High Hopes for 5G Despite Near-Term Doubts

In 2025, 5G will form 20% of all mobile connections

Adoption of 5G cellular technology globally will happen faster than that of 4G, according to our new forecast, which was published to subscribers earlier this week. Connections to 5G networks will top 1 billion in 2022, taking a year less than 4G did to clear this milestone, before reaching 2.8 billion in 2025. China will propel growth and is expected to be the largest 5G market by the end of 2020. In 2025, with over 1 billion 5G connections, the nation will be the home of 37% of global 5G connections.

Several mobile operators are claiming to have won the sought-after title of being first to launch the world’s first 5G service. AT&T and Verizon in the US, KT Telecom in South Korea and Swisscom in Switzerland, among others, have all taken their first steps in the commercial deployment of 5G (see Verizon Claims 5G Gold Medal). But despite this avalanche of recent 5G “firsts”, widespread network deployment will take years to achieve. Early launches are, of course, an important milestone for the industry, but they’re just the beginning of a long journey.

Another factor to blame for the slow take-off of 5G in 2019 is the limited availability of supporting smartphones. The first 5G-ready devices are now emerging and will launch in higher numbers and at a faster pace than witnessed with 4G. However, they’re characterized by high retail prices and limited support for frequency bands, which leads to forecast that fewer than 10 million 5G smartphones will be sold in 2019, resulting in an even smaller number of 5G connections at the end of 2019 (see Global Mobile Phone Sales Will Decline in 2019).

But things will heat up significantly for 5G in 2020, when all major Android smartphone makers will have 5G-enabled smartphones on the market. In addition, the recent agreement between Apple and Qualcomm bringing litigation between the two players to an end has cleared the way to a 5G-enabled iPhone in 2020. Fierce competition, coupled with subsidies and incentives in certain markets, will ensure rapid price erosion of 5G devices in 2020 and quick adoption by smartphone users who replace their devices in the following years.

Many new 5G networks will be switched on in the second half of 2019, and especially in 2020, when practically all major operators in Western Europe, North America, China, Japan and other advanced markets of Asia–Pacific will roll out 5G services. Operators will want to move to 5G to take advantage of capacity gains and lower costs for serving smartphone users, whose appetite for mobile data is quickly growing.

A big uncertainty in 5G technology is the extent to which operators in major markets, especially in Europe, will be permitted to use Huawei’s 5G equipment. Large European operators such as Vodafone and BT have warned that without the Chinese manufacturer’s equipment, 5G in Europe could be delayed by more than a year. The UK has just given Huawei the green light to participate in the 5G infrastructure in the country, but so far only in “non-core” parts of the roll-out.

A lot has been said about the 5G opportunity in the Internet of things (IoT), but as big as it is in the long term, it will take time to grow. 5G needs a couple more years to be fully ready for industrial IoT. Even then, the industrial IoT world is relatively cautious, and there’ll also be some substitution from other technologies. We therefore expect cellular IoT to account for less than 2% of global 5G connections in 2025.

Similarly, 5G in fixed wireless access has been the “poster child” for the technology, especially in the US. Some operators plan to use 5G fixed wireless access to disrupt the market for home broadband services; others intend to deploy it on a more limited basis, to complement existing fixed-line offerings. And another large group of operators has so far remained unconvinced by the opportunity. We forecast fewer than 50 million 5G connections worldwide for fixed wireless access in 2025.

5G connections, worldwide, 2018-2025
Source: CCS Insight 5G connections forecast (April 2019)

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