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Prediction 1

5G: The new network arrives

“It will likely take years for 5G to replicate 4G’s marketplace dominance, in the same way that it took several years for 4G to displace 3G.”

The key trends that Deloitte predicts for 5G:

  • 2019 will be the year in which fifth-generation (5G) wide-area cellular mobile networks arrive at scale, with 25 operators around the world expected to have launched 5G services in at least part of their territory (usually cities).
  • A further 26 operators should launch (again with the focus on cities) in 2020. In the UK, all four operators (EE/BT, Vodafone, O2 and 3 UK) are planning to launch 5G services between 2019-20. It will be many years however before 5G rollout is complete.
  • Approx. 20 handset vendors will launch 5G-ready handsets in 2019 (with the first available in Q2).
  • Approx. 1 million 5G handsets (out of a projected 1.5 billion smartphone handsets sold in 2019) will be shipped by year end. UK 5G smartphone shipments may total about 50k, and in 2020 will range between 2-3 million.
  • One million 5G modems (also known as pucks or hotspots) will be sold, and around a million 5G fixed cellular mobile access devices will be installed.
  • At the end of 2020, we expect 5G handset sales (15–20 million units) to represent approximately 1% of all smartphone sales, with sales taking off in 2021, the first year in which retailers will sell more than 100 million 5G handsets.

What are the three major applications of 5G wireless technology in 2019 and 2020?

  1. 5G will be used for truly mobile connectivity, mainly by devices such as smartphones.
  2. 5G will be used to connect “less mobile” devices, mainly 5G modems or hotspots: dedicated wireless access devices, small enough to be mobile, that will connect to the 5G network and then connect to other devices over Wi-Fi technology.
  3. Finally, there will be 5G fixed-wireless access (FWA) devices, with antennas permanently mounted on buildings or in windows, providing a home or business with broadband in place of a wired connection. In the UK two operators may launch FWA services in 2019 or 2020.

Will 5G impact 4G rollout?

5G spend may simply replace prior spend on 4G rollout. One study predicted that 5G might cause capex to jump from 13% to 22% of revenue for only a limited rollout. But as 2018’s field trials progressed, many operators in North America, Europe, and Japan re-evaluated cost, and releasing public guidance that capex intensity for 5G would be more or less flat with their 4G spending.1

As far as spectrum goes, early signs are that operators’ spectrum costs will be closer to the 4G experience than the 3G. Based on some early auctions, the prices for 5G spectrum, depending on the frequency band, are consistent with those for 4G spectrum: all auctions in in South Korea, UK, Spain, Ireland, and Latvia have been for less than £0.16 MHz pop, and two were under a penny. In the UK the price for 5G spectrum is £0.13 MHz pop.

5G is the connectivity technology of the future – even if its adoption curve may be relatively shallow in the next 12 to 24 months. It will likely take years for 5G to replicate 4G’s marketplace dominance, in the same way that it took several years for 4G to displace 3G.

1. Dan Jones, “Verizon capex to stay flat despite commercial 5G launch in 2018,” Light Reading, January 23, 2018; Gary Kim, “Will 5G capex really be higher than 4G?”, Spectrum Matters, February 27, 2018.