Economics of site deployment must change to enable densification on scale required by 5G.

Rolling out a 5G network under today’s mobile market conditions would bankrupt many operators, warns 3UK.

Speaking at Total Telecom’s third annual Connected Britain event in London last week, Phil Sheppard, director of network strategy at 3UK, said fundamental changes to the economics of deploying and operating mobile networks need to be made if the industry is going to deliver on the promise of 5G.

One of the biggest issues stems from the huge cell densification effort required to meet capacity and coverage demand, particularly indoors.

"[It] is completely crazy at the moment to think you could actually do that," Sheppard said.

Cell sites are expensive to build and operate, requiring operators to pay site acquisition, rent, power, and transmission costs.

"Generally speaking, mobile operators are incentivised not to increase site numbers, because every single site increases operational cost and it has to be paid for, which has to come from revenue generated by the customer base," Sheppard said.

Today, even with updated regulations, like the Electronic Communications Code (ECC), which aims to make it cheaper and simpler for telcos to deploy new infrastructure, "there is a limit to how far operators can go [to densify their networks] and still be profitable," Sheppard said.

When the time comes to roll out 5G networks, some observers expect the industry to deploy hundreds of thousands of small cells, running on millimetre wave (mmWave) frequencies, to provide very high capacity in targeted locations.

"It would bankrupt a lot of operators if we did that at the moment, because the operational costs…to do this type of densification would be completely out of the question," Sheppard said.

The cost of rolling out infrastructure needs to come down, Sheppard said, suggesting that for indoor locations, venue owners in some cases have an incentive to bear some of the cost of hosting cell sites, given that good coverage would attract visitors.

It is also vital that operators tap into new revenue streams, like IoT, or data-based services – such as providing anonymous, aggregated customer information to third parties, like advertisers – in order to help cover the cost of densification.

"I don’t want to give a negative picture of 5G, I think it’s a very exciting technology, but it needs a little bit of work and development; some of it by government, some of it by industry," Sheppard said.