Question marks are emerging over the use of millimeter wave (mmWave) technology for 5G as investment growth in the sector slowed last year.
While the numbers don’t directly indicate problems with the millimeter wave market, especially since it has exceeded expectations in the previous two years, it’s no exaggeration to say that we still need convincing. on the use of technology.
New stats shared by Dell’Oro this week show 15% to 20% revenue growth for mmWave in 2021. That’s not a small increase compared to anyone else, but it’s apparently a slowdown after what the analyst firm described as “two years of exponential growth.” Dell’Oro told us that growth was closer to 80% in 2020 and well above that of 2019 due to the start from a weak baseline.
But arguably the numbers themselves are less important than the trend. And as Dell’Oro notes, mmWave RAN revenue was weaker than expected early last year. However, he also points out that “mmWave NR investments have mostly surprised on the upside compared to expectations set out three to four years ago,” which is worth considering; essentially, we might be looking at a natural plateau in growth after a period of dramatic increases.
Indeed, the analyst firm itself is not in phase with the change.
“We are not concerned about the slowdown and implications for the long-term business case and view this more as a short-term benchmark reflecting the fact that the sub-6GHz spectrum still provides the most compelling RAN savings” , noted Dell’ Oro analyst Stefan Pongratz, in a blog post.
We caught up with Pongratz and he provided some additional commentary. “We were also in the skeptical camp initially when it came to mmWave (we initially modeled mmWave to represent less than 1% of the market), then we had to adjust our forecast upwards several times to reflect the progress made at both with devices and infrastructure,” he said.
“That’s why I’m not too concerned about the slowdown in 2021 – the industry has already come a long way in terms of proof of technology. Of course, sub-6GHz spectrum offers better economics than spectrum mmWave and it will take some time for this gap to close in. But there is no magic here, the sub-6GHz spectrum is not unlimited.
Just look at Verizon’s recent activity to see this happening. After repeatedly drumming mmWave when it was essentially the extent of its 5G spectrum, the US operator last month brokered a US$170 million deal for early access to the band’s spectrum. C (3.7 GHz-4 GHz) which he won in 2021. mega-auction… an auction in which he racked up a bill of nearly $53 billion, let’s not forget.
Verizon is just one carrier, but it still seems fair to say that mmWave is incidental, rather than critical, to carriers’ 5G deployments so far. And at the extreme end of the scale, in Belgium earlier this week the Walloon regional government eased regulations on 5G mobile base station broadcasts, but chose to continue to block mmWave use on the grounds that its health implications are unknown.
Belgium is an extreme example. But it serves to remind us that using frequencies at 24 GHz and above is not without its challenges.
Nevertheless, many grow. Brazilian broadcasting conglomerate Globo boasts that it used mmWave on Ericsson’s kit and mobile operator Claro’s 5G network based on 26 GHz frequencies to share images of the Sao Paulo carnival, according to local reports. Incidentally, Dell’Oro names Ericsson as the mmWave market leader, which is worth noting. And further north, UScellular on Thursday announced the launch of 5G mmWave in parts of 10 US cities with more to follow later this year.
Certainly, the launch of UScellular refers to a fixed wireless service: its Home Internet+ service, to be exact. And FWA is an area with additional growth potential, according to Dell’Oro.
Mobile is the primary area for mmWave at present, but technological advancements in base stations and repeaters should improve the FWA business case, the analyst firm predicted.
So this is it. There is clearly still a large market for mmWave, whether for 5G or FWA mobile services. But a dip in a previously meteoric growth rate might just suggest the technology isn’t shaping up to be the darling of the 5G world.
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