2020 Will Be A Consequential Year for Mobile

Next year is going to be one of the most consequential in the 30-year history of the cellular business. Numerous factors are coalescing in a way that will shape the industry, and the types of services offered to consumers and enterprises, for years to come. Here’s a brief tour of the key issues, incorporating some opinions and predictions.

5G

5G will dominate the wireless industry news cycle in 2020. Even as we start experiencing an accelerated pace of network and device rollouts throughout the year, it’s going to become increasingly clear that 5G is long ball. Do not expect meaningful revenues, or game-changing uses cases coming from 5G during 2020. Millimeter wave based deployments will continue to resemble a Swiss cheese, and it’s not clear that they’ll move beyond being a niche, ‘hot spot’- centric service with specific use cases, at least in the near term. There’s a distinct possibility that the 2020 version of the iPhone will not support mmWave. On the opposite end, it’s clear from T-Mobile’s 600 MHz launch that ‘coverage-centric’ 5G at the lower bands yields only modest improvements over LTE.

Three things could change the game: action in the mid-band, through resolution of the T-Mobile/Sprint case and C-band auctions that could occur before the end of the year; AT&T’s more fully leveraging its spectrum assets to deliver the first compelling ‘mobile 5G’ service in the U.S.; and service providers starting to re-farm their lower band spectrum for 5G, including dynamic spectrum sharing (DSS) techniques, which allows channels to share LTE and 5G. The potential for 5G becomes real when 5G leverages multiple spectrum bands, low-mid-high.

Opportunities for 5G in the enterprise, which is where many of the game-changing use cases reside, won’t really kick in until 2022 or so, which is when equipment, software, and devices based on 3GPP Release 16 will become more widely available.

Spectrum

We all might be frustrated by what’s happening in Washington these days, but Ajit Pai’s FCC has been impressively laser-focused on getting more spectrum into industry’s hands, and soon. The first three months will see continued auctions of mmWave spectrum. The CBRS PAL license auctions are scheduled for 2020, and could be very interesting in terms of new types of players (i.e. cable, Internet) and even some enterprises bidding for spectrum.

It’s also looking increasingly likely that there will be C-band (3.7-4.2 GHz) auctions toward the latter part of 2020 or in early 2021. Mid-band spectrum is increasingly becoming a big part of the global 5G story. It’s where a lot of the 5G (especially standalone) deployments are going to occur in Europe, China, and other parts of Asia. Mid-band will also prove increasingly critical to Verizon, and T-Mobile (absent Sprint). Mid-band could end up being the 5G backbone in the U.S. by the mid-2020s.

Devices

Any 5G device that’s currently available should be considered ‘early stage’, particularly since the initial 5G devices are geared toward very specific 5G bands (i.e. mmWave, 600 MHz). We’ll see a steady stream of 5G phones launched throughout 2020, at more varied price points. There are four big questions: First, pertains to mmWave. Will the performance of mmWave-based phones improve, as we continue to learn more about the vagaries of mmWave, such as antenna placement? And will there be an adequate selection of mmWave-based devices, most importantly a mmWave iPhone? Second, is what device performance will look like when they start supporting multiple 5G bands…and how many different bands the next generation of phones will support. The third key question pertains to Apple’s 5G strategy. They’re likely to release a 5G iPhone in the fall of 2020, but the wild card is whether it will support mmWave. And fourth, is the need to see some additional devices that leverage 5G, other than smart phones and mobile hotspots. It’s likely we aren’t going to see much beyond this ‘enhanced mobile broadband’ phase of 5G during 2020. But a year from now, a clearer picture of this next stage will start emerging.

CBRS/PLTE/Enterprise

We’re still in the very early stages of the CBRS (3.5 GHz, shared spectrum) launch. Next year will be pivotal, as we see the first wave of commercial deployments. Also, the PAL auction, scheduled to begin in June, provides an opportunity for entities other than the incumbent mobile operators to acquire spectrum. This could include cable companies, DISH, major Internet players, and some enterprises themselves.

An important aspect of CBRS is the opportunity for Private LTE, whereby enterprises can use dedicated or shared spectrum to deploy a private cellular network. This is an opportunity for companies in certain verticals, such as energy and hospitality, to offer enhanced coverage, capacity, and security. In some cases, Private LTE could be a compelling alternative to Wi-Fi.

Industry Structure

There are some big questions in 2020 related to industry structure. Of paramount interest is resolution of the T-Mobile/Sprint saga. If the deal goes through, the competitive landscape will be reshaped. New T-Mobile would be a 5G juggernaut, armed with Sprint’s 2.5 GHz spectrum, and more. It would also become a bigger player in IoT and the enterprise. If the deal is not approved, there will a new round of discussions about ‘what to do with Sprint’, which is unlikely to survive on its own.

Hanging in the balance is DISH. There’s a provisional deal as part of the New T-Mobile, which will start DISH down the road of becoming a fourth national competitor. If the T-Mobile deal doesn’t go through, DISH will need another major partner, or anchor tenant, in order to finance its 10+ billion (required by the FCC) network build.

Other key industry structure questions include: the potential participation of entities other than incumbents in planned spectrum auctions; the future of Verizon’s media unit; the impact of the Streaming Wars on the mobile sector; the future of DirecTV within AT&T; and how and whether AT&T will leverage its Warner Media unit in mobile, particularly in the 5G era.

The Geopolitical Landscape

As the near daily headlines over the past several months have made abundantly clear, the mobile space and 5G are very much caught up in the fraught geopolitical climate. If The Tech Cold War gets even colder, the competitive and supply chain landscape could become even more profoundly affected, impacting availability of 5G equipment and devices. One would imagine that there could be retaliation for the ban on Huawei and other Chinese suppliers. Closer to home, the stalemate in Washington, and the upcoming 2020 election could stall initiatives such as planned spectrum auctions, or result in rogue actions.

So, it appears that 2020 for the mobile sector will not lack for drama. On the one hand, there’s a sense of great opportunity, with 2020 being the first full year where 5G will be deployed broadly, in numerous countries. It’s also looking like the spectrum auction/allocation roadmap could result in the needed capacity, in favorable bands, to help fulfill the promise of 5G. But there are also wildcards, mainly regulatory and geopolitical, that could dilute some of this promise or stall its progress.