The onset of the Covid-19 pandemic in March heralded a number of predictions of a doomsday scenario for the 5G industry, but a study from CCS Insight is the second in two days to make bullish expectations for 5G in 2020 and into the next five years at least.
The optimism is based on the industry building on a market momentum that has seen the launch of 100 commercial 5G networks and which is set for acceleration with what CCS Insight says is an abundance of 5G smartphones that cost significantly less than widely expected a year ago. By the end of 2020, the analyst predicts there will be nearly a quarter of a billion 5G connections worldwide, and this number is on track to more than triple in 2021.
Further fuel to the 5G fire is expected from the long-awaited launch of 5G-ready iPhone models, which CCS Insight says will deliver a major boost to adoption of the technology in markets where Apple traditionally commands a significant market share, such as Europe and North America.
China is the main market where 5G adoption is defying previous expectations, with well over half of new smartphones sold in the past three months featuring support for 5G, thanks to strong promotion by the three main mobile operators in the country – China Mobile, China Unicom and China Telecom – which simultaneously switched on 5G in November 2019.
South Korea remains the leading market for 5G adoption based on the proportion of connections, reaching 12% in August 2020. About a third of all mobile data traffic is now on 5G networks as operators continue to develop new applications for 5G and promote upgrades through attractive pricing.
In contrast, major markets in Western Europe and North America have been held back by the lack of 5G-enabled iPhones, despite the fact that mobile operators have managed to continue network roll-outs during the pandemic.
Marina Koytcheva, CCS Insight
CCS Insight’s research also identified faster download speeds as the top reason that could convince people to sign up to 5G. This finding, it said, should encourage an industry that has placed speed at the heart of many 5G campaigns. In addition, the study suggested that even if people don’t actively look for 5G, the new phones they buy over coming months and years are increasingly likely to be 5G-enabled. It expected 60% of all phones sold in Western Europe and North America in 2021 to support 5G connectivity, growing to 85% in 2024.
In all, CCS Insight expects global sales of mobile phones in 2020 to reach 1.54 billion units, 15% lower than in 2019 owing to the global Covid-19 pandemic. Given these drivers, CCS Insight projected more than 170 million phones to be connected to 5G networks by the end of 2020, out of a total universe of 260 million 5G mobile phones sold in 2020, jumping to 630 million in 2021.
Yet, observed Marina Koytcheva, vice-president of forecasting at CCS Insight, the weak overall demand for smartphones worldwide has been one of the triggers for 5G’s success. “This has sparked intense competition among manufacturers to get their 5G-enabled phones into the hands of consumers,” she noted. “Prices of phones featuring the latest 5G technology have slid rapidly, with devices from prominent brands already reaching £299 or €349 in Europe. We expect prices to drop further before the end of the year.”
The analyst also recognised that the increase in its forecast for 5G connections overcame mixed perceptions of 5G technology, highlighted by a recent survey of more than 2,000 mobile phone users in the UK and US that showed that among people who have yet to take 5G, 44% in the UK and 29% in the US said they do not need this latest technology. This was higher than when CCS Insight asked the same question a year ago. However, industrial usage of 5G to connect the internet of things has also been delayed by the Covid-19 pandemic.
Another challenge to the adoption of 5G that appeared in the study was that people’s satisfaction with their existing 4G service remained strong. This, said the analyst, was one of the reasons why only about a fifth of respondents who have yet to sign up to 5G said they would be prepared to spend more to get it.
Overall though, Kester Mann, director of consumer and connectivity at CCS Insight, regarded the trends highlighted in the study as reflecting restrictions on movement during pandemic lockdowns that could have quashed people’s hunger for a high-speed mobile service. But he also cautioned that the survey results expose a need to better explain the lasting benefits of 5G.
“In the short term, keen pricing and an abundance of device choice will ensure 5G finds the consumer without radically new uses for the technology,” Mann observed. “This is a wake-up call for the industry. Customers need more help to understand how 5G can help them and to overcome some of the clear misconceptions that our research highlighted.”