Intelligence Brief: Should you care about CBRS?

Last week, the FCC approved five companies to begin initial commercial deployments of the Citizens Broadband Radio Service (CBRS) [1], which introduces a flexible model for spectrum sharing in the 3.5GHz band.

This development represents a major milestone in what has been a huge talking point in the US over the last few years. Nevertheless, CBRS is not widely understood elsewhere even though its implications are potentially wide-reaching. This makes it important to explore what CBRS means for mobile operators, as well as those companies outside of the industry, which will use CBRS as a testbed for deploying their own connectivity solutions.

How does CBRS work?
The CBRS initiative opens up 150MHz of the 3.5GHz band (3550MHz to 3700MHz) using a three-tiered approach to spectrum management:

Incumbents: Includes military, satellite providers and wireless ISPs. These users have the most rights over the CBRS spectrum.
Priority Access Licences (PAL): Holders pay to buy rights to a portion of the spectrum (70MHz), but can only use the spectrum when it is not in use by incumbents. The PAL spectrum auction takes place in 2020 using county-sized licence areas.
General Authorised Access (GAA): Users will be allowed localised access to up to 80MHz of spectrum as long as it does not interfere with incumbents or PAL holders. GAA spectrum will be made immediately available for commercial deployments.

The five companies approved by the FCC to start commercial deployments (Amdocs, CommScope, Federated Wireless, Google and Sony) are Spectrum Access System (SAS) administrators. Their role is to manage requests to use the spectrum at particular times and in certain areas, ensuring there is no interference between the three tiers.

How does CBRS benefit mobile operators?
In GSMA Intelligence’s report Region in Focus: North America (released this week), we look at the latest telecoms and broader TMT trends in the region, including a detailed look at CBRS’s potential impact on mobile operators. One key benefit will be the chance for operators to use CBRS spectrum to boost mobile capacity in congested locations. This is similar to how some operators deployed the unlicensed 5GHz band via Licensed Assisted Access (LAA).

Mobile operators seeking to enhance capacity will benefit from 3.5GHz spectrum emerging globally as a key 5G licence band. This means we can expect to see a steady release of new smartphones compatible with CBRS, including the latest iPhones and Samsung Galaxy devices.

Yet, CBRS’s potential extends beyond smartphones. It presents mobile operators with a chance to deliver home broadband services through fixed wireless access (FWA) technology. These deployments can be expected as early as this year, with AT&T already working with Samsung and CommScope to rollout FWA services using CBRS spectrum.

New opportunities, new players
CBRS will also drive change in other areas. For example, the use of localised spectrum licences makes it easier to deploy a location-specific mobile network, which allocates a dedicated slice of bandwidth for the sole use of a specific customer.

Demand for location-specific networks is likely to come from several enterprise verticals such as the manufacturing sector, which could use CBRS to support the high-speed mobility required by robots and vehicles as part of factory automation. There is also likely to be interest from industries involved in handling sensitive and personal data, attracted by the increased security offered by isolating their data from public networks.

CBRS also enables other solutions, such as neutral host networks. These are most common as localised deployments in busy places requiring ultra-high bandwidth (for example airports, shopping centres and stadiums). Several companies are trialling neutral host solutions including Wi-Fi hotspot operators (for example Boingo), equipment vendors and other localised network providers (Dense Air). CBRS allows neutral host networks to be deployed without mobile operators sharing licensed spectrum, easing commercial and technical obstacles.

Mobile operators are most likely to lead initial CBRS deployments. At the same time, operators can’t assume to be the default providers of connectivity. CBRS lowers the cost of entry to new providers, and many enterprises are taking this opportunity to experiment with deploying their own solutions. For example, Amazon plans to deploy CBRS at its Sunnyvale campus in California, building on a demo at AWS re:Invent 2018 where it showcased real-time surveillance cameras and smart meters.

What to expect next?
The initial commercial deployments of CBRS must run for a minimum of 30 consecutive days. SAS administrators will then report their findings to the FCC, ensuring their systems worked to prevent interference between users. After this, we will be closely watching out for further CBRS deployments as well as other key milestones, including:

PAL auction: PALs come with longer licence terms, larger coverage areas and greater rights than the GAA tier. However, the cost of acquiring PALs is likely to reflect these benefits. As such, the PAL auction will be a true barometer of demand for spectrum from those companies outside the mobile industry, which are deploying CBRS solutions in the GAA tier.
CBRS in 5G: CBRS will initially use LTE, with support for 5G coming later in the CBRS roadmap. This poses a dilemma to companies interested in deploying CBRS: move early on LTE or wait for 5G support? Many customers began planning their deployments when 5G was still a way off (reflecting the significant delays encountered by CBRS). It is therefore unlikely they will wait until CBRS supports 5G to commence deployments. This underlines the strong early demand seen by SAS administrators (such as Federated Wireless), which indicates LTE meets the initial CBRS requirements of most customers.
More spectrum sharing initiatives: If successful, CBRS could lead the FCC to pursue similar initiatives in other frequency bands. There will also be implications beyond the US, with many countries contemplating the merits of spectrum sharing initiatives. Some of these have already come to fruition, albeit in different forms to the three-tiered approach of CBRS. UK regulator Ofcom is enabling spectrum sharing through Shared Access and Local Access licences across four bands, while Germany’s Bundesnetzagentur has a gone a step further through reserving 100MHz of mid-band spectrum for local use.

