- The initial appeal of 5G would be primarily for enterprise use cases with a focus on industrials, logistics and smart nation programmes launched by governments. Consumer adoption of 5G (except for Fixed Wireless Access) in our opinion seems to be still a long way away. Consumer devices that can support 5G are still very limited (major phone manufacturers like Apple have yet to come up with a 5G device) and tend to be priced at high premiums. The appeal of faster speeds may not be a key demand driver for 5G in the early days, as 4.5G and fibre broadband networks already offer adequate speeds for most consumer use cases. Much of the consumer IoT applications can be served with existing NB-IoT (Narrow Band Internet of Things) networks and consumer applications that require ultra-low latency, such as autonomous vehicles or fully-immersive Virtual Reality (VR) are still in early stages of development and adoption.
- In comparison, there was much better clarity on the appeal of 4G networks to both consumers and operators alike. 3G networks exposed users to the possibilities of data but the user experience was poor given inherent limitations of 3G data transmission speeds. 4G offered much desired faster transmission speeds and better user experience while exposing users to a plethora of new use cases. 4G also offered better spectral and operational efficiencies to the MNOs with clear consumer use cases, making a sound business case for 4G adoption. This so far has not been the case with 5G.
- 5G-enabled phones are still limited and not accessible by the mass market. Some of the 5G phones launched so far
- Samsung Galaxy S10 (5G) - US$1,299
- LG V50 ThinQ - US$1,152
- Huawei Mate 20 X (5G) - US$1,275
- OnePlus 7 Pro - US$669
- Xiaomi Mi Mix 3 (5G) - US$680
- That being said, we see that 5G will appeal to enterprise and government sectors as the ultra-low latencies and faster transmission speeds offered by 5G are often viewed as necessary for major industry automations and certain smart nation applications (e.g.Smart security). Besides, more attractive consumer and enterprise use cases would evolve with growing adoption and maturity of 5G networks. Hence, we believe that while the technology is necessary, roll-out would be much slower, and more selective and pragmatic than previous mobile technologies
Is there more than one way to deploy 5G?
- There are two major ways in which 5G can be deployed: Standalone (SA) vs non-standalone (NSA).
Non-Standalone (NSA) –
- The most common form of deployment currently. Here, radio access to end user devices is provided through dual connectivity of 5G new radio cells and existing 4G LTE radio cells. Key benefits of NSA roll-outs include faster deployment and the ability to utilise and leverage existing 4G infrastructure. However, NSA networks do not fully support superior network slicing features to cater to different user requirements with different network features.
- NSA deployments hold appeal to countries that are likely to take a long time to deploy SA 5G networks, given the scale and investments required for such deployments. NSA deployments would allow these countries to enjoy faster speeds offered by 5G and gain Fixed Wireless Access (FWA - wireless provisioning of high speed broadband services via 5G radio signals). However, eventually all countries are expected to move towards SA deployments given the inherent limitations of NSA.
Standalone (SA) –
- In a SA scenario, radio access and core networks for 5G are deployed independently and are operated on their own. Only one radio access technology on 5G spectrum is used for deployment and 5G core networks may be deployed to fully enjoy the benefits of 5G. SA networks are simpler and less costly for operators to manage but are time consuming and more expensive to be deployed as they do not piggyback on 3G and 4G networks.
- Some of the key benefits of standalone deployments seem to be derived from a 5G Core Network (5GC). The 5GC offers superior network slicing and better quality of service features. In addition, 5GC also provides better support for edge computing and a multitude of access technologies, as the control plane and user plane are separated in this core network type.
- Standards for SA deployments are expected to be finalised by March 2020.
What are some of the long-term key use cases of 5G?
- Autonomous vehicles – Cellular vehicle-to-everything (CV2X) is considered as one of the most prominent use cases for 5G. Not only will CV2X create new business opportunities e.g. providing in-car infotainment service, but also increases road safety and convenience such as navigation provision, remote health monitoring of the vehicle, precise position provisioning, parking slot discovery and automated parking.
- Smart healthcare – The health & wellness industry is about to change dramatically with the advent of 5G allowing healthcare providers to cater for flexible and individual treatment such as live bidirectional video for more efficient consultation, diagnosis, treatment, monitoring as well as for assisted surgery.
- Smart manufacturing – Industry 4.0, brought about by IoT is set to fundamentally change the manufacturing industry. IoT facilitated by 5G connectivity will drive seamless factory and process automation and human-machine interface connectivity.
- Smart energy – The business potential of introducing 5G Network Slicing in the energy domain is exceptionally high, with energy grid protection and control achieved through smart grids and smart metering.
- Smart Cities – Usage of 5G network slicing in smart cities is highly diverse and continuously evolving such as intelligent lighting, public safety, emergency services management, waste management, smart parking, smart bike sharing, energy grid management etc.
- Other Low Power Wide Area (LPWA) applications – In LPWA, a small amount of information is generally exchanged per transmission. These applications are latency tolerant but coverage is particularly important. Such use cases include smart homes/buildings, agricultural industry, asset tracking and monitoring etc. Telco network providers would have to scale up their network capacities by several-fold through the use of newer technologies to ride on this rapidly rising wave of mobile consumption. Those who do not will risk losing market share.
How are 5G deployments around the world progressing?
- Fourteen countries have already auctioned/allocated/licensed 5G-suitable frequencies in at least one spectrum band, and 13 countries have plans to auction/auctioned spectrum that can potentially be enabled for 5G use in 2019/20.
