Wells Fargo's Fritzsche: 5G Automation Lives on the Edge With Fiber

To predict the 5G future, look no further than the disparate approaches that major wireless carriers have to its deployment and automation, suggests Jennifer Fritzsche, managing director and senior equity analyst at Wells Fargo Securities.

In an investor note following last year's Wells Fargo Securities 5G Forum, at which AT&T made a big announcement about when it expects its initial 5G rollout, Fritzsche cautioned that "a quick definition for 5G is a bit hard to find and -- depending on who you speak to -- you can get many different answers!" (See AT&T Expects 5G in Late 2018 or Early '19.)

Below is what Fritzsche had to say when Telco Transformation reached out to her to ask about what 5G really means. In Part One of this two-part Q&A (lightly edited for length and clarity), Fritzsche highlights the link between respective wireless carrier approaches to 5G and automation-fueled services and applications -- in particular, that higher-level 5G automation may have to take a backseat to high-bandwidth spectrum grabs and low-latency fiber rollouts.

In Part Two, look for Fritzsche to continue discussions on the importance of fiber rollouts, edge computing and certain IoT applications to 5G development.

(For Wells Fargo's disclosures pertaining to this interview, please visit https://www.wellsfargoresearch.com/Disclosures/DisclosureSearch).

Telco Transformation: What's your definition of 5G? And what are the definition's practical implications for telecom CIOs and their 5G strategies?

Jennifer Fritzsche: I don't know if it can be summarized in one word or one sentence, just because I'm listening to the carriers, and they have very different definitions of it.

I think if you played the word association game with any RF engineer -- "What does '5G infrastructure' mean to you? Give me five words" -- those words would be "cyber densification and small cell." And some combination of spectrum is key too.

[5G] is certainly the next leg of the technology platform for wireless, and it will be a platform that makes the spectrum that they have much more efficient. But I think [that], importantly, this might be the first generation where we see the complete blurring of wired and wireless lines -- even at the consumer level; maybe at the enterprise level. I think that's an important first step.

TT: Over the next couple of years, how do you see telcos approaching 5G automation? What are they thinking about practically for applying automation to services and applications -- such as autonomous vehicles, Internet of Things (IoT), artificial intelligence (AI), big data and video analytics, AR/VR, etc. -- where there is minimal to no human input necessary?

JF: I think those [applications] are for sure coming, but that's where it gets into, "What is your approach with 5G?" Verizon's approach is a dense fiber mesh small-cell densification strategy. That is a strategy that will very much support low latency, and that's key to all the applications you've described. T-Mobile's approach with 5G is a very different strategy. It's going to be working off of low-band spectrum, which has longer propagation -- which will be better for things that don't require low latency, IoT, smart cities, automated meters, lighting, things like that -- [whereas] if you think of autonomous driving, there is probably no application that needs lower latency than that just given the safety concerns.

So I think that carriers, and this is where I circle back to the word "fiber," are honed in on getting their networks virtualized -- so essentially, in layman's terms, pushing the intelligence over the network. You have to virtualize that network, and in order to virtualize that network, you need to invest a whole lot of capital in fiber. And that's where I think their heads are right now. I think that autonomous cars and things like that are really cool to talk about, and AI is certainly making advancements every day, but that is a much longer-term time horizon than what 5G will immediately bring.

TT: What other enabling network technologies are crucial to supporting these services and applications?

JF: I think the edge is crucial, [as well as] small-cell architecture like Cloud/Centralized Radio Access Network (C-RAN), and fiber running from those small cells connecting through a point of centralization. You're now seeing data centers talking about it and talk about that they are touching 5G.

TT: Is telcos' interest in 5G automation based more on improving efficiency and saving money, or is it more founded in planning for new revenue streams?

JF: I would say that these companies are, obviously, capitalist animals, so I think it's probably more on making money and finding revenue streams. The wireless industry is 110% penetrated, and so you don't have [the] growth opportunities in wireless right now. So they're forced to go elsewhere. I think that's a combination of what we're seeing right now.

— Joe Stanganelli, Contributing Writer, Telco Transformation