Nearly $104 billion will be spent over the next 10 years to upgrade existing LTE networks and build out the 5G network infrastructure, according to a new report from telecom consulting firm iGR.
In its newly released market study “5G in the U.S.: What will it cost to build?” iGR forecasts that the building and deploying 5G networks will cost some $48 billion in LTE network upgrades through 2019 and an additional $56 billion in new 5G build costs between 2017 and 2025.
According to the study, the $56 billion in build costs will be divided among three main components, including RAN upgrades, cell site densification using small cells and the creation of data centers, central offices (CO) and mobile edge computing (MEC).
In coming up with its figures, iGR president Iain Gillott said his team looked at what would be necessary to roll out 5G technology working on the assumption that the first 5G networks will be based on today’s LTE technology.
Some of the upgrades Gillot’s team figured into the calculations include new equipment at existing cell sites, such as antennas and radios; activation of fiber that the team assumed will already be installed by that time; massive network densification, based on the assumption that the number of cell sites needed to address the market will double from 2020 to 2025; and data and mobile edge computing centers to push content to the edge of the network, based on forecast upgrades to existing centers and the construction of new ones.
“Implementing 5G will be an expensive task,” Gillott said. “Unlike previous wireless technologies, where the costs were concentrated in the air interface, 5G will require significant investment in data centers, central offices and mobile edge computing (MEC), as well as upgrades to the RAN. The success of 5G will depend on the ability to support a wide range of low latency applications and services, as well as high bandwidth video content delivery.”
According to Gillot, however, there is one major issue with the anticipated 5G rollout: money.
“One of the concerns we have with 5G is the economics,” he explained, noting that carriers would likely foot the bill for the upgrades. “The reality is we have one of the four (major U.S.) carriers who’s having a lot of financial difficulty right now. What are the odds that they’re going spend another $10 billion on 5G? We’re talking about $100 billion here. You’re going to need a heck of a lot value to justify spending on something like that.”
According to Gillot and Syniverse’s Senior Vice President and General Manager of Mobile Transaction Services John Wick, the short-term focus for carriers will likely remain on completing the rollout of LTE.
“While the industry is looking ahead to 5G, the reality is that more than half of the mobile operators around the world – according to the GSMA – have not yet evolved to the latest IP-based 4G technologies like LTE and voice over LTE (VoLTE), upon which 5G will be built,” Wick said. “Consumer expectations for faster speeds and new technologies such as IoT, M2M, high-bandwidth video and more are placing increasing pressure and demands on existing networks. In addition to looking ahead to 5G – which has yet to be defined or standardized in terms of roaming, interconnect and spectrum bands – operators need to focus on implementing LTE today to position their networks for the future.”