While the mobile industry has long trumpeted 2020 as the year 5G would start making a big impact, it now needs to begin re-casting and promoting 2021 as the Year of 5G...
2020 was finally going to be the year of 5G. Not anymore. Industry analysts tracking the fortunes of the mobile industry are scrambling to revise their 5G market projections.
Some expect a delay in 5G network installations by three to six months. The [5G network] infrastructure supply chains, although not broken, have slowed down. Meanwhile, the 3GPP has already been forced to delay in ironing out some important additional [5G] specifications, since the organization had to cancel face-to-face meetings for the foreseeable future.
Other analysts are looking at a 30 percent shortfall in shipments of 5G-enabled smartphones. Some observers also worry if Apple might postpone the much-hyped launch of its 5G-enabled smartphone, scheduled for September.
Meanwhile, senior executives working at the mobile communications sector are sending out mixed signals regarding the impact of the novel coronavirus pandemic on the roll-out and take-up of 5G.
US carrier AT&T said in a statement it is still “marching down the path we have been talking about.” Verizon and T-Mobile stressed they are moving ahead with 5G build plans, with the former projecting it would spend $500 million more on capital expenditure (Capex) this year than originally planned.
Delayed standards, deferred spectrum auction
While welcoming such positive moves, FCC Commissioner Jessica Rosenworcel warned that there is a mix of factors at play and it is important to keep in mind that “delayed standards, deferred (spectrum) auctions and supply chain issues could slow this in the future.”
The FCC recently pushed back on planned auctions until July because of the pandemic, and at the same time, has identified telecom workers as essential.
Meanwhile, just ahead of its annual general meeting, which was scheduled to take place virtually, Borje Ekholm, CEO of Swedish infrastructure supplier Ericsson, noted the company had not yet seen any significant business disruption due to the virus outbreak, but warned, “we assume and plan for the fact that we will be affected.”
Expect ‘a huge hit’
Focusing on the devices side of the equation, Ville-Petteri Ukonaho, associate director of the global wireless practice at Strategy Analytics, told EETimes, “We are about to publish research that will warn the industry should expect a huge hit on 5G smartphone sales during the first half of this year, but we anticipate a return to our previous projections and a big bounce-back during the second half of the year if the spread of the coronavirus has been brought under control.”
Strategy Analytics expects global 5G smartphone shipments will grow tenfold during 2020, from sales of 19 million units in 2019 to 199 million for this year.
Ukonaho suggests, “there will be a much less pronounced impact on the wireless infrastructure segment, notably in China.” The most significant impact will be seen in Europe, he added.
“It will prove difficult to build out networks when borders are closed for people and goods. And in any case our projections have long suggested that European carriers are behind the curve of the build out expected in the United States and most of Asia. The current situation is expected to push back 5G installations by perhaps 6 months.”
Another analyst group, Gartner, also told EE Times it is in the process of ‘evaluating’ its forecast for infrastructure shipments and will publish results later this month and in May. “The April Alert will indicate we believe that the growth we previously forecast will be below what we originally forecast. At this moment I do not have a quantified value,” Michael Porowski, senior principal researcher for Communications Service Providers Operating Technology told EE Times.
Porowski concurred with data from Strategy Analytics that Europe will lag in 5G development. He said China will grow modestly but 5G development will be less impacted. “North American 5G development will rebound in 2021 but will be stunted this year, and emerging economies, thrown into significant recession, will be impacted most”.
Perhaps the most optimistic comments on the state of the 5G sector due to the pandemic came right at the beginning of this month from the Global mobile Suppliers Association (GSA), whose president Joe Barrett noted “the old adage of ‘build it and they will come’ has never been more true than with 5G.”
Referencing data from analysts Omdia, Barrett said “the rapid subscriber adoption of 5G is not just exciting for the industry, it is a vote of confidence in the investments being made in new 5G networks, services and devices.”
Omdia is another market research group that is in the process of revising its 5G forecasts. It previously projected there would be 91 million 5G connections by the end of 2020, of which North America would account for 13.9 million. China was expected to extend its already significant lead over all other territories, a huge boost for its infrastructure suppliers Huawei and ZTE.
Latest figures suggest Chinese operators have already activated 160,000 5G base-stations covering 50 cities and are now busy expanding stand-alone 5G network coverage and capacity, primarily using gear from Huawei and ZTE, with Ericsson lagging in third place in the country.
Another factor impacting the slowdown in 5G build is standardization. As previously noted the 3GPP has already been forced to delay some important additional specifications, and to cancel face-to-face meetings for the foreseeable future.
A new wrinkle
Now the standards body looks like facing separate challenges that are unrelated to the coronavirus disaster.
