As Europe seeks to emerge from the uncertain environment of the pandemic, mobile is continuing to strengthen its role in connecting a brighter future. Productivity gains made in the 2010s, through the development of 4G, helped the world to teach, communicate, carry out transactions and do business more efficiently.
Luciana Camargos is Head of Spectrum at the GSMA.
Today these benefits are bound tightly into the European economy and a new phase of development can now come from the deep integration of 5G into the lives of individuals, societies and businesses. With the right regulatory tools, it’s clear 5G can become a central pillar of European economic development strategies. Its benefit to sectors such as manufacturing, services (including healthcare and education) and public administration (including smart cities) can catalyze a new wave of economic growth.
There’s strong evidence that shows spectrum allocation could be a powerful driver of industrial development and economic growth over the next decade. The GSMA’s report – an analysis of the direct monetary impact of mid-band 5G – shows the potential socio-economic benefits at stake from mid-band spectrum at 1-7 GHz.
Revolutionizing wireless connectivity
5G networks deliver higher connection speeds, greater capacity and lower latency than 4G. This increased performance enables 5G networks to support new use cases and applications which have the potential to benefit a wide range of industry sectors.
However, 5G’s promise of a consistent user experience will rely on one natural resource: spectrum. Europe is expected to benefit significantly and quickly from mid-band 5G. Our data forecasts a $67 billion increase in Europe’s GDP produced by mid-band 5G in 2025 growing to a $121 billion GDP uplift in 2030. This will be around 0.4% of regional GDP in 2030.
How mid-band spectrum can supercharge global GDP
The report finds that globally, mid-band 5G could deliver $610 billion GDP growth in 2030 – or 65% of total 5G benefits while 5G, in its entirety, is expected to yield $960 billion in additional GDP value add to the global economy – approximately 0.70% of forecast global GDP, in 2030. Timely access to the spectrum, based on a clear long-term roadmap, is vital. Operators need to know what access they are going to get to spectrum resources in order to plan their networks as efficiently as possible. This will help reduce the impact of investing in a new wave of services, in turn widening their availability and quality.
Spectrum constraints and economic ramifications
Our analysis primarily studied the overall benefits that mid-band 5G spectrum can provide with sufficient spectrum assignment in mid-bands. To counter-balance this, we also looked at a scenario where mid-band spectrum is constrained to current levels.
5G relies on mid-band spectrum to realize its full potential and we found that the global economy could lose up to 40% of the expected 5G benefits if no additional mid-band spectrum is allocated to mobile services. Global 5G benefits in 2030 could decrease from 0.68% of GDP to 0.42% of GDP (less than $600 billion) if spectrum is constrained.
Spectrum adds to mobile network capacity – for a given number of users more spectrum means faster speeds. Whenever mobile traffic demand exceeds capacity and spectrum availability is constrained, mobile operators generally face two choices. They must either increase their network density to meet traffic demand and/or accept a degree of quality degradation in the performance experienced by users.
The evaluation shows that in a situation where spectrum is constrained to today’s assignments, up to 40% of the economic impact could be lost. Put simply, if spectrum is limited to current levels as demand for services grows, increased network congestion and deployment costs will stifle 5G. Network quality and speed will suffer, limiting 5G adoption and its economic impact.
Empowering manufacturing with increased connectivity
5G mid-band applications will mostly be used to benefit the manufacturing, public administration/services, ICT and retail sectors across Europe. Manufacturing is continually looking to improve the productivity of its processes, reduce costs and remain competitive on the global stage. It is well-placed to take advantage of the expanding deployment of 5G and the services and opportunities that will arise from pervasive and ubiquitous connectivity.
The manufacturing sector, together with the public administration and services sectors, is expected to drive most of the benefits associated with mid-band 5G spectrum. However, 5G will also drive innovation across other sectors, including retail, agriculture and transportation.
Government and regulatory action on spectrum is required. Spectrum capacity can provide fast, affordable services but the coming years will decide the extent to which 5G can deliver on its promise. Last year, the GSMA conducted an analysis which found that an average of 2 GHz of mid-band spectrum will be required to fulfil the ITU requirements for 5G of 100 Mbps downlink and 50 Mbps uplink. Governments and industries need to work together on this – through WRC-23 and in national processes – to ensure that 5G can power a new phase of economic growth.
In Europe, that 2 GHz mid-band requirement per market leaves a shortfall of around 0.95 GHz compared with today’s assignments in most countries. The region has historically shown forward-thinking on spectrum – the 800 MHz band and the early assignment of 3.6-3.8 GHz are two examples – but 5G expansion capacity needs attention.
3.8-4.2 GHz is one opportunity currently under discussion. However, with 4.8-4.99 GHz unlikely to be made available in Europe, the use of the upper 6 GHz for licensed 5G becomes critical to avoid untenable small cell densification and to keep pace with the new connectivity leaders in East Asia, the Middle East and elsewhere. If the 2 GHz of mid-band spectrum per market is not met and spectrum is limited to current levels as demand for services grows, then the constrained scenario which we modelled in our research – showing that 40% of economic impact could be lost will become the reality.
Connectivity’s impact on every country’s economic agility is growing every year. 5G can push Europe into a new decade of digital development but it needs the tools – the spectrum - to do the job.
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Luciana Camargos is Head of Spectrum at the GSMA.
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