5G: where exactly are we?
A look at the numbers
Let’s start with some of the most recent figures. Ericsson has estimated 70 million 5G subscriptions were added in Q2 2022, bringing the total figure up to 690 million. Undoubtedly this is a big step forward in terms of the size of the 5G market and promising to see that there is appetite for the technology. Add to this the numerous business applications for 5G from industry 4.0 to connected cities and we see the potential for a thriving 5G landscape.
In addition to the consumer adoption, uptake of private 5G networks is having a considerable impact on demand for 5G. Research from RAN Research estimates that by 2028 private 5G network sales and associated services such as installation could generate up to $23.8bn in revenues, with manufacturing and healthcare applications driving demand.
We can see businesses and consumers are both pushing to capitalize on the benefits offered by 5G. In order to maintain that momentum, it is imperative that operators stay ahead of the game when it comes to building the infrastructure needed to support the growing demand. So, what does the current investment in 5G look like and is it at the pace needed to meet the current demand trajectory?
The answer is that it depends, some countries have committed very early to 5G, others are holding back, but overall investment in 5G is looking very positive.
The North American market was very quick to roll-out 5G in 2019 with AT&T and T-Mobile among some of the first operators to deliver on trials and consumer offerings. The region had 72 million 5G connections by the end of 2021, adding 54 million 5G connections over the year – a gain of 292%. Beyond enthusiastic consumer mobile adoption it is also having a huge impact as a vehicle for connecting the unconnected. 5G home broadband is now available to over 40 million homes, a third of those in rural America. This high CAPEX over the past few years means we’re starting to see a flattening in investment, but leaving a strong 5G market in the US.
Likewise, China is another example of a region investing early in 5G. 5G investment in China has exceeded 400bn Yuan and in January of this year had 757 million 5G users. It is one of the biggest 5G markets and 2022 will likely see the peak of 5G investment in China.
Europe as a region is still growing when it comes to 5G investment and operators are showing promising plans when it comes to rolling out the technology across the region. For example, Vodafone Germany is looking to achieve almost complete 5G coverage in the country by 2025. By 2030, Orange estimates total 5G-enabled sales of €407bn across the five countries it operates in (France, Spain, Poland, Belgium, and Romania). It may not yet have the penetration we are seeing in the US, but it certainly has plans in place to make up ground.
More with less
It is a positive outlook but not one that is without pitfalls. Big investment is fantastic for the industry and the advancement of technology, but it also comes hand in hand with the need for big ROI. While it is heartening to see high adoption rates for 5G, there is more to delivering ROI than subscribers. Operators have to maximize the capacity to cost ratio. The more capacity per dollar invested, the greater the possible return. This is where operators need to think smart with their investments and focus on hard working, futureproofed equipment. This may mean technology that uses advanced network features to maximize capacity, it may mean compact equipment that serves multiple purposes to keep site costs down. There are a number of ways to approach this, but the key is making the network do more, without incurring spiraling costs.
This becomes ever more important when we layer onto the landscape the potential impact of global macroeconomic factors. With a recession likely, there is likely to be a level of uncertainty that could limit the investments made into infrastructure. Add into this concerns over the OPEX costs due to rising energy prices and it becomes clear that there are challenges ahead for the industry to navigate.
Despite the potential difficulties that lie ahead for every industry, it does seem to be a positive period in the development of 5G, with successful deployments inspiring a confidence in what can be achieved with 5G. It has been a conversation topic in the industry for over 5 years and it is easy to feel fatigued when it comes to the question of ‘are we there yet?’ We are moving towards a position of being able to say ‘yes, we have arrived in a 5G world’ and there is more to come. However, caution still needs to be exercised, only by ensuring the smartest possible infrastructure investments can operators ensure that the outlook for 5G remains so sunny even in the difficult years that lie ahead for businesses.