Ovum

TMT intelligence |

5G – Deployment and Commercial

Considerations
 CONTENTS ABOUT THE AUTHOR
Summary.............................................................. 3
In brief..............................................................3
Ovum view........................................................3
Recommendations...........................................3

5G network considerations and options............... 4

5G provides the widest range
of spectrum options that mobile
operators have ever had..................................4
There is more than one way to deploy 5G.......4
Massive MIMO is key to improving both
coverage and capacity......................................7
Cloud RAN and preparing LTE for 5G..............8
Preparing the transport network for 5G.........9
5G ecosystem...................................................... 10
Strong vendor support for 5G........................10
Antennas are now more important
than ever.........................................................10
Chipset vendors are getting ready for 5G.....11
Daryl Schoolar,
Practice Leader
Daryl covers the wireless infrastructure space at Ovum, with
a primary focus on market activities as they apply to the
radio access network (RAN). RAN coverage includes macro-,
micro-, and picocell solutions for CDMA EVDO, HSPA/
HSPA+, LTE (TDD and FDD), and LTE-Advanced. Daryl’s
research includes not only what infrastructure vendors are
developing, but how mobile operators are deploying and
using these wireless networking solutions. Daryl also leads
Ovum’s Next-Generation Infrastructure team. That team
covers all access technologies, fixed and mobile, along with
operator trends with network transformation around NFV
and SDN.
As an industry analyst, Daryl has been involved in such
projects as helping technology vendors develop use cases
for new products and services, identifying new technology
trends, and providing market sizing and market share
support. He regularly speaks at industry and vendor events
on trends impacting the wireless infrastructure market.
He is also sought out by trade publications to comment on
mergers and acquisitions, new product announcements, and
market developments as they relate to his coverage area.

© Copyright Ovum 2017. All rights reserved.

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2 TMT intelligence informa © 2017 Ovum. All rights reserved.

 Summary
In brief
In a few years, operators will start rolling out commercial, standards-based 5G networks. In doing
so, these operators will face a variety of deployment scenarios based on spectrum and other various
factors. The deployment decisions they make will impact what the network looks like and the types of
services offered. Operators need to understand the trade-offs that come with different 5G options.
Given the different factors involved, operators today are gravitating toward deploying their initial
5G networks using the 3.5GHz spectrum band. By using new antenna technologies, 3.5GHz gives
operators the best balance between coverage and capacity, both of which will be needed to build a
robust 5G business.

Ovum view
• The capacity gains offered by 5G are important, but so is network coverage. Mobile networks need broad
coverage to attract subscribers and gain device manufacturer support.
• The most common band for initial 5G deployments will be 3.5GHz. Using massive MIMO (multiple input
multiple output) and beamforming, 3.5GHz can offer coverage that is comparable to that of the already
commonly used LTE band of 1800MHz.
• Massive MIMO is one of the most important technologies coming from 5G because it can significantly add
to spectral efficiency and can be used with all 5G and LTE spectrum bands.
• 5G networks are about much more than just a new radio. 5G will bring changes in the areas of network
virtualization, Cloud RAN, and massive MIMO. Mobile operators can start working on those changes
before they deploy 5G.

Recommendations
• Mobile operators need to start building their 5G business plans. Having a solid business plan will help
them in making network deployment decisions.
• Prior to deploying 5G New Radio (NR), mobile operators should take steps to get the network ready as
well as deploy LTE technologies that will be used with 5G. Network changes include transformation
from a hardware-centric network to a virtualized software-centric network. As part of the virtualization
process, operators should start down the path to a Cloud RAN architecture by at least centralizing some
parts of the 4G network.
• Operators need to continue to invest in their LTE networks, because these networks still have a long life
expectancy. Initial 5G networks will be spotty. Pushing LTE capacity to 1Gbps will help create a more
consistent user experience in those areas that lack 5G coverage.
• Mobile operators need to work with regulatory commissions to identify and make available 5G-capable
spectrum.

