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5G network launches are now gathering momentum. What should the industry expect in terms of impact? MEF provides a quick view of the 5G future:

  • 5G is expected to show a fast take up in 2021 – similar to the 4G launch: networks are ready, a healthy smartphone replacement cycle will do the rest.

  • Operators are wary of the large cost of the new technology deployment, they will sing the praises of 5G marketing-wise, but their effective rollout will be carefully paced to manage CAPEX.

  • The mobile ecosystem will enjoy the 5G advantages on service quality and revenue even more than the mobile operators. Expect better customer experiences thanks to improved speed, latency and IoT support. New services that will benefit particularly: fixed wireless conversion, virtual reality applications in business, and networked real-time gaming.

  • Consumers will feel the advantages of 5G in terms of less congested networks, but this will not be comparable to the experience shift from 3G to 4G where mobile become the medium of choice for internet consumption.

The roll-out of 5G networks has finally reached critical mass, and 2021 will be a significant year for the number of new 5G data connections. 5G will open the gate for better service quality overall, but the real impact will on the quantity of data that will be shared by and with consumers. However, it might have less than an impact on the mobile operators supporting it overall the generic mobile data service: 4G was a leap in their experience of mobile data.

5G is coming

The countries ready for 5G services are now covering a large part of the world map (see figure below). China, the USA, and South Korea were the early testbeds, but we now see a much wider implementation in Europe, South East Asia, and South America. Only the African content seems to lag significantly, but there some operators are still busy with 4G and fiber infrastructure roll-outs. To date, 82 operators have launched a form of 5G services in about 40 countries, and many have announced that they will follow.

In reality, there is not a single 5G rollout, by an assortment of spectrum combinations to challenge the choice in a candy shop. Most of these differences should eventually become insignificant as users that expect by now to buy ‘services’ and less so networks specific flavours. There have been delays in allocating frequencies but even that chapter seems to have been

Fast uptake for 5G

5G will see a fast upgrade cycle, similar to the one seen for 4G. The smartphone replacement cycle might have slowed down but it remains consistent and the recovery from the dip during the pandemic months in 2020 should help to smooth the numbers. There are already 149 5G mobile devices available in the market, and 200 announced, with prices progressively reaching mid-range devices.

Mobile operators: a careful trade-off

The telecoms industry has been wary of 5G, despite the general praise for the technology, operators have taken their time to roll out. While operators are concerned about the large costs for 5G deployments, they still sing the praises of 5G marketing-wise. However, the rollouts will be carefully paced to manage CAPEX. There will be launches, but 5G will not be everywhere.

For consumers, 5G will be an improvement but not dramatically different from its predecessor. We have already commented before about industrial services, they will play an important role eventually, but they are not still here in volume yet.

Surely there are many advancements brought by this new generation of mobile networks: delivering more data and more efficiently, with lower latency and more devices in each cell. Simply put mobile operators will have to embrace 5G as their networks deliver more and more data.

Operators already find signs of commoditisation for mobile data. In Western Europe, the Unlimited data plans have re-surfaced and 50Gb data plans are also common (a 50% increase year on year on headline data bundles size). Data consumption has grown  to about 3GB per month on average (a 25% increase year on year from 2019). Operators will find it difficult to manage a fast positioning of 5G bundles as premium.

The 5G hype: a double edged sword

The hype generated around 5G in recent years has not helped the launch of the services – if anything, it has probably hindered it with many questioning the value of 5G. All of the talks of autonomous cars based on 5G have only shown the weakness of a solution requiring a capillary network deployment and good fiber connections. The national networks required by these services are far from reality. Many started to think that they were sold PowerPoint based dreams just like during the 3G times.

The Real Winners: data applications/service providers

However, many will be surprised by the sheer volume of data that 5G networks will transport. Expect more devices with longer sessions and higher usage of bandwidth-heavy applications such as video. By 2022, it might not be the quality of applications but the volume of traffic that will show the success of 5G. Fixed wireless substitutions could be a simple application for last-mile substitution improving broadband experiences – also driving much of the traffic hike.

The launch of the latest generation of game platforms, the PS5 and Xbox X and S have already shown the importance of connected gaming. The raw power of console processors is traded more and more by online services. The availability of 5G with higher throughput and lower latency will make the mobile gaming experience jump in quality. Mobile will become a much more serious contender to the console world.

Networked virtual reality applications will enjoy the lower latency, avoiding the dizziness created by lagging images so far. The market for interactive virtual reality (VR) on mobile and game platforms has seen a resurgence of interest after the pandemic. Entertainment and business application developers are now re-engaging with the potential of visually immersive experiences. The first generation of interactive VR services in the late 2010s was welcome by many enthusiasts but failed to deliver an optimal experience to the masses.

Hardware optimization, network latency, and capacity were holding back wider take-up. Today, the promise of 5G networks, edge computing, and the much greater interest for interaction by the public are changing the dynamics of this market. The Mobile Ecosystem Forum valued the global market for VR hardware and services at 4.2 USD billion in 2019 – expect this to grow significantly in the next years.