Editor’s note: Advances in radio interface technology will enable network operators to open up a vast tranche of new spectrum to carry network traffic and thus help drive Internet of Things growth, report Technology Business Research analysts who recently attended a forum on the emergence of 5G technology. This is the first of two reports.

TBR perspective

The telecom industry in the Americas is in the early stages of a major transformation. With LTE pervasively deployed in North America and operators in the region now shifting focus to LTE-Advanced Pro, 5G and network virtualization, and with Caribbean and Latin America (CALA) operators focused on LTE deployments, the industry is gearing up to support new use cases leveraging networks, particularly in the area of Internet of Things (IoT). Concurrently, operators face the challenge of navigating the sometimes adverse regulatory environment and securing adequate spectrum to support their initiatives. Fortunately for operators, advancements in radio interface technology enable the use of millimeter frequencies at the access layer, opening up a vast tranche of new spectrum to carry network traffic, which will help telecom operators not only support their existing businesses but also add new businesses that leverage their networks.

Event overview

More than 50 representatives from well-known operators and vendors attended the annual 5G Americas event to talk with more than 70 top-tier industry analysts about the state of wireless communications in North America and Latin America as well as discuss challenges and opportunities presented by the rapid development of the mobile ecosystem.

The event kicked off with Jose Otero, director of CALA for 5G Americas, providing a special session on the CALA market. His presentation provided an update on the CALA telecom market and focused on LTE deployments and spectrum challenges. A panel of representatives from CALA-based operators and vendors took to the stage after Otero’s overview to provide insights into the regulatory framework, 5G and IoT in the region.

The key takeaway was that LTE is growing rapidly across most countries in CALA, but more spectrum, along with fiber optics, is needed to support traffic growth, particularly as data usage ramps up.

Day 2 began with a keynote from 5G Americas Chairman Tom Keathley, who emphasized how fast the LTE ecosystem has developed in North America and globally as well as how there is more room for LTE to evolve using LTE-Advanced and LTE-Advanced Pro features. Keathley also highlighted NFV/SDN, IoT, spectrum and 5G as major drivers of the wireless ecosystem going forward.

The keynote was followed by a presentation by Brian Daly, director of Core & Government Regulatory Standards at AT&T, who provided a global status update on 5G. The key takeaway was that, though the telecom industry still does not know what 5G will ultimately become, the 5G ecosystem has developed substantially in one year, and several operators intend to begin deploying the technology a couple of years before standards-based 5G is finalized in 2020.

Following Daly’s 5G update, a mix of panels and small group discussions delved deeper into key industry topics, including 5G, IoT, NFV and SDN, LTE-Advanced, small cells, and network security. Of particular interest to the analyst community was greater insight on 5G because this technology will prove critical to helping operators deal with the exponential rise in network traffic and bring new business models to market.

Impact and opportunities

CALA has acute need for more spectrum

The lack of spectrum allocated for commercial use in CALA is hampering the proliferation of LTE in most markets in the region as well as operators’ ability to densify existing networks. Though governments are clearing the path for more spectrum to be auctioned off, the prices they want continue to increase, creating a conundrum for operators that are facing declining gross domestic product (GDP) growth and lower EBITDA margins in key markets such as Brazil and Argentina. More spectrum is required for operators to migrate to LTE platforms and bolster their data businesses, and the more they have to pay for spectrum, the less capital they will have available for capex, creating a paradox that needs to be worked through. There are a couple of ways the region can accelerate development: create a more robust secondary market for spectrum or allow some operator consolidation with requirements to commit to network development milestones.

LTE is here to stay, even with 5G on the horizon

A pervasive theme from the event was that LTE still has substantial runway and will remain relevant well beyond 2020, even in markets that aggressively deploy 5G. LTE will remain the foundational network standard and provide the base layer for all communications, with 5G serving as an overlay where capacity enhancement and or lower latencies are required. LTE will also be leveraged for traffic fallback from 5G and will become the de facto coverage layer of the network due to its better signal propagation attributes compared to 5G. LTE is evolving to LTEAdvanced and LTE-Advanced Pro feature sets, which include technologies such as 4×4 MIMO, VoLTE and carrier aggregation that carriers in the U.S. and elsewhere are aggressively deploying.

U.S. spectrum auctions and IoT use cases will stimulate 5G investment

Though the telecom industry still does not know exactly what 5G will become, it is in agreement that a primary driver of 5G will be the need for more spectrum to support future network traffic. The opening up of millimeter wave frequency bands for telecommunications provides new wireless pipes to carry network traffic, and this spectrum will also enable the delivery of high-bandwidth broadband and low latency services. Licensed millimeter wave spectrum will begin to be auctioned off in the U.S. before 2020, with some unlicensed bands already available for commercial use. The secondary driver of 5G will be for new business development, particularly in the IoT space, whereby operators will leverage the high-bandwidth and low latency 5G provides for specific use cases. Virtual reality and autonomous cars are two use case examples where LTE is insufficient and 5G’s attributes will be required.

NFV/SDN update

Several operators in North America, particularly AT&T, continue to drive development of the NFV/SDN ecosystem. One of the key issues facing broad-based adoption of NFV and SDN is the lack of robust management and orchestration (MANO) platforms, which is critical to realizing the promises of NFV/SDN, namely opex and capex reduction as well as new revenue-generating opportunities. Though the European Telecommunications Standards Institute defines and has standards around MANO, there are a variety of open-source and commercial MANO options in the market currently, including AT&T’s brainchild ECOMP.

TBR believes there will be a round of consolidation in the MANO space as operators rally around a few major MANO platforms, which will then lead to an acceleration in NFV/SDN adoption. AT&T’s decision to open source part of ECOMP and leverage Amdocs to take the platform globally will hasten ecosystem development.

Part two: 5G to drive IoT

(C) TBR