James Joiner – analyst, Core Mobility Research – GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.


Intelligence Brief: Who would licence Huawei 5G tech?

Last week, following a two-hour interview of Huawei’s CEO and founder (Ren Zhengfei) by The Economist [1], the vendor’s 5G network solutions became the buzz of the mobile tech industry, yet again. For much of this year, those solutions have been in the news because of a potential (and, in some cases, real) prohibition against operators deploying them. The news last week was different.

Over the course of the interview, Ren said he would be willing for Huawei to license its 5G technology (existing patents, code, production techniques), allowing a third party to control and alter the code, building 5G kit based on these assets and ensuring that Huawei would have no control over any infrastructure that results.

And, over the course of the week that followed, various folks weighed in on what this all means. To their credit, the punditry generated a lot of great insight into why Huawei would make such an offer. That’s an important question. But it’s not nearly as important as questions around what comes next and how the market (including operators and other vendors) might react to Huawei’s offer.

What’s the Huawei strategy behind all of this?
This is an easy one, if only because it’s been discussed so much already.

The concept of licensing existing 5G assets (patents, code, technical blueprints) and giving a buyer permission to alter the source code is all about building trust while monetising existing R&D. If another company can leverage Huawei’s core 5G assets in order to build its own solutions, that company can (in theory) ensure that it’s secure. The licensee benefits by capturing business based on Huawei’s 5G know how. Customers benefit from equipment they know is safe (without dependency on a party they don’t trust). Huawei benefits by generating revenue that it wouldn’t otherwise have access to. Win-Win-Win.

There is another angle here too. We’ll come back to that at the end.

Who would buy third party kit powered by Huawei?
Past performance, as they say, is no guarantee of future results. Putting that aside for the moment, Huawei claimed earlier this month that it had secured more than 50 commercial 5G contracts. In other words, there’s a good body of empirical evidence suggesting that Huawei’s 5G kit is compelling, and not just in price sensitive markets. If another vendor could replicate these products, then their offer should be compelling as well.

And if there was ever a time for a new vendor to enter the market with a compelling product offer, that time is now.

[2]In a poll of 100 operators across the globe (think the vast majority of mobile connections and capex), the GSMA Intelligence team checked on whether or not 5G was going to be an occasion to bring on new network suppliers (see chart left, click to enlarge). The verdict? More than half plan to do just that. Just as importantly, only about 20 per cent think it’s unlikely that they’ll bring on new suppliers in their 5G builds.

What’s been holding back operators from introducing new vendors to date? From integration issues to corporate culture and tepid RoI expectations, a plethora of considerations keep incumbents in place. But the number one factor conspiring against new suppliers? Network security concerns. If trust is the issue Huawei is looking to solve with a potential licensing scheme, it seems well-aligned with operator thinking around new suppliers.

Who would license Huawei’s 5G know-how?
Of course, before any product based on Huawei’s 5G assets gets built, there would need to be an interested licensee. On this front, two factors come into play: costs and future R&D.

It’s no major insight to note that a 5G licensing agreement with Huawei would find many more takers if priced at US$5 million vs. US$5 billion. But given the investments (time and money) Huawei has already made in 5G, it’s likely that the vendor would be looking for something closer to the latter sum. And there are only so many companies who would be interested and able to pony up that amount of money.

Start-up 5G infrastructure players? The cost would be prohibitive.
Incumbent 5G infrastructure players? They aren’t exactly flush with cash and the marginal value of additional 5G assets would be questionable.
Webscale and enterprise players? This might make more sense: they’ve got money and 5G solutions could play into virtualisation and enterprise digital transformation trends.

But then there’s the question of future R&D.

If Huawei is only offering up its current patents, code and processes, any licensee would need to be ready to invest heavily in future development. Huawei will certainly be investing on this front; any third party products based on a Huawei license circa 2019 will quickly be uncompetitive without similar investments. This is probably the biggest sticking point in the plan. Given Huawei’s R&D scale, it’s unclear that a licensee could keep their offer competitive going forward. And if the goal is to assuage government fears over security, there’s no real assurance that Huawei won’t alter its code going forward in a way that isn’t transparent – or that third party licensees could be trusted.

Presumably, Huawei and its CEO know all of this and understand the slim odds of this actually moving forward. If so, then the licensing proposal needs to be looked at from a different perspective. Rather than looking at it as a clear, easy, workable solution, it needs to be seen as an attempt at a solution. It might not be a great (or even viable) solution, but it’s a signal that Huawei – in the middle of a seemingly intractable problem – is actively looking for ways to get past current trust concerns and potential geo-political technology splintering. That’s got to be worth something.

– Peter Jarich – Head of GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.


