Author(s): Kester Mann
Autonomous driving, remote healthcare and fixed wireless access have regularly been touted as the "killer" services for new 5G networks. Although these applications are bound to enjoy relevance at different stages in the technology's lifespan, they won't drive significant connections for many years to come.
This was a leading finding of CCS Insight's new forecast of subscriptions to 5G networks, published last week. The report shows that fast Internet access on consumer and enterprise smartphones will be the dominant area of adoption of fifth-generation networks in the near future. Even by the end of 2025, it will still represent a huge 99 percent of all 5G connections, bolstered by insatiable demand for video consumption.
Strong handset support for 5G will also be an important enabler. The first compatible devices are likely to emerge in 2019, before steep growth in 2021 sees annual sales cross the 300 million mark.
Nevertheless, the first commercial use of 5G is likely to be fixed wireless access. Verizon and AT&T are pushing this agenda in the US, but the technology could also offer an attractive solution in many emerging markets, where access to high-quality fixed-line infrastructure is limited. However, we believe the cost of deployment will restrict roll-out to the densest urban areas.
South Korea, Japan and the US will fight it out to be the first country to launch a 5G network, but we expect China to quickly become the early driver of mass adoption. China was left on the starting blocks in 4G, but its political ambition of leading the charge in technology, combined with the rise of local manufacturer Huawei and strong consumer demand, will help it quickly establish leadership this time around. Even by 2025 — following mass 5G deployments in most world regions — our forecast shows that China will still account for more than four in every 10 connections on 5G networks.
China's early momentum will propel 5G to faster initial adoption than any previous technology generation. We expect 5G to hit 1 billion connections worldwide in mid-2023, taking less time than 4G to reach this milestone.
However, there are also challenges. The large amount of infrastructure needed for deployment means that significantly more sites will be necessary than in LTE. This creates additional obstacles such as access to land and street furniture, not to mention cost. Further, opaque operator business models, consumer apathy to upgrading their smartphones and a seemingly endless debate about potential uses prevent us from being more bullish.
In the long-term, we expect 5G adoption to follow a broadly similar path to LTE, reaching 2.6 billion subscriptions in 2025, equivalent to just over one in every five mobile connections.
CCS Insight's full forecast, including splits by region is available to our customers here. To download a summary of our expectations for the development of the technology until 2025, please click here.