© 2017 Ovum. All rights reserved. TMT intelligence informa 3

 5G network considerations and options
5G provides the widest range of spectrum options that mobile operators have ever had
One of the big advantages of 5G compared to previous mobile technologies is spectrum. 5G supports a
wider range of spectrum bands than any previous mobile generation. Figure 1 below shows the wide range
of 5G spectrum possibilities.

With spectrum, however, there are very pronounced trade-offs. Lower spectrum bands have strong
propagation capabilities and are ideal for building out network coverage and penetrating buildings. The
main drawback of these bands is capacity. There is not as much spectrum in the lower bands, and given
that with any mobile standard there is a fixed bit-per-hertz capability, the amount of available spectrum
significantly impacts network capacity. The reverse of this is true with higher bands.

Figure 1: 5G spectrum

Traditional mobile spectrum bands, New spectrum expected to be made available for 5G
including LTE

400MHz 3GHz 6GHz 10GHz 30GHz 90GHz

Continuous coverage, high mobility, and reliability Higher capacity and massive throughput

Source: Ovum

As 5G pushes into mmWave spectrum above 6GHz, capacity dramatically increases. The size of those
spectrum bands will provide immense network capacity and make it possible for operators to have
multigigabit network speeds. However, those signals will have limited range and will be subject to greater
atmospheric and environmental interference. The mmWave bands are great for added capacity, but are not
suitable for building out a nationwide network.

There is more than one way to deploy 5G

The 5G network is not a singular thing. There is more than one possible network architecture for 5G so one
operator's 5G network very likely will look different from another's. Secondly, spectrum choices greatly
influence what the network looks like.

Nonstandalone and standalone radio access network architectures

5G theoretically can have 12 different network deployment options. However, the standards process will
eliminate some of these. Other options that do pass through the standards process might not be deployed
for many years, if ever. The different options come out of how the LTE and 5G networks are coordinated and
how the radio access network connects to the mobile packet core.

The first iteration of 5G will be what is called nonstandalone architecture. In nonstandalone architecture,
the 4G LTE network will provide the mobile packet core and network control plane. 3GPP is expected to

4 TMT intelligence informa © 2017 Ovum. All rights reserved.

standardize this version of the 5G NR by the end of 2017. This 5G architecture is one way mobile operators
will continue to leverage their LTE investments. Figure 2 shows nonstandalone 5G NR options.

Figure 2: 5G NR nonstandalone options and standalone option

Option 3/3a/3x: Option 2:

Nonstandalone/ “LTE assisted,” EPC conected Standalone NR, NGCN connected

Next-gen Next-gen
EPC
core core

“1A”

LTE NR NR

Dotted line = control plane; solid line = data plane

EPC = evolved packet core. NGCN = next-generation core network.

Source: Ovum

The other option is standalone. With standalone, the 5G NR connects to the 5G packet core and the 5G radio
provides both the control and data planes. Standardization of this option is not expected until June 2018.
With the standalone option, the network can support advanced 5G features, such as network slicing, from
day one. It also has the smallest impact on the existing 4G commercial network, making it easier to deploy,
and has better network performance than the nonstandalone option.

Building for coverage and building for capacity will look very different
As discussed earlier, some spectrum bands are better for coverage, while others are better for capacity. An
operator's accessible spectrum will play a big part in how the operator's network looks.

A 5G network built for coverage will use macro cells, with the goal of covering many people and large
geographic areas. Conversely, a network built for capacity will have a much smaller footprint.

5G networks based on high spectrum will have limited coverage/footprint due to propagation. Because of
this, those networks will have a targeted deployment scheme. The operator will deploy 5G in places that
need a capacity boost, such as dense metro areas, or for very targeted enterprise applications.

Ideally, operators will use a mixture of low-, mid-, and high-band spectrum for their 5G networks to balance
the needs for both wide coverage and high capacity. However, that will take time, and most operators will
initially start with a single 5G spectrum band.