Intelligence Brief: Is Germany ready for IFA tech?

Europe’s largest consumer technology show, IFA 2019, has wrapped up for another year in Berlin. Although the show is based in Germany, its focus is global. That said, it is important to understand that while the show is global in scope, local market conditions are an important factor in any analysis of emerging technologies and trends.

So, let’s look at the German market, both because it is the host country and to draw attention to the uniqueness of Germany in the global consumer electronic market landscape.

Most consumer tech ecosystem players were on hand to showcase their latest creations, platforms, and products, giving press and the public a glimpse at the future of connected homes, entertainment, transportation, the latest in gaming technologies and, of course, the latest smartphones. Among announcements from nearly all major consumer electronics brands, several key themes emerged which showed what consumers can expect in the near future, both in Germany and globally.

The next-generation technology was omnipresent at IFA 2019. Discussions around the impact of 5G in 2019 have increased relevance, as numerous countries have launched services this year. And no two companies were more passionate in evangelising the advent of 5G than Huawei [1] and Qualcomm [2] in their respective opening keynotes.

While Huawei emphasised the all-encompassing power of 5G to connect everyone and everything, Qualcomm was eager to note the potential for fixed wireless access (FWA) that could be positioned to eventually replace traditional wired broadband internet configurations in the home and in the workplace.

The potential of 5G to replace fixed broadband is good news for operators and consumers alike: as household devices are increasingly connected, the bandwidth and speeds offered by 5G can enable a seamless smart home (or workplace).

And what does Germany look like on this front? Brand new data from the GSMA Intelligence 2019 Global Consumer Survey suggests only 21 per cent of German consumers intend to upgrade to 5G when it becomes available. Moreover, any attempt to transition to FWA 5G in the home will face fierce competition from legacy players in the fixed broadband market. To generate interest, some operators are considering bundling 5G services with IoT or gaming to entice consumers. Unfortunately, this initiative may have limited impact: found that in Germany, only 10 per cent of consumers would be likely to invest in a 5G subscription if IoT devices were bundled with the offer.

Nevertheless, one clear takeaway from IFA 2019 is that 5G is not only on its way, it is here to stay. Consumers can expect the rapid proliferation of 5G enabled devices in 2020 and beyond.

Ubiquitous connectivity in the home
IFA 2019 is a showcase for connected everything: washing machines, ovens, dishwashers, vacuums, and even a connected closet from Samsung. While each vendor in Berlin seemed fully invested in connected devices in the home, the Consumer Survey data indicates the German market is actually among the slowest to adopt connected smart home devices (see chart, below, click to enlarge).


While in markets such as the UK and the US, connected devices hover around a 50 per cent adoption rate, ironically, Germany, the host of IFA 2019, lags significantly behind. Among the reasons cited by German consumers for their reluctance to adopt connected devices in the home are privacy and security concerns (31 per cent), and a lack of understanding of the value of connected devices (54 per cent). Given consumers privacy concerns and their overall indifference to the smart home, vendors will have an uphill climb in growing the smart home market in Germany.

Another significant takeaway from the chart is that across all the markets shown, adoption of smart home devices has stagnated year-over-year, with no new uptake since 2018. This raises some concerns for vendors at IFA and beyond, which have invested heavily in their “connected everything”.

Digital assistants
[4]The slogans “works with Google Assistant” and “works with Amazon Alexa” may well be my most lasting impression of IFA 2019, mirroring the experience from CES for many people. These slogans were emblazoned across a seemingly unending array of product types, from coffee machines, to dishwashers, televisions and clocks.

When I asked Amazon if it hoped Alexa would be the default access point for connected devices inside and outside the home, my question was met with some equivocation. Yes, basic functionality could be accessed with Alexa-enabled devices, but for more granular instructions to different devices, the proprietary application included with the device in the home would need to be used. The fundamental problem here is obvious: as these connected devices proliferate, each with their own associated application, it will become extremely unwieldy to sort through a dozen applications to find the controls for the device or appliance that a consumer is looking for. This constitutes a major customer pain point.

Furthermore, there is the issue of a digital assistant usage patterns. Our survey showed the proportion of users accessing their digital assistants on a daily basis is, with the exception of the US, very low (see chart, below, click to enlarge).


For digital assistants to become the portal through which a consumer accesses connected devices, these numbers will need to increase in the coming years, which will perhaps be the inevitable consequence of the increasing number of partnerships between Amazon, Google, Apple and ecosystem vendors, as they embed their digital assistants into a multitude of new products.

Final word
As planned, IFA 2019 had something (insights, at least) for everyone. For operators, the prospect of FWA 5G as an alternative to fixed broadband is an enticing new revenue opportunity. For ecosystem vendors, while there remain significant hurdles in adoption for “connected everything”, the industry is nonetheless pursuing this objective, even in markets which are more resistant to new technology adoption such as Germany.

For us at GSMAi, IFA provided a lens through which to view our 2019 Consumer Survey results: look for more from that soon.

Jason Reed – lead analyst, Consumer and Survey Insights – GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.