next-generation wireless network investment: lte …

Next-generation wireless network investment: LTE will fill the 5G gap for operators and vendors

© Analysys Mason Limited 2017

RESEARCH STRATEGY REPORT

analysysmason.com

NEXT-GENERATION WIRELESS NETWORK INVESTMENT: LTE

WILL FILL THE 5G GAP FOR OPERATORS AND VENDORS

ROBERTO KOMPANY



KEY QUESTIONS ANSWERED IN THIS REPORT

WHO SHOULD READ THIS REPORT

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This report analyses the challenges that vendors and mobile

network operators (MNOs) face in planning for 5G. Most of the

proposed 5G use cases lack clear business drivers and MNOs are

questioning the opportunities.

Vendors must exploit the current opportunities to plan and

execute LTE network improvements necessary to increase MNO

network capacity, meet customer experience and reduce opex,

while avoiding an investment slowdown by MNOs as they await 5G

to mature.

MNOs must not wait for 5G to begin the network improvements

such as virtualisation and migration to C-RAN, as this will limit

their ability to compete.

The research is based on several sources:

▪ Analysys Mason’s research, including forecasts of wireless

traffic and devices

▪ interviews with stakeholders in operators, RAN vendors and

other parties such as small-cell producers

▪ governmental and standards bodies’ publications on 5G

▪ Analysys Mason survey of 68 MNOs about their 5G deployment

plans, drivers and barriers.

About this report

▪ What are the key inhibitors for 5G deployment and how can these be

mitigated?

▪ What are the opportunities for vendors in deploying incremental LTE

network improvements while planning for 5G?

▪ What are the 5G potential revenue-making opportunities for MNOs?

▪ What are the challenges for incumbent RAN vendors and the

opportunities for challengers in the new modularised and disaggregated

mobile network world?

▪ Network vendors’ R&D, strategy and operator account teams supporting

marketing and strategy related to mobile networks.

▪ Mobile operators’ network, spectrum and technology strategy teams.

▪ Regulator work groups and policy teams responsible for licensed, lightly

licensed and unlicensed spectrum policy.

▪ Industry bodies associated with assigning and managing spectrum used

in fixed and mobile wireless networking.

▪ Other industries interested in the future of, and investment in, 5G, such

as private equities and venture capital firms.



CONTENTSCONTENTS

EXECUTIVE SUMMARY

BEYOND LTE: CHALLENGES AND OPPORTUNITIES

ESSENTIAL 5G INVESTMENTS

VENDOR OPPORTUNITIES AND IMPACTS

APPENDIX

ABOUT THE AUTHORS AND ANALYSYS MASON

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Figure 1: Analysys Mason’s survey indicates that most MNOs are likely to invest in 5G

between 2020 and 20261

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1 We asked 68 Tier 1 and 2 MNOs to indicate their timelines for 5G New Radio (NR) commercial

deployment.

5G will drive spending on new technology and architecture

when MNOs and vendors overcome adoption barriers.

Meanwhile, MNOs and vendors should focus on LTE

enhancements.

5G addresses a range of use cases, but most MNOs are likely to

delay deploying it for the next 5 years. Some use cases, such as

massive machine-type communications (mMTC) and ultra-fast

mobile broadband, are a natural extension of existing 4G

networks, and ultra-fast mobile broadband will probably be the

main business driver for the next generation of mobile networks.

Other use cases, such as virtual reality and robotic surgery, are

challenging to develop and deploy and will, therefore, take years to

generate significant revenue.

MNOs can move towards 5G and reduce operational costs by

using technologies such as virtualisation, cloud RAN (C-RAN), self-

organising networks and multi-input multi-output (MIMO)

antennas. We recommend that:

▪ the industry must understand 5G use cases and opportunities

and MNOs must develop specific roadmaps

▪ vendors have an opportunity to deliver efficiencies to MNOs

and derive significant value from enhancing LTE

▪ vendors should provide multi-vendor and open-source solutions

in response to increasing network disaggregation.

Executive summary



Figure 2: 5G investment drivers and barriers

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1 Ericsson and Nokia’s mobile broadband hardware equipment revenue declined by 14% in 2015,

although Huawei’s increased by 10% in the same year.

MNOs recognise the strategic importance of 5G to their long-

term plans, but most will defer major investments in the next

5 years until the technology matures and the business need for

5G becomes clearer and stronger.

MNOs have not promoted the benefits of 5G use cases beyond

that of faster mobile broadband, such as mMTC and ultra-reliable

and low-latency communications. High-profile exceptions aside,

most MNOs are reluctant to invest in 5G until the technology

matures and opportunities become clear.