© 2017 Ovum. All rights reserved. TMT intelligence informa 5

 3.5GHz becoming the global 5G spectrum band to provide best of both coverage and capacity
Officially there are no 5G spectrum bands yet. Designation of official 5G spectrum bands will not happen
until the ITU-R's radio spectrum conference in 2019. But, the results of that conference will reflect operator
and regulator activities taking place right now. And, right now, 3.5GHz, outside of a few countries, is gaining
considerable interest as one of the first bands for 5G deployments. Some countries without clean 3.5GHz
spectrum are considering alternative bands near 3.5GHz, such as in the US with 3700MHz–4200MHz. Ovum,
through the second quarter of 2017, has identified 15 markets where 3.5GHz has either been awarded for
5G or been used in trials. Those countries are as follows:
• Austria • Greece • Romania
• Belgium • Ireland • Slovakia
• Canada • Italy • Slovenia
• China • Hong Kong • Spain
• Colombia • Hungary • UK

A long-term benefit of 3.5GHz comes from its universality. It can be the initial global 5G band for network
roaming. Roaming based on mmWave bands will not be as efficient.

In the shorter term, there are several other reasons for interest in 3.5GHz. Unlike lower bands, 3.5GHz is
relatively unused. Operators do not have to refarm the spectrum before they use it. This could speed up
time to market. Secondly, there is approximately 400MHz of spectrum available at 3.5GHz. The 3.5GHz band
runs from 3400MHz to 3800MHz. Depending on the number of operators in a country, they could each have
enough spectrum to support multiple gigabits of network capacity.

Coverage is another big consideration with 3.5GHz. With newer antenna technologies, the coverage of
3.5GHz can be comparable to 1800MHz. Coverage remains one of the major underpinnings of a successful
wireless technology. With 3.5GHz, an operator can use macro sites, even reusing some existing sites, to
build its 5G network. This is much more cost efficient than building out large-scale coverage using small
cells. Beyond the cost consideration, better coverage means more subscribers.

Having more subscribers naturally leads to lowering of ecosystem costs for devices and network gear as
end-user demand increases. And, ongoing cost declines continue to feed the cycle of expanding coverage
and increasing service uptake.

Figure 3: Relationship between network coverage, service uptake, and ecosystem costs

Service
uptake

Network Ecosystem
coverage costs

Source: Ovum

6 TMT intelligence informa © 2017 Ovum. All rights reserved.

Massive MIMO is key to improving both coverage and capacity
A big part of 5G's performance improvements will come from massive MIMO. MIMO itself is not new. LTE
networks use 2 x 2 and 4 x 4 MIMO antennas. Some TDD networks have gone a step further with 8 x 8 MIMO.

With massive MIMO, the industry does not clearly define what is massive and what is not. However, for
TDD bands, the consensus is that for an antenna solution to qualify as "massive," it must have at least 32
R (receive) and 32 T (transmit). Vendors have even started demonstrating 128 x 128 MIMO. For FDD, due to
some technical limitations on the feedback channel and size of antenna needed for lower bands where one
finds FDD, massive MIMO is more limited. The ultra-low bands (sub-1GHz) might only reach 16 x 16 MIMO.
Above 1GHz, FDD is more suitable for massive MIMO; plans are already in place for 32 x 32 MIMO in this
spectrum range.

With massive MIMO also comes beamforming. With beamforming, the power of the radio signal can be
focused on the end user. Figure 4 below provides an illustration of massive MIMO and beamforming.

Figure 4: Massive MIMO

Vertical Massive MIMO simultaneously

beamforming supports three-dimensional
beamforming and MU-MIMO

Horizontal
beamforming

Source: Ovum

Massive MIMO benefits the network in terms of both capacity and coverage. The extra transmission streams
coming from the additional antenna elements allow for the transmission of more data without increasing
the spectral capacity. In other words, a 20MHz channel of spectrum can transmit more data quicker using
64 different antenna paths than it would with 4 antenna paths. Appling massive MIMO to larger spectrum
channels found in the 3.5GHz band will bring even greater capacity improvements to that band.

