Interest in the 3.5 GHz band is increasing as its set to become the global 5G spectrum band. We recently undertook a study for a new research report* of global 3.5 GHz band to uncover the impact on the 5G deployment timelines and ecosystem. One of the fundamental questions is putting figures on the value of the 3.5 GHz band. Our analysis shows that on average 3.5 GHz spectrum is 36% that of 2.6 GHz spectrum. In the meantime, we estimate that a 3.5 GHz network will require 15% more cell sites than a 2.6 GHz network. This leads us to conclude that prices for 3.5 GHz spectrum will rise. We also identified a number of issues that regulators will have to address to improve the value and utilization of this band.
5G Spectrum: 3.5 GHz Spectrum Valuation [Source: Xona Partners]
Refarming required
Backhaul and in satellite communications historically used the 3 GHz band. In the 2000’s, regulators made parts of the band available for fixed wireless access. That was the decade of WiMAX. WiMAX vendors and operators lobbied regulators to allow TDD access mode. TDD supports advanced antenna techniques like beamforming with greater efficiency than FDD. WiMAX players also lobbied for wider channels and bigger allocations: change from multiples of 3.5 MHz to multiples of 5 MHz. Many countries implemented such modifications, but many others did not.
5G achieves its data rate performance by using wide allocations of up to 100 MHz in sub 6 GHz frequencies, in addition to carrier aggregation and massive MIMO. However, many countries do not support such wide allocations. Some have stayed with FDD mode and/or multiples of 3.5 GHz channels. These countries would have to refarm the spectrum to take full advantage of the benefits of 5G. Therefore, we don’t expect deployments of 5G in this band to take off until regulators implement such plans.
Prices to rise
There will be several new auctions of 3.5 GHz in the next few years. Notable ones include Korea (scheduled for June 15), Germany, Italy, Canada, India and China. In the meantime, the US and Japan are looking into opening spectrum up to 4.2 GHz. Southeast Asia will need to figure its strategy given the allocation of 3.5 GHz to satellite services.
One of the drawbacks of the 3.5 GHz band today is the limited ecosystem support it has. Small operators who formerly planned on WiMAX own most of the licenses. These operators did not have the strength to drive the roadmap of major vendors – they became stranded when LTE dominated the broadband wireless market. The device ecosystem is limited as are the options for infrastructure vendors. The dynamics are set to change once major operators take possession of this spectrum. This is beginning to happen now: the UK is a good example. But the operators who make markets are in the US and China. Before these markets drive volume, the cost of 5G will remain high. If 3.5 GHz is to become a global band quickly, it will need the US and Chinese operators.
Update – June 2019: we published a report on 5G C-band spectrum valuation. Click here for information.
* If interested in the study, contact me for additional information.