5G: The Current Market
5G, the latest iteration of wireless cellular technologies, has started to be rolled out by network operators and industry stakeholders. Previous iterations of technologies (3G and 4G) were developed with a consumer-oriented focus. However, 5G will have further-reaching impacts, enabling a large number of use cases in IoT sectors such as healthcare, automotive industries, smart cities and mobile broadband. 5G networks will deliver high bandwidth and low latency that supports services such as UHD (Ultra High Definition) video streaming.
5G will provide the data infrastructure not just for the next generation of mobile communications but for serious developments in IoT, including smart cities and AVs (Autonomous Vehicles).
As shown in figure 1, Juniper Research anticipates that over 75% of global 5G connections will be in Far East & China. This is due to the early launches in South Korea by all Tier 1 operators, which was followed by significant launches of commercial 5G networks in China.
It must be noted that the uptake of 5G connectivity has exceeded pre-launch expectations. This can be attributed to pricing strategies by operators and substantial pre-launch device support for both smartphones and FWA (Fixed Wireless Access) routers
Additionally, we can see that North America accounted for approximately 14% of connections by the end of 2019 owing to launches from AT&T, Verizon and Sprint. West Europe will account for 4%; again driven by operator support in countries such as Italy, Finland, Spain and the UK.
1.2 5G Market Update
2019 was the year that 5G finally hit the market. Launches in North America, West Europe and the Middle East created a small base of 5G consumers, however the technology gained significant traction in Far East & China. Thanks to an amazingly effective launch and surprisingly fast customer take-up, South Korea leapt ahead of the rest of the world. By the end of the year, there were an estimated 4.5 million 5G users in the Far East, roughly 80% of the global total, nearly all of them in South Korea.
North America had the second highest number of connections, reaching around 800,000 users. West Europe is taking a more tentative approach, waiting to see how the technology develops, while some parts of the world lack the infrastructure to start on 5G for at least two years. While Europe, Asia and the Middle East move to catch up with Korea’s achievements, India and Latin America are both likely to lag far behind, thanks to failures of 5G pricing on the one hand and economic challenges on the other.
The rate of adoption has already been five times faster than anticipated in our previous report, which holds great promise for 5G. It has not just lodged in the public consciousness but has found its way into the lives of several million consumers.
Indeed, Juniper Research believes that strategies of extremely competitive pricing have been a major driver for the accelerated adoption of 5G connections.
1.3 Stakeholder Player Analysis
The level of deployment of 5G is currently limited; however, a growing number of countries have launched, or plan to launch, commercial 5G networks . A range of operators have established initial 5G networks and there is already potential for competition in some countries.
1.3.2 Early Leaders
So far, the largest movement has been in South Korea, where several companies have established commercially viable 5G networks serving millions of customers. This has mostly been achieved using Samsung, Nokia, and Ericsson equipment. However, it is notable that one provider, LG U+, also uses Huawei equipment.
China is using the 5G opportunity to push forward the status of its technology industry. Russian operators have agreed to use Huawei equipment in the backend of their 5G networks.
Conversely, the US has the largest 5G deployment outside Asia thus far. Verizon, Sprint, and T-Mobile had early launches and have used these to garner publicity.
As can be seen in the figure below, there are a large number of countries that have developed and launched 5G networks as of 2019.
1.4 Overview of 5G’s Impact on the IoT
The IoT is the concept of providing a connected digital identity to physical objects and networking those identities and their data together. Analysis of the data that these objects produce aims to improve the quality of life, efficiency, create value, or reduce costs. It will enable far great automation, as devices become self-regulating as complex, interconnected networks. From hospital data management to self-driving cars, devices will play a powerful role in people’s lives.
While 5G is not an absolute necessity for IoT, the two are mutually supportive. IoT is a data-centric endeavour. While geographically stable IoT devices will be able to use local connective networks, those that are more mobile will need to tap into mobile telecoms. This creates opportunities at the infrastructure, device and component levels, which can be accessed by 5G technology.
5G will be used to connect many traditionally ‘dumb’ devices, including appliances, vehicles and smart homes. The IoT will depend on the widespread deployment of sensors. Many of these will only be able to connect to the IoT through mobile networks, while for others this will offer a more convenient, flexible and cost-effective alternative to wired connections. Thanks to its increased spectrum use, 5G will be better able than its predecessors to withstand IoT’s growing pressure on data networks.
In IoT, the number of end points on the network will exceed the number of people on it. 5G’s capacity to cope with many more devices will make the IoT a reality.
Network slicing is also allowed by 5G. By slicing off parts of the spectrum for specific uses, continuous service can be ensured for critical devices and time-sensitive data. This ensures the reliability needed for IoT deployment in areas such as healthcare and automated vehicles.
5G will therefore be a critical part of the unifying infrastructure that allows millions of devices to talk to each other and to provide human agents with the data they want from the IoT. This in turn will shape the 5G network. Current mobile networks are designed for people, but in the 5G era, they will need to be designed with mass devices in mind.
When deployed, 5G networks will need to be scalable and intelligently efficient to support billions of IoT devices. A sizeable number of sensing devices are already in place and several uses for the IoT have emerged from these.
Over the next five years, we anticipate significant activity in five key sectors:
- Automotive: IoT technology, including sensors and inter-device communication, is fundamental to self-driving cars and driver support tools.
- Digital Health: Networked devices allow the more effective collection of healthcare data, supporting eHealth practices.
- Smart Cities: Thanks to the better data facilities of 5G, local authorities will be able to establish smart cities, where automation and information sharing improve a city’s efficiency.
- Smart Homes: The most immediate consumer-facing segment of the IoT, sensors and networked devices can be used to manage a home, increasing comfort, safety and energy efficiency.
- 5G Mobile Broadband: The increased bandwidth and speed of 5G will make it a viable alternative for connecting homes to the Internet, reaching areas that currently lack connectivity
1.6 Market Forecast Summary: Global 5G Connections
The total number of 5G connections will reach 1.5 billion globally by 2025, rising from only 5 million in 2019. This is an annual average growth of 150% over the next 6 years.
- We forecast that the US and South Korea will be the fastest adopters of 5G, with 75% of all 5G subscribers attributable to these two countries by the end of 2020. Aggressive pricing strategies and extensive device support have enticed over 5 million subscribers to 5G networks globally in 2019.
- Pricing strategies from operators in the US and South Korea have aimed to rapidly migrate users to 5G networks by offering low cost connectivity. However, this strategy will prolong operators’ primary goal of securing a return on their substantial 5G investment.
- Conversely, operators in other regions, such as Europe, have focused on maximising early 5G revenue by applying premium pricing over 4G subscriptions. Operators in these regions must expand geographical 5G coverage via basestation rollouts in order to maximise the value proposition of 5G and justify the premium pricing.
- Additionally, the significant number of 5G-supporting devices will further increase the immediate adoption of 5G connectivity. Early launches of FWA routers will provide operators with an immediate platform to launch broadband services that leverage 5G networks as a last mile solution.