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LATAM | Jan 20, 2022

BIG BUCKS: Expert says 5G could bring huge socio-economic benefits for Latin America and the Caribbean

Gavin Riley

Gavin Riley / Our Today

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Principal economist Kalvin Bahia presents findings of the new GSMA report at #ITUinSA18, linking high spectrum prices to more expensive services, lower 4G coverage and lower network quality in September 2018. (Photo: Twitter @GSMAPolicy)

Under the considerations for 5th-generation (5G) technology, Latin America and the Caribbean stand to make quantum leaps in socio-economic development if countries across the region can get integrated in time, says principal economist at the London-based GSMA Intelligence, Kalvin Bahia. 

As regulators around the world are deciding how best to manage the radio frequency spectrum for decades to come, reviews for an optimal approach to spectrum management have become increasingly relevant, and are at the heart of the debate surrounding the six gigahertz (6 GHz) frequency.

The 6GHz spectrum band represents the largest remaining block of mid-ban spectrum that can be allocated to licensed mobile or unlicensed service—leading to Governments having to weigh on what the most efficient use of the band is to optimise the socio-economic benefits.

“Now this is a subject that often seems very technical and for many people quite boring but it’s very important. The majority of the world’s population is now online and uses the Internet on their mobile phones and a large number of people also use the Internet at home, at work, or on a fixed-line connection,” Bahia remarked.

“That internet connectivity also drives significant socio-economic activity. Last year, a GSMA Mobile Economy study showed that mobile technologies generate seven per cent of GDP in Latin America—or more than US$40 billion. This includes the direct and indirect impacts, where mobile technology and being on the Internet makes all sectors of the economy more productive,” he added.

The most pertinent aspect is whether this band is used through a licensing scheme for 5G and its evolution, or an unlicensed one that considers Wi-Fi 6 and its development. 

GSMA Intelligence, presenting its findings of a cost-benefit analysis on Wednesday (January 19), indicated that there are different assignment options for the 6GHz spectrum band.

(Photo: IEEE Innovation at Work)

The study looked at expected traffic demand and supply for both 5G and Wi-Fi whereby supply was determined by the amount of spectrum available; as well as capacity constraints relative to mobile broadband and Wi-Fi traffic demand. 

GSMA Intelligence found that capacity constraints could be alleviated through 6GHz and generate spill off benefits by reducing the overall prices and/or increasing network quality or a mix of both. 

The socio-economic benefits were compared in three scenarios, using different allocations of the 6GHz spectrum band—all 6GHz of the band assigned to licensed use, all of the band assigned to unlicensed use and finally, 500 megahertz (MHz) assigned to unlicensed use while 700 MHz would be assigned to licensed use—which was done relative to a baseline method. The study also covers the period from 2022 to 2035 in 12 countries (Australia, Colombia, France, Germany, Ghana, India, Kazakhstan, Kenya, Mexico, Qatar, Thailand, and United Arab Emirates), with more to follow in phase two.

GMSA Intelligence concluded that greater internet penetration drives poverty reduction and enables a decline in greenhouse gas emissions, aiding the fight against climate change. 

According to Bahia, the more people utilise their mobile devices, which GMSA Intelligence expects to increase in the next 15 years, the greater the data traffic will be. The advent of 5G will also provide faster streaming/download/upload speeds for consumers.  

“5G, for example, is offering at least 100 Mbit/second of download capacity. There is a large amount of spectrum available in the 6GHz band that most countries haven’t decided how to allocate yet,” said Bahia.

“So, governments have a very important decision to make and what we tried to do in this study is to help based on evidence. We tried to assess the demand and supply conditions of 5G and Wi-Fi over the next 15 years and, therefore, understand where the 6GHz spectrum would have its most efficient and economic use,” he explained further.

Off the bat, based on 5G demand, the assignment of more spectrum this way has an immediate positive effect, Bahia noted, by reducing the cost of network deployment thereby making 5G services more affordable. It also meant that the speeds at which 5G requires to be operational are easily met.

A man walks past an advertisement promoting the 5G data network at a mobile phone store in London, Britain, January 28, 2020. (Photo: REUTERS/Toby Melville/File)

Contrastingly, with insufficient spectrum allocation, the costs would skyrocket owing to the need for more site deployments or force some operators to reach a technical limit in attempts to expand their network, in turn weakening the quality of service delivery.

“In the case of Wi-Fi, studies showed that, at the moment, there aren’t many countries where the spectrum available for Wi-Fi is imposing a significant capacity constraint,” the principal economist argued.

Bahia argued that while the situation could drastically change in 15 years, experts recommend that for countries with fibre-cable connections, if their speeds cannot exceed five gigabits/second, then economic analysis suggests the most beneficial policy option would be to assign the full 6GHz spectrum band to 5G. 

“To provide an example, the two Latin American [countries] we looked at in this phase were Mexico and Colombia. In the case of Mexico, our analysis found that if the full 6GHz band was assigned to 5G, it could add US$4.3 billion to the Mexican economy by 2035 or 0.2 per cent of GDP,” he said, adding that for Colombia it would add US$1.5 billion to the local economy,” Bahia contended.

Another option for Latin America and the Caribbean would be to split the 6GHz band (500MHz assigned to unlicensed use, 700 MHz to licensed use) GSMA Intelligence’s analysis concluded that would be most beneficial for developing countries. 

“Just to give you some numbers, again, in Mexico, we found that approach would add up to almost US$10 billion in the next 15 years and around US$2.5 billion in Colombia—both around 0.4 per cent of GDP,” he said.

Time and demand are the most important factors for countries across the region to consider, Bahia told Our Today, as he felt Latin American nations could ‘leapfrog’ from 3G tech into 5G and still access greater benefits than what 4G could possibly provide. 

Small toy figures are seen in front of a displayed Huawei and 5G network logo in this illustration picture, March 30, 2019. (Photo: REUTERS/Dado Ruvic/Illustration/File)

“It is important these decisions look at country-specific contexts and consider how the mobile market and the fixed-broadband market will evolve over time,” he explained.

“Once the report is published, the idea is that if a country is not included in that study, by setting up the cost-benefit framework and methodology, we hope that any country could apply [them] to their specific circumstances,” Bahia added.

While several countries in Europe and Asia have already heavily invested in 5G, the conversation has largely just started in Latin America and the Caribbean—strong-armed into a digital transition due to the ongoing coronavirus (COVID-19) pandemic.

In Jamaica, the topic of 5G has morphed into a geopolitical tussle between China, which expressed an interest in assisting the island build out its telecoms infrastructure, and officials from the United States, who are wary of Kingston’s ever-growing ties with Beijing.

Most recently, Donald Tapia, ex-US ambassador to Jamaica, went on a fiery tirade against Chinese advancements in 5G technology, placing a counteroffer from America and a corresponding warning that Jamaica may continue deepening relations with China at its own peril.

Donald Tapia, outgoing US Ambassador to Jamaica (Photo: Tau Kappa Epsilon Fraternity, Illinois)

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The two biggest telecommunications companies, Flow and Digicel, have both lamented the hefty costs associated with a 5G transition and have not definitely stated an intention to at least begin in the Kingston Metropolitan Area (KMA) where most people live, work and transact business.

Ultimately, the greater task lies with the Jamaican Government’s Spectrum Management Authority (SMA).

Rohan Pottinger, chief technology officer for Digicel Jamaica, said during a February 2020 public forum that the launch of 5G networks in Jamaica would require more than triple the number of towers now installed.

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