5G roll-outs to continue apace in 2021

New 5G launches will be led by telcos in forerunner markets, but the industry’s near-term outlook will depend on the timing of an economic recovery

Global 5G momentum will continue apace in 2021 despite the Covid-19 pandemic which had slowed new 5G launches this year, according to the GSM Association (GSMA).

In its annual Global mobile trends research report, the GSMA said 5G activity has recovered, with 113 mobile operators having launched a 5G network in 48 countries. It expects operators to spend 80% of the telco sector’s capital expenditure, or $890bn, on 5G networks over the next five years.

Also, consumer adoption of 5G will reach 20% of global mobile connections by 2025, with adoption rates higher among countries at the forefront of 5G – US, China, South Korea, Japan, the Gulf states, Australia and parts of Europe.

However, the near-term outlook in 2021 depends, to a large extent, on the timing of an economic recovery from the pandemic, given pressures on consumer incomes.

The GSMA said a continued fall in 5G smartphone prices could help. In its global consumer trends survey for 2020, 37% of consumers said they intended to upgrade to 5G, compared with 30% in 2019.

Although this increase is welcome, it also highlighted the challenge for the mobile industry to convince the mass market of 5G’s value compared to 4G.

On the enterprise front, 56% of operators see manufacturing as the highest potential for 5G, serviced with a mix of internet-of-things deployments, cloud and private networks.

The timing of 5G also aligns with the availability and commercialisation of open networking technologies such as Open RAN (radio access network), which paves the way for a paradigm shift in the way networks are built and operated.

The GSMA said Open RAN will help the industry reduce costs and increase agility to unbundle network assets to monetise use cases such as edge computing. It will also increase competition among network equipment suppliers, with 57% of operators planning to introduce new suppliers into their supplier roster.

Despite the hype over 5G, 4G will continue to dominate the global mobile landscape, accounting for 57% of the global mobile customer base, by the far the largest share, according to the GSMA.

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Smartphone and 4G adoption are rising in many emerging markets. For example, in India, the world’s second most populous country, smartphone penetration is now about 70%, with 85% of these smartphones running on 4G networks.

The GSMA expects this trend to continue over the next five years, with a fall in smartphone prices and an increase in the availability of local content to make the internet more relevant to users.

The pandemic may have put the spotlight on the importance of mobile connectivity, but in higher-income countries, telecom revenues still fell by 4-8%. In these countries, the decrease is around half of the comparable drop in GDP since the start of 2020. 

The fall was mainly concentrated in four areas: roaming, due to a lack of international travel; lower handset upgrades, due to retail store closures; challenges in corporate and small to medium-sized enterprise markets, and general consumer spend pressures, particularly in the prepaid mobile segments.

However, telcos’ resilient mobile and fibre networks have met the demands of increased data traffic, spiking to 50-100%. The increases were driven by home entertainment and work from home communications, such as video and voice calls.

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