Right at the outset, here’s wishing everyone a happy and wonderful 2023 to come. As the world of tech and telecom churns endlessly, there will be a lot to cover in 2023 as the telecoms industry continues to innovate and evolve. For analysts everywhere, it is customary and near mandatory to go crystal ball gazing at the start of the year. In short, another year and another inaugural post with predictions. No pressure of course!
There is another reason to write this inaugural post for 2023. Mandala Insights is turning 5 this week and it is a great opportunity to take stock and to refocus on our core coverage areas. To this end, this post will be a set of predictions but also a summary of things we will be tracking and following this year. So here goes.
Adoption of 5G, WiFi 7 and non-terrestrial networks will drive demand for spectrum in Asia
The deployment and rapid adoption of 5G has been one of the global success stories of the mobile communications industry. Indeed, no cellular technology has seen this much adoption, this quickly. But 5G adoption would not have been possible without the availability and allocation of new spectrum bands across the APAC region.
Much of the region has coalesced around the 3.5 GHz set of frequencies, with minor variations across individual markets. This consolidation will enable significant economies of scale both on the network equipment and the device side.
The emergence and increasing maturity of mmWave technology is also pushing Governments and regulators across the region to make frequencies available. Several countries in Asia have already allocated mmWave spectrum, including Japan, Australia, South Korea and India. South Korea, of course, was in the news recently for cancelling its previous award of 28 GHz licenses to the mobile operators, citing their inability to deploy mmWave networks and failing to meet their rollout obligations. However, other countries are expected to launch mmWave in 2023.
India has seen the deployment of the 700 MHz band, with Reliance Jio picking up the spectrum. Presumably, the key motivation for this band is for the wide coverage possible but also to enhance in-building coverage, which has traditionally been an issue for mobile operators.
Beyond this, we expect 2023 to be the year when the 6 GHz band will be debated heavily, with proponents from both the cellular and Wi-Fi worlds pushing hard for allocation. There is a battle brewing over the 6 GHz band across the Asia-Pacific region. While there is a demand from the WiFi industry groups to keep this band unlicensed similar to 5 GHz, the mobile industry is calling for 700-1200 MHz of spectrum in this band to be licensed. China, Japan, Singapore and several other markets are already studying the 6 GHz band scenarios. The most likely outcome is for a hybrid scenario where the upper portions from 6425 MHz – 7125 MHz are licensed while the lower bands are left unlicensed.
Spectrum will also be in demand for other applications. These include mobile backhaul for 5G where spectrum in the high E and V mmWave bands is being made available for backhaul purposes. There is also demand for spectrum from the satellite industry, with 28 GHz the sought-after frequency for satellite operations for many of the new low-earth orbit (LEO) constellations.
5G will be hybrid, with mobile connectivity depending on a "network of networks"
Mobile operators have long been the custodians of mobility and all its related use cases, cutting across people and things. They have built large scale terrestrial networks based on 3GPP-specified technologies and are now busy rolling out 5G networks at scale. They have enabled voice communications, data for apps and Internet access as well as networks for machine to machine (M2M) and the Internet of Things (IoT). However, mobile operators have never been able to scale their networks sufficiently to cover the entire population of a country or even the majority of the surface area. There are significant variations depending on the size, geography and topology but there may still be anywhere from 40-50% of people around the world without reliable and affordable Internet access.
The simple reason for this has been that the economics did not add up into a viable business case for mobile operators. It was cost prohibitive to deploy fiber into rural and remote areas. Even where microwave technology could substitute for backhaul, there were additional concerns about the opex costs of running and maintaining base stations in areas that were not adequately served by the power grid. Satellite connectivity has been used for select verticals and use cases but this required specialized devices and represented niche opportunities in verticals like maritime, mining and others.
However, the stars are aligning with new technology that will disrupt the status quo by complementing terrestrial networks and potentially expanding the coverage footprint nationwide. These new networks are collectively described as non-terrestrial networks (NTN) in 3GPP parlance and cover a wide range of technologies. The most significant of these developments is in the area of low-earth orbit (LEO) satellite constellations being launched by the liked of SpaceX’s Starlink, OneWeb, AST SpaceMobile, Lynk, Iridium and more. There is also momentum behind the Direct to Device technology which will allow satellites to communicate directly with smartphones, bringing satellite connectivity into the mainstream. The other area is high altitude platform stations (HAPS), which operate in the stratosphere. Previously, high profile ventures like Project Loon by Google and Aquila by Meta (Facebook) didn’t go the distance, no pun intended. However, more recent ventures from the like of Airbus with Zephyr and NTT DoCoMo are driving momentum with MOUs and trials. The HAPS Alliance has also become more active in this area. But more on these later.
