FCC Chairman Tom Wheeler says as wireless operators hone their 5G plans, which will leverage higher band frequencies, there will be a need for more cost effective wireline-based backhaul solutions.
However, a number of wireless-centric providers like Sprint have long argued that there has not been enough competitive choice in the wireless backhaul market because it has been mainly controlled by large incumbents like AT&T (NYSE: T).
The FCC itself has been working to ensure that there will be more competition in the special access, or what it calls business data services (BDS) market to provide backhaul sources for wireless operators rolling out small cells.
In late April, the FCC approved a Tariff Investigation Order and a Further Notice of Proposed Rulemaking outlining a new regulatory framework for the provision of special access services.
"All these small cell sites will need to be connected, so we'll need a lot more backhaul," Wheeler said during the National Press Club meeting this week. "That's a challenge we're going to address through our proceeding on Business Data Services, the kind of dedicated access that wireless providers need to connect cell towers and antennae to their networks."
According to the FCC estimates, the backhaul connections for wireless operators can be as "much as 30 percent of the cost of operating a wireless network."
Wheeler said that as wireless operators acquire and put in use millimeter wave spectrum bands at 28 GHz and above, the costs will rise even further.
"With the additional sites required to support use of the millimeter wave spectrum that percentage is likely to increase, to as much as 50 percent," Wheeler said. "In many areas, however, competition in the supply of backhaul remains limited, and that can translate into higher prices for wireless networks and then higher prices for consumers."
Wheeler said that a dearth of competitive choice could hamper future 5G network deployments.
"Lack of competition doesn't just hurt the deployment of wireless networks today, it threatens as well to delay the buildout of 5G networks with its demand for many, many more backhaul connections to many, many more antennae," Wheeler said. "Before the end of this year the Commission will take up a reform proposal – supported by the nation's leading wireless carriers, save one – that will encourage innovation and investment in Business Data Services while ensuring that lack of competition in some places cannot be used to hold 5G hostage."
However, Wheeler's comments drew fire from USTelecom, an industry group that represents large incumbent telcos.
The group says that the BDS market is already competitive and does not need to be reregulated.
"In over 90 percent of the country where people are buying business data services there is robust competition, and it is growing," said Walter McCormick, president and CEO of USTelecom, in a statement. "Thus, the conundrum: We understand the purpose of regulation in the absence of competition, but find it puzzling that the chairman would propose regulation in the presence of competition, particularly when the goal is to incentivize more investment, not less."
- read Wheeler's speech (PDF)
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