The communications market has historically been dominated by large telco operators, who paved the way of the infrastructure by supplying the communication medium. Participation in this market required both extensive capital investment and highly verticalized domain expertise which all translate to a highly defensible entry barrier. By no surprise, the much-anticipated 5G roll-out has been evangelized by the very same consolidated group.
But for the first time in mobile telecommunications, the profoundness of 5G lies in its constructive disruption that will compel new dimensionality and constructs. An ecosystem of new players will emerge. The network will be reconstituted to accommodate for the tsunami and variety of new connected devices. Disaggregation and softwarization will drive new constituents and novel architectural platforms. 5G will establish a new digital silk road emphasizing velocity, privacy, and services. And these telco giants will start to face new competitors in the 5G services space - cable and satellite internet/TV companies will be among them.
Traditional telco operators (i.e. AT&T or Verizon), cable internet companies (i.e. Comcast, Cox and Charter), and satellite internet companies (i.e. Dish Network and Viasat) all have one thing in common - they provide internet access and television services. How they differ is in the methodology and physical medium: Telco operators rely on massive base stations and optical fibers, cable companies install coaxial cables, and satellite companies install a dish.
Cord cutting: cable internet providers’ path to 5G
The wired technology that traditional telco operators and cable companies rely on to deliver internet and TV services is expensive and increasingly becoming obsolete. To provide internet/TV services to users, these companies have to dig tunnels, then lay physical cable, DSL or optical fiber lines to connect customers. This is a costly and cumbersome process. And the path to upgrades is fraught with friction and exorbitant capital expense. Both traditional telco operators and cable companies recognize the need for a more efficient method to deliver internet services: fixed 5G wireless.
Fixed 5G wireless was designed specifically to provide a higher-performance and more cost-effective alternative to wired broadband. This tech will enable both telco operators and cable internet providers to replace miles of cable with lightweight wireless 5G access points. To deliver services to homes and businesses, they will strategically install wireless access points on existing infrastructure and buildings (such as streetlights and office tower rooftops). These access points will transmit 5G signals to small antennae attached to homes or businesses. These antennae will connect an ethernet cord from the antennae to a wireless router within the home or business, providing end users WiFi and 5G network services.
Physical cable infrastructure won’t be completely displaced. Rather, these companies will still need to lay fiber optical lines to create network backbones. But the vast majority of the population will be serviced via fixed 5G wireless infrastructure.
As cable players adopt fixed 5G wireless to better support their existing consumer base, they will realize the opportunity to move beyond internet and TV services and begin to offer private 5G network services for the enterprise market. Cable companies will begin targeting a burgeoning variety of business-oriented use cases. For example, creating private 5G networks that serve an entire university or corporate campus. Or providing 5G networks in factory and warehouse settings to support advanced automation and robotics. What is transformational about fixed wireless in the enterprise environments is large area coverage where cables were historically not viable. It would enable inter and intra-campus networks. It would also provide a direct wireless data uplink to a localized private, secured cloud.
To operate fixed 5G wireless and make this transition possible, cable companies will need to buy spectrum licenses. In 2019 alone, over $4B of the private spectrum bids are coming from cable, media, and energy companies who are strategically invested to create private 5G networks. In the US, regulators are continuing to release spectrum in efforts to promote 5G innovation on the world stage. Furthermore, the emergence of 5G millimeter wave will stimulate new applications for short-range, ultra-high bandwidth applications.
Satellite internet/TV companies ahead on 5G
Satellite internet/TV companies are on a similar trajectory. In fact, satellite companies are even further ahead than their cable counterparts. For one, they don’t rely on wired tech. They already have expertise in delivering services wirelessly and won’t have to replace massive networks of physical cable infrastructure. Second, because they transmit their signals digitally, satellite companies already own plenty of spectrum. Some of the larger satellite companies may even get involved in the consumer 5G services market, as evidenced by Dish Network’s recent acquisition of Boost Mobile. However, most will focus on enterprise 5G services like cable companies.
Control of the digital silk road
5G will move the value point beyond just infrastructure. New players will couple 5G services, cloud applications, and even content as part of their value statements and delivery. With more and more spectrums becoming accessible, new entrants such as cable (and satellite) companies and cloud providers will start competing with traditional telco operators. Spectrum will become a prized resource, much like electricity, water, and gas. And wireless infrastructure will become the new digital silk road where emphasis will quickly turn to security, privacy, and control. Ultimately, this transformation brings optionality and constructive capitalism, which is what we need right now.
