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April 09, 2020
5G Costs For Telecom Operators Will Require Plan Price Increases

Carriers have been looking at energy efficiency for a few years now, but 5G will bring this to top of mind because it’s going to use more energy than 4G. Telcos spend on average 5% to 6% of their operating expenses, excluding depreciation and amortization, on energy costs, according to MTN Consulting. And this is expected to rise with the shift to 5G.

A typical 5G base station consumes up to twice or more the power of a 4G base station, writes MTN Consulting Chief Analyst Matt Walker in a new report entitled “Operators facing power cost crunch.” And energy costs can grow even more at higher frequencies, due to a need for more antennas and a denser layer of small cells. Edge compute facilities needed to support local processing and new internet of things (IoT) services will also add to overall network power usage.

Exact estimates differ by source, but MTN says the industry consensus is that 5G will double to triple energy consumption for mobile operators, once networks scale.

We have previously reported extensively on why 5G plans have to be more expensive than 4G :

What slipped through our cost estimates is the fact that triple the energy (5G vs 4G) is used which means :

1) Triple the electricity costs vs 4G 2) Incremental upgrades at the tower associated with AC power 3) Incremental upgrades at the tower associated with Battery backup

Economies of scale can be created with bullets 2 & 3 but the cold hard reality is that electricity costs grow at considerably higher rates of inflation (look at your own electricity bills over the last 5 years).

Assuming that long term contracts are entered into Telecom Operators can’t escape the need for triple the power = More costs

Anticipate that 5G plans need to be priced very significantly higher than 4G due to the very significant OPEX and CAPEX cost differentials 4G vs. 5G.

5G Costs For Telecom Operators Will Require Plan Price Increases