FOCUS: Regulation delays with resource clearing may obstruct 5G unrolling

By Yekaterina Yezhova

MOSCOW, Jun 3 (PRIME) -- While experts say Russia’s 5G market may value up to 2 trillion rubles by 2024, local major mobile operators urge the government tackle the issue of clearing the 3.4–3.8 GHz band, the most advantageous for connection of the new generation, and think the country is behind global leaders in the regulation and spectrum matter, but not technologies.

“The government recognizes 5G is as a key enabler for a U.S. $53 billion program Digital Economy with a set of ambitious targets across society and industries, such as improved labour productivity of 30% by 2024. Market capacity of equipment and software for 5G networks and Internet of Things till 2030 is estimated at over 300 billion rubles,” said Georgy Muratov, radio solutions lead at Ericsson in Eastern Europe and Central Asia.

Under the program, all big cities with more than 1 million citizens should have sustainable coverage with 5G networks by 2024.

State corporation Rostec’s National Center of Informatization (NCI) worked out a draft roadmap on cross-cutting technologies with three scenarios for 5G.

Under an optimistic scenario, the country’s 5G market is seen at 1.978 trillion rubles with the share of local products of at least 20% by 2024. Many industries will get additional economic growth thanks to use of 5G.

A basic scenario values the market at 1.098 trillion rubles by 2024 with the share of local products being at least 10%. It also contains a confident coverage with 5G networks of the biggest cities and creation of pilot zones to test technologies in various economy industries.

Under a pessimistic scenario, the market is seen at 218 billion rubles. There would be focal deployment of 5G but only in places of mass gathering of people in big cities and penetration of 5G user devices.

All the three scenarios stipulate the creation of regulatory and technological conditions for implementation of 5G networks in the country.

Most sought-after band

The cornerstone for progress of the new generation is still liberation of the 3.4–3.8 GHz band, which is viewed as the most convenient for 5G but is currently exploited by other users, including law enforcement entities that seem reluctant to cede the resource.

NCI experts said it would be reasonable to convert the band in 2019–2022, which would cost 16 billion rubles in 2020.

“Digital Economy stipulates 5G launches in main big cities already in 2021. Pilot zones must be organized this year, but without the 3.4–3.8 GHz band, it would all be smoke and mirrors. The millimeter range will not give a sufficient coverage level, while healthcare services have questions to this range, which could entail extra study,” Alexander Balyuk, head of new technologies implementation at mobile operator VimpelCom, told PRIME.

“An ecosystem could not be shaped for the 4.8–4.99 GHz band on time, and its future is unclear even in the countries, like Japan and China, where it was allocated for 5G. The 3.4–3.8 GHz band has a formed ecosystem on the global scale. Devices supporting it have already been announced by major smartphone manufacturers and will be available this year.”

A spokesman for mobile operator MegaFon said options to use the band will appear only as it is cleared. “MegaFon is ready to participate in such measures. Federal program Digital Economy will be at stake without 3.4–3.8 GHz,” he said.

“The global experience proves it: the band in question is optimal for industrial development of 5G. We should keep in mind that the minimum size of a spare band for every operator should be at least 100 MHz. If it is narrower, values of the technology’s products would decrease: slower speed and wider lags. Meanwhile, we’re starting testing options in the 25.5–27.5 GHz range and have duly applied for it.”

The 25.5–27.5 GHz range, however, does not suit 5G massive use. “In order to implement tasks of development of the digital economy and introduce 5G technologies, the 3.4–3.8 GHz band should be cleared within the shortest time,” the MegaFon spokesman said.

Muratov at Ericsson said the situation with the band is still uncertain. “Operators were to apply to the regulator for a spectrum in the 4.8–4.99 and 27.1–27.5 GHz bands to perform tests in selected territories across the country. Limited and delayed spectrum availability will not satisfy the needs to build four 5G networks (for four local leading mobile operators – MTS, MegaFon, VimpelCom, and T2 RTK Holding). Some type of network sharing collaboration will likely be required and is intensively discussed,” he said.

T2 RTK Holding press secretary Daria Kolesnikova agreed that the 3.4–3.8 GHz band is the most convenient for 5G, and rates of implementation of the standard in the country depend on its clearing. “The problem of deficit of the frequency range could be settled by a model of a single infrastructure operator,” she told PRIME.

“Tele2 welcomes a scenario of a single infrastructure operator on the local market to propel 5G. This model will make it possible to build a full-fledged network in the country, ensure a non-discriminatory access of operators to infrastructure and reduce expenses to introduce the standard.”

Infrastructure operator

VimpelCom thinks the joint use of infrastructure on the basis of parity inter-operator relations would be better for the market. “We have a positive experience of joint construction and exploitation of LTE networks infrastructure on the basis of such agreements. We can apply this expertise to 5G networks as well,” the operator’s executive Balyuk said.

The scenario of a single infrastructure operator conveys risks for the market, security, reserving, and resilience of a network on the whole. “By the way, we can observe negative consequences of a single operator in Belarus, where other operators always face problems with quality of services when connecting to infrastructure of the single operator,” Balyuk said.

“It is even separately stipulated in allocation of a spectrum in other countries. For example, in Austria an auction for the 3.4–3.8 GHz band includes an option of parity agreements on the joint use of infrastructure. Players with a large spectrum resource are limited in purchasing new resources at an auction, which ensured parity agreements to build and use infrastructure.”

The Federal Antimonopoly Service spoke against a single infrastructure operator as well because it could result in a monopoly, stagnation, and a loss by the government of revenue from potential frequency auctions.

Behind leaders

On the global scale, Russian operators are not behind the world leaders from a technological point of view. “In particular, we’re ending a large upgrade of networks in Moscow, which will allow us to unroll 5G within the shortest period. Infrastructure is ready, but regulation is behind,” Bilyuk said.

“In other countries, China, the U.S. and Europe, all authorities jointly work on allocation of a spectrum to operators because they understand that 5G networks are impetus to further economic growth of the country on the whole. The frequency question has always been quite complicated in Russia, but we can say in case with resources for 5G it’s an apogee.”

The MegaFon spokesman said Russia is behind such countries as South Korea, the U.S., and China in the regulatory and spectrum matter. “They are ahead because their governments have duly cleared the bands needed for the standard,” he said.

Bright future

Prospects of 5G use are enormous. “As the technology evolves, new scenarios, especially those requiring super-high speed and short lags in signal transfer, will be in demand. It will be mainly automatization, driverless transport, online medicine, virtual entertainment,” T2 RTK Holding press secretary Kolesnikova said.

“Anyway, machines, not ordinary subscribers, will be the main users of 5G. People do not need yet all opportunities of the technology, but high speed.”

Demands of ordinary clients, like search for information in the Internet, music or video, are fully met by 4G. “Certainly, 5G will get a wider implementation in business. It will hugely influence evolution of key spheres of urban life: education, healthcare, housing and public utilities. This is why the standard will emerge sooner in the business-to-business segment than on the mass market,” the MegaFon spokesman said.

Muratov at Ericsson said the Russian mobile market is successful and competitive which benefits the development of the country. “However, to preserve and develop the successful market it is essential to eliminate current barriers for 5G development, like spectrum allocation, technology neutrality on existing bands, secure continued competition and maintain free global collaboration,” he told PRIME.

(65.3834 rubles – U.S. $1)

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