- While 5G for consumers will kick-start the appetite, enterprise 5G has long been considered the ‘real’ opportunity for a wide ecosystem of service providers and vendors.
- With some operators delaying launches and standards bodies delaying updates due to COVID-19, when will we see the market take off?
While operators are seeing huge demand for core voice, data, and collaboration services among consumer and enterprise customers that need to leverage remote communication while social distancing, 5G is such a nascent technology that the addition of a global pandemic is bound to have a dampening effect on the market opportunity. In the consumer market, there is still no 5G iPhone (until September at the earliest), and in general, carriers are having some trouble explaining to customers why they need to upgrade to 5G. Even without the pandemic, there has been limited uptake of new and expensive 5G devices that don’t provide clear benefits, even though operators have not yet pushed up data plan prices.
First the ‘Good’ News
In the U.S., operators are still building out their 5G networks. U.S. operators do not appear to be putting 5G buildout plans on hold. In fact, some carriers – such as AT&T and Verizon – have increased spending guidance as they invest in 5G buildouts more aggressively. After announcing its completed merger with Sprint, T-Mobile said it is working to immediately put Sprint’s 2.5 GHz spectrum to work. The PAL license auction for 3.5 GHz connections in the CBRS band in the U.S. has been slightly delayed but will open up in July, providing more mid-band spectrum opportunities for operators (as well as cable companies and infrastructure vendors).
Trials are in progress. As buildouts progress, operators are in trials with businesses for a variety of use cases that may benefit from 5G. In particular, the private wireless market is seen as a significant opportunity that is being tested in factories, hospitals, and sports venues (needless to say these latter tests may be put off until live sports re-emerge). 5G in these environments is augmenting or replacing WiFi and distributed antenna systems (DAS) as well as legacy wireline connections; they don’t rely on having ubiquitous public 5G as they are indoor deployments.
Now for the ‘Bad’ News
In Europe, several countries, including Spain, Portugal, and France, have delayed spectrum auctions. We expect more delays the longer countries stay in lockdown. Most carriers in Europe have rolled out 5G networks in the 3.5 GHz band, but the auctions will give them access to low-band and mmWave spectrum. These frequencies are the building blocks to meeting the promises of 5G: wide coverage, ultra-fast broadband, and low-latency capabilities. These will power use cases such as connected cars and smart cities, along with enterprise use cases that need ultra-low latency for AR/VR-enabled training and maintenance, automated guided vehicles (AGVs), factory automation, remote operation and maintenance, robotics, ‘massive’ capacity for IoT devices, and high-speed private networks for factories, retail stores, sports venues, and utilities. However, new dates for spectrum auctions have not yet been provided by the regulatory bodies in these countries.
Tower builds face difficulties. An unexpected impact of COVID-19 on 5G buildouts includes difficulties for field technicians that are building towers; a survey from NATE reported that traveling, accessing restaurants, and getting lodging, cleaning supplies, and other necessities are all very difficult these days. Tower technicians also have trouble getting the necessary PPE, and due to a lack of lodging, they may need to return home every day and go back on the road the following morning, affecting buildout time schedules. There may even be construction work bans in some countries that impact tower builds.
Standards bodies have delayed updates. The 3GPP has delayed its Release 16 and 17 updates by three months. Release 16 will provide RAN improvements necessary for ultra-low latency and extend 5G NR equipment to operate in unlicensed spectrum. Release 17 will provide core enhancements including support for MIMO, RAN slicing, and convergence of wireline and wireless 5G; it will not be finalized until the end of the year. Slicing in particular is viewed as a significant capability to allow customers to choose different technical capabilities, bandwidth, and QoS attributes while empowering operators to leverage new business models through tiering options.
Demand will be dampened. Until coverage is much more ubiquitous, service providers will see lower demand than had been expected in 2020 and 2021. In addition, we are already seeing a dampening effect on consumer and business demand for new smartphones and new technologies due to COVID-19. Nevertheless, the belief has long been that once 5G is up and running in a large percentage of the globe or is even widespread within a given region, consumer demand will increase, while enterprise uptake may take longer but will really be a game-changer for not only operators, but also integrators, professional services companies, infrastructure equipment vendors, software developers, and an even longer list of potential ecosystem participants offering advanced services. We still believe this will happen, but it will take longer.