Beamforming improves coverage by focusing the transmit power on the end user, instead of spreading
the transmit power throughout the cell area. With beamforming, the end user is always in the optimal
signal area within the cell, in contrast to older passive antenna technologies where there is no targeting of
the radio signal. The concentration of the signal power extends the signal range. The enhanced coverage
coming from beamforming is why 3.5GHz using massive MIMO is expected to have network coverage
like that of LTE using 2T2R MIMO in the 1800MHz band. Massive MIMO enhances the already attractive
properties of 3.5GHz, making it ideal for initial 5G deployments.

© 2017 Ovum. All rights reserved. TMT intelligence informa 7

 Cloud RAN and preparing LTE for 5G
LTE will have a long life after 5G, no matter what spectrum 5G initially uses. There are many reasons for
this: operators want to maximize their LTE investments by operating the network for as long as possible;
initial 5G networks will have spotty coverage and need LTE for fallback; and there is a large embedded base
of LTE devices – both smartphones and IoT – that need to be serviced. In the near term, of course, the 5G
nonstandalone NR requires LTE for the control plane and packet core.

5G and its convergence with the existing LTE network will require changes in the mobile network
architecture. This is most evident with virtualized and Cloud RAN.

Network virtualization involves separating software from proprietary hardware boxes and deploying the
software on common X86 computing platforms. With RAN virtualization, unlike with other virtualized
network functions, the base station is not entirely virtualized. The radio and real-time low-latency functions
of the base band unit (BBU) remain as they are; only the nonreal-time functions of the BBU are virtualized.
Cloud RAN's role should be to manage and orchestrate all the virtualized resource and nonvirtualized
resource base station functions.

Cloud RAN is a 5G-oriented wireless access network architecture using both network virtualization and
network cloud technologies. Cloud RAN supports 5G CU (Centralized Unit) and DU (Distributed Unit) with
flexible deployment models. It also supports 4G network virtualization / cloudification evolution based on
a software-defined radio platform. Besides that, Cloud RAN coordinates multiradio access technology,
multiband operation, and load balancing to harmonize the coexistence of 4G and 5G, which provides a better
access experience for users, maximizes network efficiency, and enables the integration of new and diverse
services.

Figure 5 provides an example of what a Cloud RAN deployment could look like. The cloud at the upper
right represents the virtualized CU. The purple circles connected to it illustrate the 5G real-time DU
functions and radio heads. The other non-5G base stations are connected to the virtualized CU as well
for coordination. This includes the distributed LTE base station in blue and a centralized LTE base station
shown in red. The 5G virtualized CU is like the radio network controller found in 2G and 3G networks. As
this illustrates, Cloud RAN is more than just a virtualized RAN; it is an entirely new architecture.

Even before 5G reaches maturity, operators should take the following steps to prepare their LTE networks
for 5G:
• Push LTE performance to 1Gbps. Using existing technologies in the areas of carrier aggregation, 256QAM
modulation, and massive MIMO, mobile operators can achieve 1Gbps of capacity on their 4G networks.
Given the uneven nature of initial 5G coverage, the LTE network will need to match 5G performance as
much as possible to give the end user a consistent experience.
• Start down the path of core network virtualization. Many operators have already started implementing
NFV technologies in their core network, principally in terms of virtualized EPC (vEPC). The 5G core
network will be fully virtualized to support new 5G features, such as network slicing. Starting with that
level of virtualization now will make implementing 5G easier. Standalone 5G NR cannot be implemented
until the core is virtualized.
• Explore mobile edge computing (MEC). MEC allows for the distribution of some formerly centralized
network functions to be pushed to the edge. MEC can support network slicing, such as putting part of the
packet core near the access network to lower latency for ultra-reliable and low-latency communications.
While MEC is not fully standardized, operators should use this time prior to 5G reaching maturity to
engage their vendors on MEC and start trialing it.

