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Global telco 5G network infrastructure spending set to almost double in 2020

Research firm finds investments in next-generation networks will reach just over one-fifth of total wireless infrastructure spend

Despite global investment growth rates in 5G being slightly lower in 2020 because of the Covid-19 crisis, excluding Greater China and Japan, communications service providers (CSPs) in all regions are quickly pivoting new and discretionary spend to build out the 5G network and 5G as a platform, research from Gartner has revealed.

Also, the analyst says in its report Wireless infrastructure spending forecast worldwide, 2019-2020 that 5G network infrastructure market revenue will almost double in 2020 to reach $8.1bn.

What makes this more impressive is that the forecast comes only weeks after Gartner published research finding that lockdowns and stay-at-home orders, combined with the economic uncertainty brought on by the Covid-19 pandemic, caused first-quarter demand for smartphones to collapse, with the global smartphone market experiencing its worst decline ever.

The latest survey expects total wireless infrastructure revenue to decline 4.4% to $38.1bn in 2020. Investment by communications service providers (CSPs) in 5G network infrastructure accounted for 10.4% of total wireless infrastructure revenue in 2019 but this figure is calculated to leap in 2020, reaching 21.3%. Overall 5G investment for 2020 is expected to reach $8.127bn, annual growth of 96%.

Looking at the drivers for this growth, the study identified rising competition among CSPs as causing the pace of 5G adoption to accelerate. Gartner added that new O-RAN (open radio access network) and vRAN (virtualised RAN) ecosystems could disrupt current supplier lock-in and promote 5G adoption by providing cost-efficient and agile 5G products in the future.

Gartner predicted that CSPs in Greater China (China, Taiwan and Hong Kong), mature Asia-Pacific, North America and Japan would reach 5G coverage across 95% of national populations by 2023. On an individual country basis, and over the short term, the study showed Greater China leading the world in 5G development with 49.4% of worldwide investment in 2020.

Cost-effective infrastructure manufactured in China, coupled with state sponsorship and reduced regulatory barriers, was seen to be paving the way for major CSPs in China to build 5G coverage quickly. However, Gartner noted that other early-adopting and what it called “technologically adept” nations were not far behind.

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“Investment in wireless infrastructure continues to gain momentum, with a growing number of CSPs prioritising 5G projects by reusing current assets, including radio spectrum bandwidths, base stations, core network and transport network, and transitioning LTE/4G spend to maintenance mode,” said Kosei Takiishi, senior research director at Gartner.

“Early 5G adopters are driving greater competition among CSPs. In addition, governments and regulators are fostering mobile network development and betting that it will be a catalyst and multiplier for widespread economic growth across many industries.”

Looking forward, Gartner expects 5G investment to rebound modestly in 2021 as CSPs seek to capitalise on changed behaviours sparked by populations’ elevated reliance on communication networks.

It expects 5G investment to exceed LTE/4G in 2022 and that CSPs will gradually add standalone capabilities to their non-standalone 5G networks. This should mean that by 2023, 15% of CSPs worldwide will operate standalone 5G networks that do not rely on 4G network infrastructure. This, said Gartner, will rapidly divert wireless investment away from LTE/4G, and spending on legacy RAN infrastructure will decline rapidly.

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