5G business case—the financial viability of 5G Fixed Wireless Access
There is strong agreement among leading operators that Fixed Wireless Access (FWA) will be one of the early use cases to leverage the capabilities of 5G. In order to commercially move forward, operators must establish the financial justification for FWA over 5G.
The challenge with the 5G business case for FWA is not necessarily to prove its profitability. Instead, the question operators are trying to answer is under what conditions is 5G-based FWA a more attractive option than other alternatives such as Fiber access?
Many factors to consider
The approach to assess the business viability of FWA over 5G must take into account a significant number of external factors, each of which has a particular impact on either the cost, performance, competitiveness or revenue potential of the solution. Some of the salient considerations include:
Spectrum Band – What are the economic implications for the various spectrum band options? Initial deployments in North America are targeting mmWave bands (28/39 GHz) and leveraging MU-MIMO, Beamforming, and large Bandwidth in order to provide fiber like performance. In comparison to traditional bands used for wireless, mmW will not propagate as effectively, with greater reliance on Line of Sight (LoS) and more susceptibility to vegetation loss. This may translate to a greater number of 5G FWA sites to enable the desired target subscriber throughput and therefore higher capital investments.
CPE Placement – How does the operator intend to tackle the CPE installation at the subscribers premises? The preference is for indoor self install by the subscriber as opposed to the operator performing a roof or exterior wall mount install which requires a dispatch and thus is more expensive. The self-install option allows quicker time to market and a more effective setup cost per subscriber premise. The tradeoff is a more stringent coverage criteria for design that translates to a greater number of 5G FWA sites to enable indoor reception.
Target Throughput – What is the minimum bandwidth per customer that FWA is aiming for? This is one of the key design criteria. Higher throughput translates to greater capacity for backhaul, and places greater demand on radio resources to provide the necessary coverage with the minimum acceptable bandwidth rates.
Competitive Necessity – What is the competitive landscape like in the target service footprint? Is the FWA solution being used to address an underserved area or to provide another alternative to existing options in that area? This may have implications on pricing and performance requirements.
Customer Density – What is the composition of addressable customers? The number of customers addressable within a given area—urban vs. suburban vs. rural—drives the anticipated revenue stream and some of the implementation investments. For a given deployment, the operator wants to achieve maximum utilization of the network resources, which will in turn drive profitability. Low density settings for example, present a challenge, since the investment in resources and capacity is being recovered by only a few customers, pushing the payback period business case out in terms of time.
Take Rate – What is the anticipated adoption rate and service take rate? As expected, a higher adoption rate will tend to yield a greater return. However, the actual service take rate will be influenced by the given competitive situation mentioned above.
As highlighted in the image below, other factors should also be considered, such as limited to busy hour demand, backhaul facilities availability and capacity, pole height, foliage, and site acquisition costs.
One size doesn’t fit all
An important aspect to keep in mind is that the results may be quite different from one operator to another. This means that it is unlikely that a replicable template can be used to define the characteristics that will make FWA attractive in a given market.
The trial activity that is taking place throughout the industry is shedding light to many of the questions highlighted above. Ericsson is leveraging the lessons learned from these trial activities to further refine the business case analysis work and support service providers as they prepare for a 5G-enabled future environment.
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