5G and Municipal Broadband

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What’s the Real Relationship Between Municipal Broadband and 5G?

Oh, no, another article about 5G. We’ve all read a few over the last 10+ years. After many years of reading about the wonders of 5G and mapping them to the technical and business realities of Last Mile/broadband networking, it’s not conspiracy theory lunacy to suspect an alternative motive around the immense 5G hype machine. Could the alternative motive be to freeze the market from new competitors?

When I first heard from a city official that 5G eliminates the need for Fiber-to-the-Premises, I shrugged it off. Then I heard it from different city officials in different states. Gee, I thought for a nanosecond, where did that narrative come from? If you’re new to telecommunications and haven’t been hearing about 5G for the last 10+ years, then you may now believe it’s synonymous with nirvana.

According to Wikipedia, this is the definition of 5G:
“5G (from “5th Generation”) is the latest generation of cellular mobile communications. It succeeds the 4G (LTE/WiMax), 3G (UMTS) and 2G (GSM) systems. 5G performance targets high data rate, reduced latency, energy saving, cost reduction, higher system capacity, and massive device connectivity….” (Source: https://en.wikipedia.org/wiki/5G)

In simpler terms, it’s a newer and better wireless bit pump or wireless modem that sends bits, 1’s and 0’s, from one device (e.g., phone or a thing) to and from another device (e.g., radio head, base station, small cell) over a fading channel. Not to worry, all channels are fading. If you’re not moving too fast (Doppler Tolerance) it does the same as Wi-Fi over fiber, coax, or copper. It’s Last Mile bit transport. All broadband architectures are basically Last Mile bit transport. This definition is likely the most uninteresting definition of 5G you’ve ever read. (See Figure 1 for a simplified view.)

5G-Municipal Broadband-civil-infrastructure

Figure 1. Broadband Network

In theory, 5G could eliminate the need to deploy fiber to every building. In theory, and in MATLAB©, each home could get 100s of megabits per second and even “up to a gig”. Thus, 5G is another viable broadband or Last Mile option.

If 5G is merely a better bit pump, then why all the narratives around 5G enabling autonomous vehicles, powering the Internet of Things and the 4th Industrial Revolution and even transforming national economies?

Qui Bono? (Who Benefits?)
The entities that benefit from the narrative that “5G eliminates the need for FTTP” are those who control the status quo, “own” billions of dollars’ worth of spectrum, spend over US$1B a year in advertising, and are betting the farm on 5G. If your product is wireless and mobile broadband, you too would want to prevent a fiber competitor. Planting a bit of FUD (Fear, Uncertainty and Doubt) is an easy trick to play. If you’re an incumbent in any industry, you benefit from, and should be creating, barriers to entry. If you’re a mobile network operator or a wired incumbent the last thing you want is a city, or anyone, to overbuild the city with fiber. You too would use whatever tools you have available to at least deter a new entrant. It should be no surprise that wireless incumbents do not want a city or anyone else overbuilding their areas with FTTP.

The narrative states that 5G eliminates the need to deploy fiber all the way to the premises. What 5G does is eliminate the incumbents’ need to deploy fiber to the premises. However, to reach the “up to a gigabit” speeds with promised ultra-low latency they need access to Fiber-Almost-to-the-Home, perhaps a nearby utility pole. Somebody, the MNO or neutral company, will deploy the requisite fibers.

This Fiber-to-5G impacts the community in a number of ways. First, it doesn’t matter who is running fiber down the streets. If you assume “up to a gigabit” small cell densities, it will result in the same 2-5 years civil construction project. It will disrupt local traffic, and could create detours through quiet neighborhoods regardless of who owns the fiber. Depending on your patience level and driving habits this may not be a big deal, and it’s only 2-5 years.

The second impact is on the utility poles. Each utility pole has a fixed amount of space which is further limited by separation requirements between electric power and communications, and amongst communication cables. If a 5G operator happens to be the local ILEC, then they can lash, or bind, new cable to existing hung cables and not use up additional pole space. Otherwise, any new entity would need space on each pole that meets all the separation requirements.