The key point to grasp is that these new connectivity options through LEOs and HAPS will work well on their own but the ultimate goal is to provide a seamless umbrella of connectivity for the individual user. The vision of a user carrying an individual device anywhere without losing connectivity is so much closer to becoming a reality today. But this vision obscures the fact that mobile networks must be integrated with NTNs, and this work is being done through the auspices of the 3GPP. The 5G standard’s upcoming Release 17 and 18 have numerous features that will enable 5G specifications to be used in both satellite as well as HAPS, thereby making 5G the first near universal connectivity technology for mobility. This will also mean that 5G, from an architectural point of view, will become a hybrid architectures and bridge cellular, LEOs and HAPS. In other words, 5G will become a network of networks. 5G as a network of networks will also subsume the emerging categories of private 5G, or non-public networks (NPNs) in 3GPP parlance, as well as IOT networks like today’s Low Power Wide Area Networks (LPWAN).
2023 will see renewed efforts to bridge the Digital Divide
Since the onset of the Covid19 pandemic and its related lockdowns and disruptions, there has been a renewed focus on broadband connectivity, as a new pattern of remote access to work, school and entertainment took hold. As a result, the long-standing issue of the Digital Divide has come squarely into focus and efforts have been redoubled to bridge the divide. There are several technologies that can now be utilized to bridge this gap.
Fiber – this seems counter-intuitive but in reality, there has been a surge in demand for and investments in fiber over the last two years. Not only is there organic demand from consumers whose work, school and other activities have shifted online, there is also significant funding from Governments (RDOF in the US and the European Recovery Funds are good examples) and private equity funds (KKR, Macquarie and others) around the world that are driving investments in broadband and fiber connectivity. Fiber demand is also shifting to new regions around the world. For example, while China’s massive investment in fiber has started to tail off, demand for fiber has picked up in other regions like North America and Asia. In both the South Asian and Southeast Asian (SEA) regions, there are several countries that still have low fixed broadband connectivity which translates into several million households that are still unconnected and are now driving demand. Of course, there are several markets where fiber will not be able to reach the last mile or specific user segments, either due to regulations or high costs. For example, in Japan, many high-rise buildings do not have available duct space for fiber. Fiber demand is also coming from the need for backhaul to handle the data traffic increases from new services like Fixed Wireless Access (FWA).
FWA - Much of the early hype behind FWA was that it would be one the first monetizable use cases for 5G networks. However, in reality, a number of factors have conspired to constrain 5G adoption until recently. To be clear, FWA has seen relative success in mid-band spectrum but not in mmWave where a number of challenges persist. These include availability of chipsets, affordability of the CPEs, lack of 5G spectrum, the onset of the pandemic and the difficulty of service providers in upgrading the underlying transport networks to enable FWA. Supply of CPEs is no longer an issue, with multiple vendors now offering CPEs, both for 4G and 5G. The majority of these OEMs have adopted Qualcomm’s Snapdragon platform and built their devices using the reference design offered. But FWA’s brightening prospects go beyond the improving supply chain issue. The addition of mmWave as a viable technology for FWA is potentially a major breakthrough. Previously, mmWave CPEs were too bulky, or too costly to be in consideration. Vendors like Nokia have built on the learnings from initial trials in Japan which overcome the indoor propagation challenges of mmWave by using high again antennas and algorithms to project the best possible signals. These new CPEs are already offering a range of 7 kms and beyond in trials today. The implication of this is massive as it means that mmWave spectrum, usually thought of as suitable for dense urban areas, can now be deployed for rural communities as well. While these rural sites need to be in line of sight (LOS), this innovation will bring a number of households and premises into the addressable market that were previously beyond reach.
Satellite-to-Mobile and HAPS - direct connectivity between satellites and smartphones is now a reality. A wave of announcement have hyped the potential of direct to device communications between satellites and smartphones. There are a number of reasons why this is possible today, including innovative and lightweight designs for satellites, massive advances in antenna technology, with beamforming and phases array technology helping push hundreds of beams simultaneously to enable these satellites to act as base stations, or as the GSMA put it, “Floating Towers in the Sky”. Apple was one of the first to announce its emergence service in collaboration with Globalstar. A wave of telcos have been announcing partnerships with satellite providers. In the US, T-Mobile announced a deal with Starlink, AT&T announced a partnership with AST SpaceMobile, and Verizon has been in talks with Amazon’s Project Kuiper. More recently, at CES 2023, Qualcomm announced Snapdragon Satellite, a collaboration with Iridium to utilize the latter’s constellation of LEO satellites with an enhanced smartphone (additional RF componentry) to enable two-way messaging. In a similar vein, there is also increasing momentum behind HAPS providers. NTT DoCoMo has entered into an MOU with Airbus and JSAT to test HAPS based solutions to enable what they are calling ‘Space RAN”. Both satellite-based NTNs and HAPS will boost coverage for mobile operators and connect users in remote areas, in the air as well as at sea. However, they will serve different purposes, with LEOs providing relatively lower bandwidth connectivity in rural and remote areas, while HAPS can be more niche and cover white spots in mobile networks as well as specialized use cases for defense, maritime and other verticals.
Overall, 2023 is shaping up to be an important and disruptive year for the telecoms industry, with new technologies and innovations helping pivot the industry towards new directions.