Falling CPE costs will drive 5G fixed wireless deployments

Falling CPE costs will drive 5G fixed wireless deployments

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The increase in available devices and the corresponding expansion of the addressable market for 5G network deployment, combined with the growth of users and the rapid adoption of 5G-enabled smartphones, will help reduce the cost of indoor and outdoor 5G FWA units to Meet the requirements of the global operator business case.

ICC News Global demand for broadband services has led to accelerated interest from fixed and mobile operators in deploying broadband, either expanding existing LTE or point-to-multipoint fixed wireless services, or rolling out early 5G to growing existing and potential subscribers Serve. Both in mature and emerging markets, the number of RFPs (Request For Proposals) for equipment and software to support large-scale 5G fixed wireless service deployments has increased significantly. Clearly, service providers want to strike while the iron is hot, securing users who need broadband now, while also taking advantage of the growing government subsidies for broadband services.

The vendor ecosystem supporting 5G fixed wireless is naturally growing stronger, especially in the dedicated CPE space. According to the GSA (Global Mobile Suppliers Association), there are more and more equipment suppliers, the number has exceeded 50, and these suppliers have launched more than 130 FWA CPE equipment (indoor and outdoor). More than 50 of these dedicated CPEs are commercially available, up from 15 a year ago. Dell’Oro expects the number of commercially available devices to exceed 100 by the end of 2021, doubling in 2022. The number of suppliers producing or planning to produce 5G FWA CPE equipment has exceeded the number of 4G FWA CPE suppliers.

The increase in available devices and the corresponding expansion of the addressable market for 5G network deployment, combined with the growth of users and the rapid adoption of 5G-enabled smartphones, will help reduce the cost of indoor and outdoor 5G FWA units to Meet the requirements of the global operator business case. In particular, for emerging markets where ARPU levels are typically low, low-cost CPE is an absolutely critical element for operators to ensure faster ROI.

The larger the target market, the more willing component suppliers are to adopt forward-prices in order to capture a larger share of this growing market. The resulting drop in module prices will spur wider availability of finished CPE. It becomes an iterative cycle that benefits the entire supply chain and the network operator as the ultimate buyer.

5G FWA devices will grow rapidly

At the end of 2020, Dell’Oro estimated that there were nearly 60 million fixed wireless subscribers worldwide. A significant portion of these users use 4G LTE networks, although some use 3G networks, proprietary point-to-multipoint services, and some use early 5G technologies, including Sub-6Ghz and mmWave. The research firm estimates that there are currently around 1 million 5G fixed wireless subscriptions. However, as operators such as T-Mobile (US), AT&T, Verizon, Bell Canada, Saudi Telecom, Rain (South Africa), Swisscom, Deutsche Telekom, Optus and others roll out or expand 5G FWA services this year, these subscriber numbers will increase in 2021. Years doubled.

The total number of 5G FWA devices shipped to operators this year is estimated to comfortably exceed 3 million, and may even reach 4 million, given the carrier’s commitments are in place. The vast majority of these devices will support Sub-6Ghz service offerings. Although some mobile operators will use a combination of technologies such as Sub-6Ghz and mmWave to provide wide coverage and fiber-like speeds in highly competitive regions in order to compete with fixed broadband providers, overall, the mainstream this year and next year It will be Sub-6GHz devices, with mmWave device shipments expected to start climbing in the second half of 2022 and 2023.

The vast majority of 5G FWA deployments will rely on indoor gateways that combine 5G modems with WiFi 6 access points for signal distribution within the home. Many of these gateways will also be mesh capable and will pair with satellite units to cover homes with WiFi coverage and eliminate dead spots within the home.

Certain situations will require outdoor equipment, especially when deploying mmWave, which requires line-of-sight due to the use of high-frequency spectrum. But even in the case of Sub-6Ghz 5G FWA deployments, outdoor units are required when a residence or apartment has very thick glass windows or is located in a LEED (Leadership in Energy and Environmental Design) building.

As deployment models and device types become clearer, the cost of 5G FWA CPE is expected to decline this year and next, providing a catalyst for larger global deployments of services in 2022 and beyond. Dell’Oro believes that the average cost of an indoor 5G FWA CPE will drop from about $475 in 2020 to about $180 by the end of 2023 (Figure 2).

Prices of 5G chipsets will see the biggest declines, driven in large part by increased sales of 5G smartphones, but also by 5G modems, gateways, tablets, cars and other products that rely on 5G networks for WAN connectivity continuous improvement of the ecosystem. Currently, 5G SoCs cost about 4 times as much as 4G SoCs. In the early stages of 4G network and device rollout, chip costs used to drop rapidly as the number of devices increased.

Likewise, WiFi 6 chips still cost about 15-20% more than WiFi 5 chips. While WiFi 6 will be the dominant technology in mature, highly competitive markets, WiFi 5 will remain an important option in price-sensitive markets, especially in developing and rural markets, where competition comes from low-cost services. But as enterprise and high-end residential gateways adopt WiFi 6 technology, the cost of those chips will drop significantly in the coming years.

In addition to these two major components, manufacturing costs will also decline as equipment and contract manufacturers increase production based on initial board and hardware designs. With any new product, manufacturers have a learning curve. Although the cost of producing the first few thousand devices is high, costs will drop rapidly as the manufacturing process becomes clear and new generations of devices contain low-cost components.

There are two key factors behind the steady decline in 5G FWA CPE costs: increased orders and volumes from service providers, and collaboration between 4G CPE equipment and 5G equipment providers to understand how to reduce costs as quickly as possible. This collaboration is necessary to spark interest from service providers, who can then increase the number of purchases to improve the overall economics of delivering 5G fixed wireless services.

5G FWA will be built on top of 4G deployments

While the deployment of FWA services using 4G LTE networks has seen some global success, 5G will significantly boost the addressable market for users and the ability for the service to be reasonably competitive with most fixed broadband technologies. 5G can easily provide downstream speeds comparable to VDSL and DOCSIS 3.0 services, while easily beating both previous generations of fixed technologies. More importantly, C-band and mmWave technologies are expected to be comparable to DOCSIS 3.1 and fiber optic services, further expanding the potential market for users.

Global mobile operators that were previously unable to compete with fixed broadband providers, as well as fixed broadband providers looking to expand their services more quickly, are enthusiastic about the opportunities that lie ahead for FWA. Their growing commitment to service and a rapidly expanding ecosystem of customer equipment suppliers will help bring down the cost of these equipment quickly, ensuring a faster return on investment for service providers and a willingness to expand their reach further.

Original link: CPE Cost Declines Will Fuel 5G Fixed Wireless Deployments – Dell’Oro Group

CPE Cost Declines Will Fuel 5G Fixed Wireless Deployments

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