1. Session Theme: Regulatory Perspectives Presentation Theme: Regulation for 5G: Investment and Innovation
Presentation for:
Tomorrow in Now: A Workshop on 5G Technology, Operations and Regulation
Convened by
International Telecommunications Society (ITS)
Hosted by TELUS and Chalmers University of Technology 28 March, 2019
Erik Bohlin* Chalmers University of Technology, Göteborg, Sweden * This presentation develops joint work with Prof Johannes Bauer, Michigan State University, and Dr. Simon Forge, SCF Associates. A full paper with Johannes Bauer is entitled Roles and Effects of Access Regulation in 5G Markets (2018) is available Research assistance by Pratompong and Chalita Srinuan is gratefully acknowledged. Research financed by Deutsche Telekom AG. Contributions with Simon Forge are developed for a project funded by the National Broadcasting and Telecommunications Commission, Thailand, on 5G Valuation and Auction Design, with initial contributions presented at workshops in Bangkok, March, 2019.

2. What economics and regulation for 5G investments?
As ”sampled” by Simon Forge

3. Internet of Things 5G Infrastructure
5G investments depend on:-
Internet of Things
Factories & Machines
Transport & logistics
Health systems and hospitals
Agriculture
Cities & the built environment
Consumer goods
Media & communications
Applications
with novel
business
models justify
5G infrastructure
costs
5G Infrastructure
Basestations for small cells
Backhaul
Core network
Data centres
5G networks

4. 5G will require significant commercial investment:
China expects 5G to be 3 times capex of previous mobile generations (MWC’19)
One global 5G investment estimate:- US$2.7 Trillion just to end 2020; includes IoT*
Estimate of EU’s 5G infrastructure network investment: Bn Euros
Problems in financing - governments lobbied as lenders, plus new sources of working capital - with new partnerships between telcos, equipment suppliers and vertical industry users - share costs and spread risks.
Needs the IoT business models to justify financing
5G will take time to build - and to make returns
Commercial rollout for first version 2020, but really 2021
China expects 10 years to complete technical development and to rollout nationally.
Potential RoI may be spread over years* (cf 7-10 years for LTE and 3G)
Needs dense physical infrastructure for urban rollout
Requires numbers of cell sites with backhaul on a scale never seen before – eg if cell located every metres along the street – and if 50% of each square km of a city must be covered = over 700 small cells/km2 for a cell spacing of 30 meters.
Spectrum choices are wide-ranging
Fairly different bands round the world :-
UHF 300 MHz -3GHz – eg T-Mobile USA using 600MHz to cover the USA; ‘Mid-band’ 3.4 – 3.8 GHz – EU and others Low end of centimetric band – 4-10GHz eg China 3.5 & 4.9Ghz High end of centimetric - 26, 28 GHz – USA: ATT, Verizon Millimetric bands: 34, 38, 40-50, 60, 70, 80GHz.
* Greensill, Australia, Financing the future of 5G, 25 Feb 2019

5. For urban densification, expect more complex street furniture
to serve multiple small cell RAN technologies –
both indoors and outdoors, with a variety of backhaul technologies
Fibre Optic
Broadband
Backhaul
xDSL Backhaul
in existing ducts
5G Femto
5G small cell
Wi-Fi
3GPP
Macro
Site
Satellite Backhaul
Non-
LoS
Micro-
wave

6. 5G strategy Preparing to access the benefits of 5G
What is needed:-
5G strategy
- Industrial policy (not only telecoms policy)
Regulatory policy Investment policy
Deployment policy Spectrum Policy
Fast rollout for dense configurations of small cells

7. However, a recurring problem setting:
What regulatory models for investment take-up?
Source: Mobile Wireless Performance
in the EU & the US
by Eisenhardt, Caves and Bohlin, 2013

8. Capex per inhabitant in US$ (2018-2020 estimated)
Source: GSMA Intelligence, World Bank World Development Indicators; own calculations, as presented in Bauer & Bohlin, 2018.
Note: If the EU14 invested the same amount per capita as the United States, total capital expen­ditures in would be $27 billion higher. Over the five-year period between 2020 and 2025, when capex will predominantly support 5G network deployment, the accumulated investment gap could be more than $100 billion.
EU14 is here Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, Spain, Sweden, and United Kingdom

9. Updating the GSMA 2013 Report
Total mobile connections in the EU14 ( estimated)
Updating the GSMA 2013 Report
EU14 is here Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, Spain, Sweden, and United Kingdom
Total mobile connections in the United States
( estimated)
Sources: GSMA Intelligence; own calculations , as presented in Bauer & Bohlin, 2018.

10. 4G and anticipated 5G adoption per 100 inhabitants (2018-2025 estimated)
Source: GSMA Intelligence; World Bank World Development Indicators; own calculations, as presented in Bauer & Bohlin, 2018.

11. Monthly ARPU in US$ (2018-2025 estimated)
Source: GSMA Intelligence, World Bank World Development Indicators; own calculations as presented in Bauer & Bohlin, 2018.

12. Policy mix of three scenarios
Source: Bauer & Bohlin, 2018

13. Framework Driving the Scenario Analysis (I)
Source: Bauer & Bohlin, 2018

14. Framework Driving the Scenario Analysis (II)
Source: Bauer & Bohlin, 2018

15. Conclusion
A dynamic view of regulation for investment and innovation is needed for the converging future 5G infrastructure with its huge innovation potential
In the dynamic environment of 5G services, it will be important to take direct and indirect effects and feedbacks into account. The overall effects of these counteracting, positive and negative, forces on 5G deployment and innovation are difficult to anticipate.
Some network operators and players at higher layers of the value system will recognize complementarities and embed them in their business decisions but other players may seek to foreclose competition in undesirable ways.
Overall, the need to support entrepreneurship and innovation experiments in 5G markets and to allow the freedom to develop innovative contractual approaches suggest that enabling market forces should be the primary focus of 5G regulation.
Traditional regulatory approaches that design regulation as an intervention to mitigate market power may result in a 5G market design that does not support its full innovative potential.
Experience provides strong testimony that entrepreneurship and experiment in the market place are the drivers of innovation.