Bullish Outlook for 5G Despite Near-Term Uncertainties

Adoption of 5G cellular technology globally will happen faster than that of 4G, according to a new forecast by technology research firm CCS Insight. Connections to 5G networks will surpass 1 billion in 2022, taking a year less than 4G did to clear this milestone, before reaching 2.8 billion in 2025.

Several mobile operators are laying claim to launching 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. Kester Mann, director of consumer and connectivity at CCS Insight, comments, “Despite an avalanche of recent 5G “firsts”, widespread network deployment will take years to achieve. Early launches represent an important milestone for the industry, but we should consider them as just the beginning of a long journey”.

Another factor determining the slow adoption of 5G in 2019 is the limited availability of enabled smartphones. The first 5G-ready devices are now emerging and will launch in greater volume and at a faster pace than witnessed with 4G. Nonetheless, they are characterized by high retail prices and limited support for frequency bands. CCS Insight expects 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.

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. This will facilitate fast adoption of 5G by smartphone users”, commented Marina Koytcheva, CCS Insight’s vice president of forecasting.

Many new 5G networks will arrive 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 wish 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.

However, a big uncertainty facing 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. In contrast to 4G, 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, it will be the home of 37% of global 5G connections.

A lot has been said about the 5G opportunity in the Internet of things (IoT). But Martin Garner, senior vice president of Internet at the research firm, notes, “As big as it is in the long term, we expect 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 will also be some substitution from other technologies”. Cellular IoT will 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 home broadband market; others intend to deploy it on a more limited basis, to complement existing fixed-line services. Yet another large group of operators has so far remained unconvinced by the opportunity. CCS Insight forecasts 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)

More information about CCS Insight’s extensive 5G, mobile phones and IoT research services can be found below:

ccsinsight.com/research-areas/5g-networks/

ccsinsight.com/research-areas/mobile-phones/

ccsinsight.com/research-areas/business-iot/

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