By Shunli Wang, Vice President of Huawei Middle East
We are in the midst of a digital revolution that is transforming our lives and societies with unprecedented speed and scale, delivering immense opportunities as well as inevitable challenges. This socio-economic transformation is first and foremost driven by the ability to collect, use and analyze massive amounts of data generated from the digital footprints of personal, social and business activities on various digital platforms.
With a range of features that include high bandwidth, low latency, ultra reliability and wide connections, 5G is now recognized as the enabler of the future digital society and the foundational technology of the digital economy. According to the GSMA Economic Value Report, 5G will contribute US$960 billion to the global GDP value by 2030, US$610 billion of which will be driven by 5G mid-bands. The mobile industry is not only the driving force and engine of economic development, but also the enabler and promoter of digital transformation for vertical industries. Therefore, the IMT industry must be well planned.
GCC is Leading in 5G Development for the Digital Economy
With favorable government policies and strategic investment by operators, the GCC is leading global 5G deployment and roll-out, matching or surpassing those of many advanced countries. By Q2 2022, 5G services have been launched in six countries in the Middle East, and 15 5G networks have been developed, covering 74% of the population (13 million 5G users). Alongside AI+Cloud investments, countries in the region have a crucial advantage in the rapidly evolving global digital economy.
Within the 5G-powered ToC services segment, the fourfold yearly growth of mobile users and the increase in new services will see mobile data usage per subscriber per month (DoU) continue to multiply. According to the latest forecast report by ITU, mobile DoU will be more than 250 GB per subscriber per month globally by 2030. To fulfill these needs, global carriers will require 2GHz of mid-band spectrum on average per country.
Regarding ToH services, 5G FWA is doubling annually in Saudi Arabia and Kuwait, cumulatively covering 1.3 million subscribers thanks to a home broadband upgrade, which has helped carriers increase their revenue by 10%. In FWA pioneer countries, households today consume 200 GB of data per month and are easily set to reach 1,000 GB by 2025. Adequate licensed spectrum, particularly in mid-bands, will be crucial for FWA's long-term development and affordability.
In terms of ToB services, the Middle East is already ahead. Currently, there are already 27,000 5G private line users in small and medium-sized enterprises such as hospitals, banks, educational facilities, hotels and restaurants, and five commercial and seven POC 2B contracts in various industries such as oil and gas, port, and electricity. Vertical services will lead to a drastic increase in mobile data traffic, highlighting the urgent need to upgrade the technology, to increase spectrum and expand sites.
Visionary 5G Spectrum Strategy Contributes to a Sustainable Digital Economy
GCC leadership in 5G development is the result of the allocation of both sufficient spectrum and supportive 5G spectrum, which are crucial to a sustainable digital economy. The 5G target network must contain ubiquitous layers, including deep coverage and wide coverage. At the same time, it must provide capacity layers with consistent and continuous coverage and experience over dense urban, suburban and rural areas. Also, it should meet ultra-high-capacity requirements in hotspot areas. Based on the experience of successful countries, the success factors for 5G spectrum policies are as follows: releasing the correct frequency bands; sufficient spectrum allocation; low spectrum prices and suitable payment methods.
Releasing the correct frequency bands: 5G-oriented spectrum allocation combines medium and low frequency bands, and consider coverage and capacity, such as 700 MHz/2100 MHz, C-band/ 2.6/2.3G frequency bands, which have been assigned in various countries and are mature in the industry chain.
Sufficient spectrum allocation: 5G uses key technologies, such as large bandwidth and massive MIMO, to achieve a better experience. It is recommended to provision mid-bands with a large bandwidth of 80–100 MHz to meet capacity-layer requirements, increase spectral efficiency and reduce bit costs.
Low spectrum prices and good payment methods: In the 5G era, operators need to pay annual fees for existing 3G and 4G spectrums. As a result, the total spectrum fees account for 5% of operators' annual revenues globally. The spectrum prices for 5G are lower than 4G generally. According to the Coleago report, the 5G SPI [Spectrum Price Index (SPI)=Spectrum license fee/(ARPU*Subscribers)] should be less than 2, that is, the total 5G spectrum expense of an operator should not exceed the revenue of two months (four months for 4G and six months for 3G). Flexible installment and payment deferral are also recommended. For example, carriers can delay payment of spectrum fees in the first few years, significantly reducing the financial pressure in the initial phase of network construction. A good ROI will encourage more investment and thus a more solid foundation for the digital economy.
The leaders of the fourth industrial revolution are being forged as we speak. 5G is key in enabling the digital economy and the industrial revolution. In the long run, the GCC region should sustain progressive 5G spectrum policies in order to maintain its leading position. From a technology development perspective, improving the system performance or user experience tenfold is key. Baseline spectrum bandwidth per carrier is also growing 4-5 times from generation to generation: 5MHz in 3G to 20MHz 4G and 100MHz in 5G. This amount of spectrum is required to start the first wave of these technologies, while additional blocks will be required to match traffic growth. In the 5G-advanced and 6G eras, 400-500MHz per carrier is a must.
Accordingly, 2GHz of licensed mid-band spectrum is recommended by GSMA to meet the 5G service requirement from 2025-2030; 3.5/6GHz bands is the key. Mid-bands play a critical role in continuous outdoor coverage, which shall be reserved for IMT to ensure digitalization and economic development for the future.
Apart from the GCC region, some emerging markets in the Middle East could also refer to the successful practices of the GCC to better prepare for the coming 5G and a boost in the digital economy. Spectrum is a common pool resource, and governments shall aim to make efficient and effective use of it and ensure it is available for uses that stimulate social and economic progress.