There is plenty to be excited about with 5G wireless communications, according to Marc Ganzi, co-founder and CEO of Digital Bridge Holdings. It will be 2,000 times faster than LTE and will reach 7 billion people and 7 trillion devices with technology that will feature zero latency and consume 90 percent less power, he said. But although mobile internet users are set to grow from 3.6 billion to around 5 billion in the next five years, Ganzi said, mobile network operator (MNO) revenue will grow at only 10 percent, and the average revenue per user (ARPU) is decreasing.
“It’s a problem,” Ganzi said, speaking at Connectivity Expo in a session titled Investment Insights. “It is a theme we need to keep an eye on. We need to have healthy customers.”
Helping carriers monetize their networks leads to healthier customers, he said. In Ganzi’s view, building out the internet of things is a good place to start, with the 9.1 billion current connections expected to grow to 25 billion connections in five years. He contrasted that with 1.4 billion 5G connections in 2025, which he said is only 15 percent of all global connections.
“Obviously the smartphone is an important part of 5G ecosystem, but really you need to start thinking about the notion of connected devices,” Ganzi said. “You have got to start thinking about networks. How do we bring applications and products onto these networks?”
5G: Layered Approach
5G will require a very complicated, layered network, with multiple points of ingress and egress, operating on multiple spectrum bands, Ganzi said.
“5G creates a little bit of chaos, because the networks are layered,” Ganzi said. “It is no longer a single band of spectrum. We are talking multiple-input multiple-output (MIMO) antennas and multiple spectrum bands. Think of a world where your signal reaches macros, small cells and Wi-Fi nodes, while fronthauling voice and backhauling data to a data center. That’s five or six things all going on at the same time. That’s complex. Welcome to the world of 5G. Welcome to the world of layered infrastructure.”
It has taken eight years to build out LTE, and Ganzi projects the 5G roll out will be a 10 to 15 year build – a long, protracted capex cycle.
“Infrastructure requirements are going to be massive,” he said. “I would argue that we are going to need 10 times the infrastructure versus where we are in 4G.”
In most markets 5G will be built on the back of 4G, because it is not economical to build a brand-new 5G network, Ganzi said. In his view, the development of the next generation of wireless technology requires additional spectrum, network densification and massive amounts of fiber-optic cable deployment, not to mention data centers for the applications and compute storage.
“Fiber is the biggest capex spend of any vertical right in the markets where we operate,” Ganzi said. “A lot of investment has to happen in terms of fiber, at the same time data centers are growing very fast. The amount of capex that is going into the webscale deployments and new compute nodes is astronomical. Towers and small cells were the smallest capex spend. This is the complete ecosystem. 5G is the realization of our entire investment thesis.”
Partnerships a Must for 5G to be Reality
Many of Digital Bridge’s holding companies engage in partnerships with other companies, such as competitive local exchange carriers (CLECs), fiber companies and utilities. In fact, Ganzi said he has done more joint ventures in the last five years than he did in the previous 25 years.
“This new layered generation of infrastructure will require collaboration to become a reality,” Ganzi said. “Over the next 10 years, partnerships are a must. You are going to be doing business with your competitors. It will be a new era. Frenemies will be a part of your business strategy. We cannot build 5G in silos.”
Ganzi cited Europe as an example of where carriers are getting together to form joint infrastructure partnership and combining their resources, base stations and towers well in advance of 5G.
“They understand that the only way they get to 5G is to partner,” Ganzi said. “How do you go spend $380 billion, when your ARPUs and your revenue are not growing, without partnerships?
“We all have to look differently at how we deploy, even people in this room. At Digital Bridge, we are constantly making the choice between where we are going to partner and where we are going to spend capital,” he added.