Operators are enthusiastic about deploying 4.5G: This will affect the commercial use of 5G

In 2017, more and more operators around the world announced plans to deploy Gigabit LTE networks. Take the United States for example. In the first week of January, AT&T and T-Mobile both announced plans to deploy faster 4.5G technology in 2017. Their competitor Sprint had already promised in December last year to launch Gigabit services in 2017.

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There is better news on this front, with Russian operator MTS claiming to have switched on its LTE-Advanced Pro network, and with Nokia recently announcing 110 4.5G contracts, it is not hard to foresee European operators joining the race to deploy 4.5G in the coming weeks.

However, some foreign experts have expressed the view that the widespread deployment of 4.5G is not only a positive, but also has negative effects. The high availability of Gigabit LTE will also increase the pressure on 5G developers. 5G technology is the real game-changing technology, and the widespread deployment of Gigabit LTE may even affect the strategies of operators to start deploying 5G.

4.5G is urgently needed in the fields of fixed wireless broadband and mobile TV

4.5G is an upgrade, not a completely new technology, and it can be deployed relatively economically, using existing 4G assets and spectrum resources, which is crucial because operators' networks need to cope with large amounts of video traffic, while operator revenue growth remains elusive. Including last year's 3GPP R13 version, LTE-Advanced Pro is able to use technologies such as carrier aggregation and MIMO to increase capacity. In addition to being attractive to operators, such demand is also good news for equipment suppliers who need to ship in the second half of 2016.

In developing markets, operators may be eager to use LTE-Advanced Pro as a solution for providing fixed wireless access in communities that are not well served by wired broadband technologies. Many operators have successfully used LTE to provide such connectivity to customers, and 4.5G will enhance such offerings.

In more developed markets, 4.5G could have an impact on the mobile TV strategies of operators, including AT&T in the US and EE in the UK. Without gigabit mobile connections, such players may struggle to support higher-quality video services.

However, foreign experts said that operators' commercial demand for 5G is also similarly based on the demand for this higher-speed connection. Unless 5G provides substantial improvements over 4.5G in a commercial environment, operators may be in little rush to launch it. At least the high availability of Gigabit LTE will affect operators' indicators for pursuing 5G.

Operators in no rush to launch 5G

According to foreign media reports, Bengt Nordström, CEO of Northern Consulting, expressed doubts about most operators' desire to deploy 5G as soon as possible. He said that for the communications industry, the bread and butter is still the development of 4G. As for the current industry's general claim that 5G will be commercially available in 2020, he believes that it depends on whether a mature 5G business model will emerge, and large-scale 5G deployment will not occur until at least six years later.

Foreign experts believe that if there are no other factors, the success of 4.5G will raise the standard of 5G. The success of 4.5G will not affect the long-term demand for 5G, but it may affect the way 5G is first introduced. Instead of pursuing mobile broadband opportunities, operators may invest more in serving vertical markets, where low latency is the priority for operators rather than high speed.

Sami Elhage, president of Nokia Mobile Networks, also said at a press conference in London last December: "Low latency is the biggest driver of 5G." Of course, Nokia's statement may be because wide area networks for the Internet of Things may have greater sales opportunities than mobile broadband from a supplier's perspective.

However, for operators, the business model remains unclear. "There is already a tangible business case for 5G, which is fixed wireless access," Nordström said. "The 5G story for areas such as autonomous vehicles and smart building infrastructure is interesting, but not necessarily good from a business perspective."

Currently, most global operators, except for Verizon, which regards 5G services as the vanguard of fixed wireless broadband, have not given 5G services a high priority. In fact, it is not surprising that it will take several years for 5G standards to mature and be commercially available. However, it is also fascinating to see how operators' 5G strategies change with the deployment of 4.5G.