5G Marches On Despite Short-Term Hiccups

In some advanced markets, 5G is on the verge of becoming mainstream

Despite the ongoing pandemic, connections to 5G networks worldwide will triple this year to 670 million, according to our latest forecast published last week — subscribers to our 5G service suite can access the full report here. And although our near-term expectations have been dented, we remain optimistic that the global mobile industry will overcome these temporary challenges to achieve 3.6 billion 5G connections worldwide in 2025.

Neutralizing the effect of sluggish developments in 2020, strong 5G adoption is expected in the next 18 to 24 months, as macroeconomic recovery, accelerating network deployments and plummeting prices of 5G-capable phones combine with a greater appreciation for high-quality connectivity among consumers and businesses in the wake of the pandemic.

In some pioneering countries, 5G is already on the verge of hitting the mass market. South Korea and China continue to stand out for their excellent speed of deployment: a fifth of mobile phones in South Korea are on 5G networks already, and China is on course to achieve this milestone in 2021. And in China, the pace of 5G adoption is astonishing, with seven out of 10 smartphones sold in the first three months of 2021 featuring 5G capabilities.

In the US, after being first to launch 5G and then promoting it only tentatively for almost two years, carriers have started pushing 5G hard in the past six months, particularly since 5G-capable iPhones became available. It’s because of this push that we expect the country will regain its status of a 5G front runner in 2021.

Progress in Western Europe has been mixed. Delays to spectrum auctions during the pandemic have held up network deployment in some markets such as France, and government posturing over the role afforded to Huawei has brought uncertainty. But these delays weren’t as lengthy as many feared, and some operators have moved quickly to sign agreements with alternative providers of network infrastructure.

As a result of spectrum allocation, network progress and the growing prevalence of 5G phones, which will account for more than half of phone sales in the region in 2021, most Western European countries are now not too far behind the region’s pioneers in Switzerland, the UK, Finland and Germany.

But without enabled devices networks are no good to anyone! We must acknowledge the role that smartphone-makers are playing in getting 5G handsets into people’s hands. The global mobile phone market was dealt a significant blow by the pandemic and shrank by 13% in 2020, and its growth will remain sluggish in 2021 at just 6%, suppressed by volatile demand and short supply of major components. However, the 5G segment will flourish and one in three mobile phones sold worldwide in 2021 will feature 5G. We also expect 5G phones to become cheaper and cheaper as the year progresses, with prices set to drop as low as $150 in 2022.

As all these positive factors come together, we expect that more than 75% of mobile phones in the advanced markets of North America, Western Europe and Asia–Pacific to have transitioned to 5G networks by the middle of the decade.

Importantly, 5G growth won’t be confined to the most advanced markets in the next five years, even if less developed economies are slower to launch 5G as they continue to reap the benefits of 4G. India is one such country, where fierce competition between mobile operators and ambitions for home-grown solutions have the potential to lead the adoption of 5G.

Two other areas of growth for 5G have received plenty of attention but will have limited effect in the next five years. The Internet of things is set to benefit from 5G, but the pandemic has caused delays to standards and commercial deployment, so the number of connections in this space will remain unimpressive until at least 2025. Additionally, 5G fixed wireless access is likely to remain a niche technology, confined to a supporting role alongside traditional fixed-line networks in many markets.

Risks to the exact mode and speed of 5G adoption remain, ranging from the unpredictable nature of the global pandemic and the high uncertainties facing the world economy, to the short supply of components for smartphones and other smart devices. However, the mobile industry has firmly stepped on the path of upgrade to 5G and short-term challenges will do little to hinder its long-term progress.

A summary of our new forecast for 5G connections is shown in the chart below.

If you want to learn more about our 5G research and insights, please get in touch.