Late last month, lawmakers in the United States passed new legislation that will require U.S. officials to become much more involved in the creation of 5G standards. They already do, of course, with companies such as Qualcomm, Intel, Sprint and AT&T being key players in the process.
Days after the legislation passed, the White House issued its “national strategy to secure 5G” positioning document that outlines how the United States plans to “preserve and enhance its leadership on 5G in relevant organizations that set standards in concert with the private sector, including but not limited to commercial, academic and like-minded international partners.”
Though not specifically mentioned in the document, the move is seen as another attempt to protect US national security, IP, and prevent Chinese espionage.
To date the 3GPP has managed to steer well clear of political influences, but this could alter the balance.
Pandemic derails trials and testing
But back to analysts’ concerns regarding the impact of the pandemic on the mobile communications sector. According to a research note from ABI Research focusing on telco cloud revenues from 5G core deployments, this could fall between 20% to 30% short of previous forecasts of $9 billion this year. ABI fears the investment shortfall in updating networks could be between $2 billion to $3 billion ‘in the short term’.
“The 5G market was growing faster than anticipated, with 2020 expected to be the starting point for 5G Standalone (SA) core commercial deployments in CSPs’ networks. But that expectation may take a little longer to materialize.
“That is due, in part, to the fact that Covid-19 will almost certainly derail further trials and testing to verify the processing performance and stability of 5G Stand Alone networks. In the short term the industry may have no choice but to protect existing consumer revenue,” suggests Don Alusha, senior analyst at ABI.
Meanwhile, Dimitri Mavrakis, Research Director for 5G at ABI, told EE Time,s“there are relatively few challenges as regards the supply chain, which remains relatively robust. The biggest problem we see impacting deployments is that relating to site engineers and technicians, who clearly need to follow strict guidelines when working in close proximity with others, as well as access issues to some key sites.”
Again, these sentiments echo the projections at Gartner. Porowski told EE Times, “infrastructure supply chains have been slowed but not broken. CSP inventories have thinned, but at the moment there are no major concerns about the non-availability of critical infrastructure.”
Mavrakis suggests this could add at least 3 months of delays to the process. The bigger problem, he argues, is consumer confidence and the availability of 5G enabled devices.
The lockdown has also, counter intuitively, focused some to question the need for 5G. “We are hearing from clients, and experiencing, that existing networks are coping relatively well at most operators. But this really misses the point that 5G is targeting the macrocell domain, and thus outdoors coverage. Of course, most of us now are indoors. That clearly will change and we will see that 5G is very much a much needed, cutting edge technology for the medium and long term.”
ABI Research said due to disruptions in the supply chain, caused primarily by a shortage of certain components and integration engineers, it is now forecasting a 10% fall in 5G infrastructure revenues from the forecasted $2.1 billion.
As for 5G enabled smartphones, “we are looking at a 30% shortfall in shipments for now, but this, also, will be reined back once business is back to normal,” said Mavrakis. The big surge is expected to come once the mobile network operators have opened their retail outlets, where the majority of upgrades and new subscriptions are sealed.
According to senior analyst at ABI research Jiancao Hou, the spread of Covid-19 globally is likely to delay deployment of advanced 5G NR systems, including MIMO and active antennas that many operators have started deploying. “This may mean that operators that have already deployed a significant number of base stations will be in a better position to become early adopters and benefit from an earlier transition from previous generations to 5G, but this will rely on the availability of relevant handsets.”
Referencing the on-going discussions on OpenRAN and open networks, Hou suggests “it is important for mobile operators to broaden their supply chain and avoid a single-vendor infrastructure market.”
He also suggests the impact of the virus outbreak could lead to the emergence of more innovative use cases and services. “For example, considering a 5G Ultra-Reliable Low-Latency Communications (URLCC) scenario, if surgery and health monitoring can be done remotely, the doctor will not need to physically meet the patient infected with the virus.”
For now, the mobile network operators’ are focusing on expanding, and maintaining network capacity to support the huge (and welcome) programs for different activities, including virtual learning in education, gaming, videoconferencing ad downloading entertainment to their devices.
In any case, as another ABI market analyst, David McQueen noted, almost all 5G smartphones were to be manufactured in China, where the virus initially took hold, seriously disrupting the availability of the devices. This has now changed, with production being ramped up.
One of the most intriguing question marks concerns the much-hyped launch of Apple’s 5G-enabled smartphone, scheduled for September. While the numbers might be right as regards availability, even for what promises to be a mega event, Apple might just postpone the launch and wait till global consumer confidence has fully returned.
So while the mobile industry has long trumpeted 2020 as the year 5G would start making a big impact — and start paying back dividends for the huge investments — it now needs to begin re-casting and promoting 2021 as the Year of 5G. With all fingers crossed.