Our MNO survey indicates that the main business drivers for next-

generation wireless will be higher speed and lower cost. However,

MNOs will delay deploying 5G for at least 5 years, unless and until

5G is deemed essential to driving new revenue.

Mobile network architecture is becoming modularised and

disaggregated, which will increase MNOs’ vendor choice, but will

complicate procurement and operations. New entrants in the

virtual-RAN and virtual-EPC spaces will challenge incumbent RAN

vendors that used to dominate the end-to-end value chain.

Some vendors’ equipment revenue has already slowed down1 as

MNOs test 5G technology and vendor options and consider 4G

evolution strategies. The revenue slow down affecting the big RAN

vendors in particular.

No clear 5G business need, limited LTE roll-outs and market dislocation

due to shifts in architecture will defer investment in mobile networks

Figure 3: The state of the 5G business


© Analysys Mason Limited 2017 6

Figure 4: Vendor imperatives to increase MNO investment en route to 5G and strengthen

market positionVendors must focus on delivering 5G-style use cases by

upgrading existing LTE network capacity to 4.5G and supporting

virtualisation of the EPC and RAN to improve MNO operations

and sustain network investment.

Vendors have the opportunity to promote LTE network capacity

improvements that will help decrease network opex, improve user

experience and support 5G evolution, while also protecting their

own revenue from a protracted slowdown in MNO investment.

Vendors have invested in solutions to improve LTE network

capacity. These solutions include the use of:

▪ the new 4×4 MIMO antennas to augment existing network

capacity and improve spectrum reuse

▪ virtualisation of the RAN and EPC to reduce capex and opex

costs and decrease deployment time for additional capacity

▪ small cells to increase network capacity, particularly in indoor

venues or enterprise environments.

There are also longer-term opportunities with 5G to address new

markets such as MEC, network slicing and industrial automation.

However, to make this work, significant planning and collaboration

between ecosystem parties such as incumbent RAN vendors and

new entrants in the virtualisation space and partnership with

venue owners is required and should start now.

Vendors must deliver incremental LTE improvements to prepare the way

for 5G and develop strategies in response to network disaggregation



Recommendations

1Vendors must focus on how 5G will meet MNO business needs and not expect them to upgrade to 5G until it

delivers the use cases that address clear business requirements.

5G is not just a generational change and the use cases do not always match MNO business needs. 5G brings a

mixture of new use cases as well as network efficiencies and one size no longer fits all. The industry must work

out what 5G truly means and vendors should support MNOs in designing the right network to meet their business

requirements.

2To avoid investment slowdown by MNOs awaiting 5G, vendors should deliver incremental performance

upgrades and provide value to extend existing LTE networks.

Unlike a few trailblazer operators such as SK Telecom and Verizon, most MNOs want to maximise existing LTE

investments before embarking on 5G upgrades. Incremental network upgrades such as 4×4 MIMO antennas, C-

RAN and small-cell deployment will increase MNO performance KPIs, improve data monetisation and deliver

increased quality of experience for the customer in the interim.

3Mobile network architecture is becoming modular and disaggregated. Major mobile infrastructure vendors

must create solutions that can be integrated with third-party hardware and software from multiple partners.

Expanding network capacity and improving time-to-market of new services using today’s specialised proprietary

telecoms solutions is time consuming. Network virtualisation enables much faster provisioning of new services,

but it also encourages disaggregation of the network. The industry must be open to exploring new business

opportunities with multiple new partners to develop the right solution for MNOs.



CONTENTSCONTENTS

EXECUTIVE SUMMARY

BEYOND LTE: CHALLENGES AND OPPORTUNITIES

ESSENTIAL 5G INVESTMENTS

VENDOR OPPORTUNITIES AND IMPACTS

APPENDIX

ABOUT THE AUTHORS AND ANALYSYS MASON

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About the author

Roberto Kompany (Senior Analyst) is a member of Analysys Mason’s Telecoms Software and Networks research team and is the lead analyst

for the Next-Generation Wireless Networks programme focusing on strategy and market research. Prior to joining Analysys Mason, Roberto

worked for Dixons Carphone, where he analysed the effect on the business of shifts in the telecoms market – for example, in terms of mergers,

operator KPIs and technology – in Europe and the UK. Previous positions included consultancy, where he helped a variety of clients worldwide

with mobile-related projects, such as a capex reduction and developing a 5-year strategy for an incumbent’s wireless infrastructure.



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PUBLISHED BY ANALYSYS MASON LIMITED IN JUNE 2017

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