How the Allocation of Private Mobile Wireless 5G Spectrum Impacts Enterprises | ISG

The need for secure and reliable connectivity is non-negotiable. Enterprises in industries such as Chemical, Automotive, Mining and Oil and Gas are finding private 5G networks to be a powerful technology that enables greater connectivity, efficiency and productivity. But developing and implementing private 5G networks for these industries require significant technical expertise and resources – expertise that many enterprises must seek externally. This means creating an ecosystem in which mobile network operators (MNOs) and service integrators (SIs) play a critical role in designing, deploying and managing these networks.

Increasingly, this ecosystem will depend on the spectrum allocation approach in the high- and mid-band ranges based on geography.

What Is Private Mobile Wireless 5G Spectrum?

As the deployment of private 5G networks gains momentum across industries, companies are looking to leverage the technology's capabilities to enhance their operations and unlock new business opportunities. First, they must understand the nature of spectrum allocations and how they affect the private 5G wireless ecosystem.

Spectrum allocation is a process by which a regulatory body for telecommunication networks within a country assigns a specific range of frequencies to an entity for exclusive use. This means no other entity except the one assigned is authorized by law to use it. Any encroachment on the allocated frequency by any other entity can result in financial or other repercussions. Spectrum allocation is crucial for the success of private 5G networks, as it serves as the critical piece without which there is no wireless network.

Spectrum determines the coverage, bandwidth and speed of the network. The frequency band allocation of a private 5G network determines its performance and capabilities. Until now, we have operated in the lower frequency bands because these bands provide wider coverage. But the wider coverage means the capacity of data that can be transmitted is lower. Coverage reduces as the frequency increases just as capacity increases as coverage reduces. Due to this dynamic, it is difficult to monitor the utilization of the frequencies in the higher band range.

The mid-band spectrum (2.3-6 GHz) offers a balance between coverage and capacity, making it suitable for various applications, including industrial automation, Internet of Things (IoT) and smart cities. High-band spectrum, or millimeter wave (mmWave) range (above 24 GHz), offers extremely high capacity and low latency but has limited coverage due to the shorter wavelengths. This makes it most applicable to indoor use cases.

Contrary to legacy mobile wireless markets, in which spectrum is allocated primarily to MNOs, making them the dominant players, today’s mobile wireless market with 5G technology means the allocation of spectrum licenses is up in the air as it is no longer a forgone conclusion to whom the spectrum allocation goes. In this new paradigm, some countries assign 5G spectrum licenses to MNOs, while in others, enterprises can acquire spectrum allocations to build and manage their own private 5G networks. The choice of whether to allocate 5G spectrum licenses to MNOs or not is a complex and highly debated issue and needs to be carefully evaluated depending on the situation and geography one finds themselves.

If you are a global company, for example, and you want to build a 5G network in Germany, you can acquire a spectrum license. But you cannot acquire a license in Belgium because only MNOs have them. In China, likewise, only MNOs have licenses. If you don't have a spectrum license, then it is illogical to own 5G equipment, which then restricts the type of companies with which you can do business.

The Pros and Cons of Assigning 5G Spectrum to Mobile Network Operators (MNOs)

The advantages of assigning 5G spectrum to MNOs include the following:

• Assurance that the networks are built and operate efficiently and effectively, providing high-speed connectivity to businesses and consumers. This is because MNOs have extensive experience in building and operating networks and the necessary infrastructure, equipment and human resources to deploy and maintain a 5G network.
• Greater competition among MNOs, which will lead to more affordable and innovative services for consumers. MNOs can also leverage economies of scale to lower their costs and invest in research and development to improve their services.

The disadvantages to allocating 5G spectrum licenses to MNOs include:

• Limited participation of other entities such as service integrators (SIs) in the 5G market because enterprises do not have the technical expertise or resources to build and operate a 5G network and may therefore miss out on the potential benefits of 5G technology, such as increased productivity and efficiency for these enterprises.
• A concentration of power in the hands of a few dominant players, which can lead to higher prices and limited choice for consumers. If MNOs prioritize their own interests over those of enterprise consumers, the market will suffer.

Challenges of Assigning 5G Spectrum to MNOs Instead of Enterprises

There are also some technical drawbacks to assigning 5G spectrum to MNOs in the mid-band and millimeter wave band ranges instead of enterprises. These include:

1. Network deployment challenges: The deployment of 5G networks in the millimeter wave band range requires significant investment in infrastructure and equipment, including small cells and base stations. MNOs would need to spend a considerable amount of money to deploy and maintain the network, which may be an entry barrier for some players in the market considering that enterprise contracts last between three to five years.
2. Limited coverage: The use of millimeter wave band range for 5G networks provides high data rates and low latency but with limited coverage. This means that MNOs may struggle to provide consistent and reliable connectivity over a wide area. This may be particularly challenging for rural areas or other remote locations where the deployment of small cells may not be feasible.
3. Interference and compatibility: Since millimeter-wave band range for 5G networks are more susceptible to interference from environmental factors, such as weather and physical obstructions, as well as encroachers who may feel entitled to the use of these frequencies, MNOs would need to deploy sophisticated equipment to overcome the challenges of interference and compatibility.
4. Limited spectrum availability: Millimeter wave band range spectrum to MNOs can limit the availability of spectrum. These bands have limited frequencies compared to lower-frequency bands, which means that multiple MNOs may need to share the same spectrum, leading to spectrum scarcity and potential conflicts between MNOs.
5. Regulatory compliance: the deployment of 5G networks in the millimeter wave band range requires compliance with various safety, health and environmental regulations. MNOs would need to invest in compliance with these regulations, which may add to the overall cost of deployment.

If spectrum allocations for mmWave ranges are given to enterprises, the main challenge would be the lack of expertise and resources to build and manage private 5G networks. However, this may result in a highly competitive ecosystem that introduces new revenue streams for SIs and make the entire ecosystem competitive.

The mobile wireless ecosystem involves MNOs, SIs, hyper-scalers and equipment vendors that are busy redefining themselves to thrive in a new paradigm of private 5G networks. ISG helps enterprises seeking to leverage the benefits of 5G technology in their digital transformation journey. We offer expertise, market research and insight into the provider landscape. Contact us to find out how we can help you.