8 TMT intelligence informa © 2017 Ovum. All rights reserved.

Figure 5: Cloud RAN

L3
L2 high

L2 low
L1

5G
(NR & LTE-E)

L3
L2
L1

L3
L2
L1
CPRI

LTE-E

LTE-E

Source: Ovum

Preparing the transport network for 5G

5G applications and architecture bring new challenges to the underlying transport network. New 5G
applications will demand higher-speed connectivity, lower latency, edge computing resources, and a factor-
of-100 increase in IoT devices. This in turn drives dense deployment of remote radio units, mobile edge
computing, and flexible deployment between distributed and centralized RAN based on the application.
Due to the low-latency requirement and different deployment scenarios, 5G transport needs to address
a different mix of connections for fronthaul, midhaul, and backhaul. The new fronthaul interface depends
on Ethernet and IP to make the transport network more efficient than traditional Common Public Radio
Interface (CPRI), while meeting very tight latency requirements. The midhaul and backhaul solution will
deal with the flexible connections among the DU, CU, and 5GC. 5G will also bring network slicing, which
will support the addition of virtual functions to wireless applications. To address these changes, carriers
will have to use a mixture of transport network technologies consisting of microwave, IP switch and router
products, passive optical networking, and optical networking products. The solutions will need to support at
least 10Gbps on the client side with up to 100Gbps and beyond on the line side.

© 2017 Ovum. All rights reserved. TMT intelligence informa 9

 Mobile operators need to plan now for the technologies needed to support 5G. Key new technologies
include Flex Ethernet (FlexE), segment routing, time-sensitive networking, and SDN. FlexE will allow for a
carrier to deliver multiple 100/200/400Gbps connections as one bundle and to slice an Ethernet connection
into separate virtual networks for multitenancy, enhanced mobile broadband (eMBB), ultra-reliable low-
latency communication (URLLC), and massive machine-type communications (mMTC). FlexE works with
SDN control and segment routing to control latency across the network for different applications. Finally,
carriers will need equipment that supports the frequency and phase synchronization among sites, since
most candidate 5G spectrum works under TDD mode.

A final consideration for operators as they deploy 5G is backwards compatibility to legacy 4G. Some
equipment vendors will support 4G fronthaul with CPRI while also supporting the low-latency IP/Ethernet
solutions for 5G fronthaul with a new interface. Capital expenditures are always constrained, so carriers will
be looking for cost-effective solutions.

5G ecosystem
Strong vendor support for 5G
The success of any wireless standard is heavily predicated on the strength of its ecosystem. Without
multivendor support, a standard most likely will not thrive. Operators want to know they are not locked
into a single vendor for their networks. Competition within the ecosystem also benefits operators because
it pushes vendors to continually refine the network offerings and improve performance. 5G, while not fully
standardized yet, already benefits from a strong ecosystem. Vendors are already actively marketing their
pre-5G/5G-ready solutions.

Table 1 below shows where vendors are currently supporting 5G or are expected to support 5G. Base
station support across the vendors is, of course, universal. What is not universal is support for backhaul
and 5G-ready devices. Ericsson does not offer 5G-ready optical networking gear, and Samsung offers
neither microwave nor optical. Ericsson and Nokia are not expected to have 5G devices, other than CPE for
fixed wireless access networks. End-to-end support is not necessary to supply a 5G network, but having
an end-to-end solution helps a vendor communicate that it has deep understanding of the demands of 5G
throughout the entire network and not just part of it.

Table 1: Vendors’ overview of end-to-end 5G portfolios

Operator Massive MIMO 5G base station Microwave Backhaul/fronthaul Packet core Devices

Ericsson Yes Yes Yes No Yes No, but works with partners on CPE

Huawei Yes Yes Yes Yes Yes Yes

Nokia Yes Yes Yes Yes Yes Yes (CPE only)

ZTE Yes Yes Yes Yes Yes Yes

Samsung Yes Yes No No Yes Yes

Source: Ovum

Antennas are now more important than ever

Until recently, antennas were an afterthought to the mobile network. Every base station, of course, needed
an antenna, but antennas were rarely included in discussions about mobile networks. That has now
changed. New antenna technologies are a major part of the 5G story. As discussed in the massive MIMO
section, antennas and beamforming technology will improve both network capacity and coverage. As the
air interface for 5G is expected to only offer around 20% improvement over the LTE air interface, increased
network capacity will come in the form of larger spectrum channels and new antenna technologies. 5G
vendors must now be just as strong in antennas as they are in the other domains of the mobile network.