- Countries such as South Korea, the United States and Japan that are home to established network equipment vendors, chipset manufacturers and device vendors, are particularly driven to stay ahead of 5G deployment, partially led by the IP licensing model of the mobile equipment industry. Countries such as Australia and the United States, that are both seeking to deliver ultra-high speed broadband services to homes and business premises, are looking to leverage on 5G to deliver last-mile FWA to homes.
Status of 5G in ASEAN – Singapore
- Singapore has launched public consultation on 5G framework. Five key takeaways from the consultation are:
- Deployment of 5G from 2020 based on standalone network architecture, soon after standards are finalised in March 2020.
- Sustainable competition with at least two nationwide 5G networks to encourage network sharing.
- No spectrum auction (3.5GHz paired with 26GHz and 28 GHz) but allocation via call for proposal (CFP) open only to the four existing MNOs.
- Over 50% coverage within 24-months of the commencement of the 3.5 GHz spectrum rights.
- Each standalone network operator must be willing to sell 5G wholesale services to other MNOs and players.
- Singapore places a high emphasis on network sharing with four MNOs sharing two 5G networks. Based on our understanding, 5G capex is 2-3x that of 4G capex for similar coverage, and hence telcos must share the 5G network to justify the high 5G capex. Each standalone ork operator must be willing to sell capacity on a wholes e basis.
- Despite 5G rollout starting from 2020 onwards, the paper implies around 50% coverage by 2023 as the key 5G spectrum, 3.5GHz, will be only available for use by 2021.The 5G rollout is much more gradual as 4G network coverage requirement for TPG was nationwide outdoor coverage (not 50%) in just 12 months of spectrum rights commencement. The slower rollout can be explained by a lack of decent revenue opportunity in the consumer space despite high 5G capex requirements. The focus for 5G would be on enterprise applications where lower latency and a large number of connections are important. For example, remote surgery and high frequency trading require lower latency and IoT for a large number of connections.
- A gradual 5G rollout implies similar or slightly higher annual capex compared to 4G and hence, this is not a major cause of concern. We estimate that StarHub may have incurred ~S$500m 4G capex in total over 2013-18. Telcos may have to fork out S$1bn-1.5bn in 5G capex but over a longer period of 10years. The 5G spectrum price should not be a concern as the base price of 100 MHz of 3.5MHz spectrum ranges from S$32m-S$74m internationally.
Q&A on the deployment of 5G in Singapore
Why is Singapore considering a SA route?
- Singapore already has a strong 4G market, supported by low prices and amicable competition. Singapore also enjoys ~90% fibre penetration.
- Hence, the appeal of NSA deployments simply for higher speeds and FWA for Singapore is much lesser. The SA 5G deployment is the only form that would allow Singapore to realise its ambition of developing a vibrant 5G ecosystem, nurturing a pool of talent surrounding 5G and leading innovations in the new 5G era.
Why has Singapore decided on only two 5G networks?
- Singapore, Malaysia and Indonesia use the 3.5GHz spectrum heavily for satellite communications. While up to 200MHz of this spectrum band i pected to be released after initial technical studies and clean ups, only 100MHz would have the ability to be used anywhere in Singapore. The remaining 100MHz would be for restricted use cases as it may cause interference when used outdoors. Hence this would only be limited to indoor and tunnel-use cases. Of the unrestricted 100MHz spectrum available, at least 50MHz should be allocated to one operator, as slots below 40MHz would only be able to attain the same speeds as 4G. This is why Singapore has decided to go ahead with only two networks.
- Allocating more spectrum in the 3.5GHz band is difficult as th spectrum is a “Seaband” used within the region to download content for broadcasting.
What’s the process for allocating spectrum?
- Spectrum would be allocated via Call for Proposal (CFP) instead of spectrum auction. Allocation would depend on the following criteria:
- Network Rollout and Performance plan (30% weightage),
- Network Design & Resilience (40%),
- Financial Capability (15%)
- Offer Price (15%)
- The Info-Communications Media Development Authority (IMDA) would set the baseline price for spectrum and telcos would then make offers for the spectrum. The 100MHz of 3.5GHz spectrum (50MHz unrestricted and 50MHz restricted) would be allocated to one player, while 50MHz of unrestricted capacity would be made available to the other. The player with only 50MHz of capacity would be able to deploy taller antennas to compensate for the lack of spectrum. Both players would be required to provide wholesale services of 5G services to other interested parties. MNOs can partner with non-telecom operators and foreign entities when submitting the CFP (such partnerships would be scrutinised by the IMDA) but the CFP should be led by an MNO with an assurance that new entrants to the mobile market would be restricted. The IMDA is also open to potential network sharing deals between the two winners.
Has IMDA considered a NetCo model (like Next Gen NBN)?
- A Netco model, where a separate entity deploys the network and leases out capacity to other players, would be much more difficult technically for 5G. Maintenance of the network would also be much more complex in such a situation.
Can players purchasing capacity on wholesale enjoy the true benefits of 5G?
- Users of the 5G networks on a wholesale basis would also be able accrue the benefits of 5G. While gaining full functionality of 5G, some features such as Network Slicing could be difficult and technically complex in a shared network environment, and trials are being conducted to see how this can be accommodated.
5G deployments elsewhere in ASEAN
- See attached PDF report for details.
In The Same Report:
Sachin MITTAL
DBS Group Research
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TOH Woo Kim
DBS Research
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2019-05-28
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