Consumers won’t flock to 5G as quickly as they did with 4G

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The adoption of the fifth generation (5G) of cellular technology will be slower than 4G in the consumer space due to various factors, an industry expert said. Speaking to TechRadar Middle East, Sukhdev Singh, vice-president at market research and analysis services provider Kantar AMRB, said that the growth of 5G in the consumer space will be limited due to the lack of devices such as smartphones and routers, apart from the high price point.

The cost of ZTE Axon Pro 5G smartphone is AED 5,833 in the UAE.  Huawei and Oppo will be launching their own 5G devices soon but prices are not yet published. Pricing for the Huawei Mate 20 X 5G is expected to be similar to the 4G model which currently retails at AED 3,699. Huawei is expected to formally announce the pricing and availability for the Mate 20 X 5G next week.

According to research firm IHS Markit, 37 million first-generation 5G smartphones are expected to be shipped this year globally and will increase to 120 million devices in 2020, reaching over 525 million devices in 2023.

Bit of a ‘chicken and egg’ situation

Singh said that consumers may not see a huge benefit from 5G as 4G is adequate for most consumers. “It is a bit of a ‘chicken and egg’ situation. 5G will enable new technologies and if these new technologies find ground, then it will help 5G grow. There was a big shift from 3G to 4G technology that offered a completely a new user experience. The current 4G is more than enough for a device to stream 4K videos or have a voice or video chat,” he said.

Previous cellular technologies such as 3G and 4G were meant for human interactions but 5G is the platform for machine-to-machine communications. Moreover, he said that 5G is for extremely heavy bandwidth or data-hungry applications such as cloud-based augmented reality and virtual reality applications.

The real change will be on the enterprise side, he said, through a combination of productivity gains from businesses automating processes, They will not only benefit from the high speed but also the lower latency which will improve efficiency, reliability and the number of connected devices.

4G still has room for growth

The latency for 4G is between 15-20 milliseconds but for 5G, it is one millisecond, and the data speeds are about 100 times faster than 4G and provide speeds of up to 20Gbps.

So, Singh said the growth will come from the business-to-business side rather than the business-to-consumer side.

“The consumers’ shift from 4G to 5G will happen only after 2020 as telecom operators haven’t launched plans for 5G and, at the same time, the network coverage will be limited and it could also be more expensive. There is still room for 4G penetration rate to grow as there are still people at the bottom end of the pyramid still on the 3G space, especially in some Middle Eastern countries, as they still lack wider coverage,” he said.

The 5G network will, initially, be available in certain hotspots only.

5G will account for 15% of global mobile connections

(Image credit: Future)

(Image credit: Future)

According to GSMA Intelligence, publisher of industry reports and research for GSMA, which represents the interests of more than 750 mobile operators globally and over 350 companies in the broader mobile ecosystem, said in its latest report that 5G connections will reach 1.4 billion worldwide by 2025 and will account for 15% of total global mobile connections.

During the period, 4G will account for 59%, 3G with 20% and 2G with 5%.

In the Middle East and North Africa region, 3G contributed 40% share in 2018, followed by 2G with 37% and 4G with a 23% share.

In 2025, the report said that the technology mix in the region is expected to be with 4G by 52%, followed with 3G by 32%, 2G by 10% and 5G by 6% while the Gulf States will account for 16% of the 5G adoption by 2025.

Sing said that there will be a major uptake for 5G in the fixed-line business but it will be expensive initially.

16 more countries to go live with 5G this year

Even though some countries have launched 5G services commercially, there will be 16 more countries expected to go live by the end of this year and expected to have 10 million 5G connections, according to GSMA Intelligence.

The UAE, Saudi Arabia and Qatar have gone live but major 5G deployments will happen post-2020, 64 markets over the 2021–2025 period, bringing the total to 116.

According to GSMA Intelligence, Asia Pacific will account for 65 per cent share, followed by North America with 28 per cent, Europe with five per cent and the Middle East and North Africa with two per cent.

Singh said that 5G is seen as a technology for the long term and telecom operators have a “major role to play” in the 5G space as they are becoming content enablers to consumers and trying to increasingly become a single point of contact for consumers to avail a lot of services.

“Telecoms will continue to be the dominant source of revenue for operators in the near to medium term, but they are exploring new opportunities in a fast-changing competitive landscape and they have the potential to add new revenue streams and add business capabilities, thereby playing a key role in the future digital ecosystem,” he said.

The GSMA Intelligence report said that 5G technologies are expected to contribute $2.2 trillion to the global economy by 2034, 5.3 per cent of GDP, compared to $1.1 trillion of economic value generated from global mobile ecosystem in 2018, with key sectors such as manufacturing, utilities and professional/financial services benefiting the most from the new technology.