Make-Ready and 5G
The issue arises when there is not enough space on the existing poles. The process is called make-ready and it’s very expensive and time-consuming. GoogleFiber noted that out of the 88,000 poles in Nashville, Tennessee, that were targeted for attachments, 44,000 needed some level of make-ready.

Think of make-ready as whatever it takes to make each pole ready for the new wire attachment. The kicker is the new attacher pays for everything. The new attacher pays all the current entities to make each pole ready for them. If the pole is too crowded, the new entity must pay to install the new taller pole, and then pay the current attachers to move to the new pole. The new attacher must wait for each current attacher to perform their own make-ready work as well. Since the incumbent attachers may be performing the work to make room for a new fiber competitor they’re not apt to perform the work on a timely basis. Thus, utility poles are a barrier for new entrants.

In some US states, cities have access to reserved space on each pole. This is called muni gain. When it’s widely available it will greatly reduce the make-ready cost and ultimately the amount of money a city needs for a municipal broadband build. This then translates to lower monthly fees to residents and a lower breakeven take rate. If building your community to a 21st Century communication infrastructure isn’t a good use of the muni gain, what is?

However, the risk to the community is the new private 5G-only attachments crowd the poles sufficiently to deter the city or a private company from a universal fiber overbuilder due to the new excessive make-ready costs. Excessive make-ready costs increase the amount of capital required to fund the project which increases the monthly loan payments which increase the break-even take rate and monthly subscriber connection fees. Or it reduces the attractiveness of the infrastructure investment.

It will also be common for limited scope over-builders to serve the big shiny buildings and homes they pass along the way to the 5G small cell site. This has the effect of deepening urban and suburban digital divides.

The other side of the 5G coin could be that if your city doesn’t have available fiber to the small cell site the MNOs will deploy in cities and towns that do.

Interestingly, the MNOs were quick to jump on the One-Touch-Make-Ready (OTMR) bandwagon. OTMR allows one qualified professional perform to do all the work on each pole at the same time. There are exceptions for more complex work and for electrical equipment. It’s a great money- and time-saver for the fiber deployer. Perhaps the incumbent MNO’s quick adoption of OTMR indicates they’re not too worried about overbuilders.

Broadband as Civil Infrastructure
If you take the approach that Municipal Broadband is critical civil infrastructure, your goal is to serve the entire community’s communication needs. For many reasons you want to keep the monthly fees charged to local residentials and businesses for the city’s part of the network as low as possible. To do this you need to increase take rates, keep OpEx ultra-low and create additional revenue streams.

The foundation of Municipal Broadband is lots of fiber down lots of streets. In the process of deploying, you’ll likely pass all or most of the desired 5G cell site locations. The incremental costs to serve the 5G mobile network operator is basically zero. The city can then provide competitive 5G backhaul circuits to MNOs, creating a long-term incremental revenue stream.

5G could be an alternative to a Municipal Broadband deployment. However the city adopts this strategy, they’ll be entirely dependent on a privately funded, publicly traded company for ALL their 21st Century communication needs for decades. Public companies, such as big incumbents, are driven by financial parameters that may or may not align with the goals of the community. Matters could be made worse if the Fiber-to-5G deployment overcrowds existing utility poles.

An alternative approach for a city to make sure they’re a 5G city is to ensure the MNOs have the neutral real estate, electric power, and fiber backhaul, wherever they’d like to deploy a 5G small cell. If the city chooses to deploy a universal FTTP network, they’ll achieve the fiber backhaul requirement essentially for free. The incremental revenues won’t be enough to fund the school system, but they will help keep the municipal part of the network as low cost to residential subscribers as possible.

 

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About Author

Greg Whelan, Principal at Greywale Advisors, is a leading expert on Open Access Broadband and Neutral Communication Infrastructure. He provides guidance to a wide range of broadband ecosystem participants including Technology Vendors, Municipal Leaders, Communication Service Providers, and Private Equity Investors. Greywale Advisors is a leading independent research firm focused on The Open and Neutral Future of Broadband. They work with private and public entities throughout the ecosystem to create the business, technical and financial architectures and implementation plans. If you’d like to discuss this, please contact us at gwhelan@greywale.com. For more information, please visit www.greywale.com. Follow Greywale Advisors on Twitter @greywale.

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