The deployment of 5G networks has so far been on the back of higher network speeds and somewhat greater levels of network control, but real 5G innovation, monetization, and investment will be tied to the next evolution being dubbed 5G-Advanced. A recent report from Dell’Oro Group noted this next iteration can be that driver if the stars align.

The first need is for an increase in mobile data traffic consumption. Current consumption growth models show the market will have enough spectrum resources to support traffic expansion until the end of this decade.

However, the development of video-intensive use cases like virtual reality (VR) and augmented reality (AR) will accelerate the need for 5G-Advanced.

“The successful introduction of a new virtual reality (VR) or augmented reality (AR) device for the masses that would trigger a change in behavior – increasing the amount of time users spend consuming video on the mobile network – would from a [radio access network] capacity perspective be a game changer, likely spurring massive capacity investments,” Stefan Pongratz, VP and analyst at Dell’Oro Group, wrote in a blog post.

Those investments could come from the broader deployment of millimeter-wave (mmWave) spectrum, which so far had been limited due to its lean propagation characteristics.

“Not surprisingly, mmWave still comprises less than 2% of global RAN investments,” Pongratz noted. “Technological breakthroughs combined with repeater improvements and increased use of reflective intelligent surfaces (RIS) will help to shrink the cost-per-[gigabit] gap between the sub-6 GHz spectrum and mmWave, ultimately putting this spectrum to better use.”

5G-Advanced impact on IoT and RAN

Another potential 5G-Advanced market driver will be IoT. Pongratz pointed to reports from industry group GSA and Ericsson that showed nearly 2 billion global cellular IoT (CIoT) connections at the end of last year, which was double of where it was at the end of 2019.

“Still, CIoT accounts for a low single-digit share of total mobile data traffic and operator revenues,” he wrote. “Although [4G] LTE is expected to address the lion’s share of the CIoT connections for the foreseeable future, a stronger focus on deterministic networking combined with technological innovation in IoT that can improve uplink rates and location precision could provide a boost in some industrial settings.”

RAN investments will also benefit from 5G-Advanced. That market is expected to hit a lull heading into 2023 as operators spent heavily this year on expanding the reach of their 5G networks using mid-band spectrum.

“Our baseline scenario rests on the assumption that the 5G cycle will be longer and deeper than the LTE investment phase,” Pongratz wrote. “And even though the base case is not predicated on the assumption that 5G-Advanced will drive another capex cycle, Release 18 and future releases are expected to play important roles in this next part of the 5G journey.”

Technology standards body 3GPP recently approved its Release-18 package at the end of last year, which marked the official start of work on 5G-Advanced. That specification package has a preliminary freeze date of December 2023, at which point vendors should be able to start pushing those approved updates into commercial equipment.

ABI Research predicts 5G-Advanced radios will start gaining traction in the market between 2024 and 2026. The firm expects the consumer infrastructure market will lead the space, with 75% of 5G base stations serving the market being upgraded to the 5G-Advanced specification by 2030. The enterprise infrastructure market will lag, hitting about half of that upgrade ratio.

The market witnessed a similar model with 4G standards. Initial deployments began in 2010, with 4G-Advanced updates hitting the market around the middle of the last decade.