The 5G challenge for regulators – examining the cost of reserving spectrum for private networks

The critical nature of communications networks is being widely recognised by governments around the world in their fight against COVID-19. At the same time there is a growing understanding that 5G will play an important role in economic recovery from the crisis even after the impending wave of post-pandemic austerity.

5G can spur innovation in sectors at the frontline of fighting the pandemic, such as healthcare, as well as enabling businesses to innovate and reshape their operations to lead to quicker recovery. By enabling new wireless broadband services at very high speeds, 5G technology will also be essential to industrial transformation.

As governments turn their attention to supporting high speed network rollouts, regulators continually face the daunting challenge of deciding who gets access to spectrum. In the 5G era, we are seeing more competition for access, with some relative newcomers, like manufacturing, wanting in on bands the mobile industry uses (and plans to use) for 4G and 5G. This leads to the question: is reserving 4G/5G spectrum for only private networks an efficient use of this valuable resource?

A growing interest

There is a history of reserving spectrum for certain verticals. Private Mobile Radio (PMR) spectrum has been used for private communications networks on construction sites, for taxis and for private security. Public transport and emergency services often have their own spectrum licenses and private networks. Now other verticals, like industrial manufacturing, are asking for special access to spectrum. So, when it comes to looking at who should get access to the spectrum necessary to fuel the ultra-high speed 5G networks, regulators need to decide if and how much spectrum should go to each group.

5G enables super-fast data, very low latencies and small cell deployments – which suits applications like automated manufacturing. And many verticals want access to the same harmonised spectrum that mobile operators use because the mobile operators will drive enormous economies of scale that will bring down the cost of equipment that uses these bands. But when regulators think of setting aside some of this harmonised 5G spectrum for verticals or localised usage (as Germany has already done it in arguably the most important 5G band at 3.5 GHz), do they do so at the cost of consumers of commercial 5G services?

Slower 5G speeds

Spectrum set-asides mean mobile operators – and their vast number of consumer and business customers – will have access to less 5G spectrum. That means slower 5G. The ITU recommends each operator has access to 80-100 MHz in the mid-bands to provide 5G. Set-asides can make this impossible, especially given the main 5G mid-band (3.5 GHz) has proved difficult to clear of existing users. Interestingly, many of the existing users that regulators are trying to clear are vestiges from previous unsuccessful efforts to experiment with improving access to wireless broadband (e.g. WiMAX).

When less spectrum is available in 5G awards, evidence shows that the demand and subsequent prices paid for licenses can be high. Expensive spectrum takes capital away from deployment and has been shown to lead to reduced coverage, slower mobile data speeds and slower adoption of new technologies. Obviously, this is not ideal when launching 5G. This has been borne out in Italian and German 3.5 GHz 5G auctions where there are many press reports about how the limited spectrum supply forced up prices.

Putting cost aside, is setting aside spectrum for verticals an efficient use of the spectrum? How widely and intensively will these verticals use these set-asides? It seems unlikely the spectrum will be used outside of the relatively small number of locations where verticals would want networks (e.g. factories, airports etc). This means valuable 5G spectrum could be underused in areas where it is in great demand for mobile services. Trying to mix lots of independent mobile networks in close proximity (and adjacent to commercial mobile networks) also raises a range of serious interference issues.

A way forward

So, how can regulators support the needs of verticals without negatively impacting commercial 5G service? It can actually be very straightforward. Mobile operators already support verticals and can deliver private networks with dedicated spectrum where needed. Regulators can also tailor their normal award approach to meet the needs of verticals without undermining 5G more widely. The Finnish regulator assigned the whole of the 3.5 GHz band to mobile operators and included a regulatory framework for those mobile operators and verticals to work together.

Will 5G set-asides ruin 5G? The real answer is nobody knows for sure – the experiment has only just begun. But the risks to 5G are clear. It will be vital for regulators to assess their options and consult with the stakeholders to devise an approach that can suit everyone. It is important to note that in many countries with little spectrum available for 5G in mid-bands, the risks of set-asides are especially grave. Mobile operators could quite simply be left without enough spectrum to meet 5G expectations.

Regulators need to proceed with caution and avoid unnecessary risks. The GSMA has published a position paper that discusses the options and the risks, as well as proposes best practice. It is available here.