10 TMT intelligence informa © 2017 Ovum. All rights reserved.

Chipset vendors are getting ready for 5G
Chipset vendors Intel and Qualcomm have joined with infrastructure vendors to push the development of
5G. They are both active in standards bodies and are developing the chipsets that will eventually go into
various 5G devices. While Qualcomm itself does not build network hardware, it is active in developing the
technology that goes into that hardware. The same goes for Intel.

In 2016, Qualcomm announced the Snapdragon X50 as its first 5G modem for handsets. In October 2017, the
vendor announced it had completed a trial of a prototype handset using the X50. It exceeded gigabit speeds
in the downlink using the 28GHz band. The vendor plans to provide operators the chipsets to trial in 2018
and expects commercial handsets will be available in the first half of 2019.

Intel, for its part, announced a 5G mobile network trial platform in September 2017. The trial platform will
allow for the interoperability testing of its 5G modem chipsets with different network and device partners.
The bands supported by the trial platform are 600MHz–900MHz, 3.3GHz–4.2GHz, 5.1GHz–5.9GHz, 28GHz,
and 39GHz. The vendor has been working with some of the operators at the forefront of 5G deployments,
including KT and SK Telecom in South Korea and Verizon and AT&T in the US. Intel's 5G modems will be
part of the South Korea Olympics' 5G trial in 2018.

© 2017 Ovum. All rights reserved. TMT intelligence informa 11

Ovum
TMT intelligence |

ABOUT OVUM
Ovum is a market-leading data, research and consulting firm focused on helping digital service providers and
their technology partners thrive in the connected digital economy. Through its 150 analysts and consultants
worldwide, it offers expert analysis and strategic insight across the IT, telecoms, and media industries.
Founded in 1985, Ovum has one of the most experienced analyst teams in the industry and is a respected
source of guidance for business leaders, CIOs, vendors, service providers, and regulators looking for
comprehensive, accurate, and insightful market data, research, and consulting. With 23 offices across six
continents, Ovum offers a truly global perspective on technology, communications and media markets and
provides clients with insight including workflow tools, forecasts, surveys, market assessments, technology
audits, and opinion.

Ovum is part of the Business Intelligence Division of Informa plc, a leading business intelligence, academic
publishing, knowledge and events group listed on the London Stock Exchange.

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contact us at marketingdepartment@ovum.com or visit ovum.informa.com. To hear more from our analyst
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ABOUT ZTE
ZTE Corporation is a global leader in telecommunications and information technology. As part of ZTE’s M-ICT
strategy, the company is committed to provide integrated end-to-end innovations to deliver excellence and
value to consumers, carriers, businesses and public sector customers around the world, enabling increased
connectivity and productivity to unlock the power of technology for society. Founded in 1985, ZTE is listed
on both the Hong Kong and Shenzhen Stock Exchanges and is China’s largest-listed telecommunications
equipment company.

With the industry’s most comprehensive product range and end-to-end solutions, ZTE offers cutting-edge
wireless, access & bearer, value-added services, terminals and managed services to telecommunications
carriers, in addition to ICT solutions for enterprises and government agencies. ZTE’s advanced capabilities
enable leading telecommunications operators and Fortune 500 enterprises in more than 160 countries to
achieve business objectives and attain increased competitiveness.

As a member of the UN Global Compact, ZTE is committed to a vision of balanced, sustainable development
in the social, environmental and economic arenas. Promoting freedom of communications around the world,
the company has incorporated innovation, technological convergence and the concept of "going green" into
the product life cycle. This includes R&D, production, logistics and customer service. The company also is
committed to maximizing energy efficiency and minimizing carbon emissions.

With Corporate Social Responsibility (CSR) a key priority for the company, ZTE played an active role in relief
efforts following events such as the 2015 earthquake in Nepal. ZTE also established the ZTE Special Children
Care Fund, the largest charity fund of its kind in China.

Looking forward, ZTE is committed to pursue the company’s M-ICT strategy together with our customers and
partners, and drive innovations in telecommunications and ICT globally as the business and technology needs
of the industry continue to evolve.