Mohammad Hanief
Communications service providers worldwide are continuing to invest in 5G, driven by the prospect of superior connectivity and emerging opportunities. This comes despite geopolitical unrest and a macroeconomic slowdown in some markets. New major 5G markets are emerging. India is experiencing massive network deployments, making it the fastest growing 5G market globally. 5G is a critical component in India’s journey to realize its “Digital India” vision. Meanwhile, in North America the addition of mid-band spectrum now enables superior multi-band 5G experiences for many users.
With over 1 billion 5G subscriptions worldwide, service providers in leading 5G markets have been experiencing positive revenue growths over the past 2 years. However, the 5G rollout is still in progress, and the deployment of 5G mid-band spectrum, which offers high capacity and good coverage for superior user experiences, remains limited to around 25 percent of 4G sites globally, with North America ahead and Europe behind. As global mobile network data traffic continues to grow, with a CAGR of around 25 percent projected through 2028, smart network modernization becomes imperative.
Managing this growth while improving the mobile user experience requires continued network evolution. Notably, 5G mid-band build-out is proving to be more energy-efficient and cost-effective compared to the expansion of 4G networks.
5G is growing fast – total 5G subscriptions are projected to pass the 1.5 billion mark this year, growing by 500 million in just 1 year. The growth comes in spite of a challenging macroeconomic climate. Globally, around 240 commercial 5G networks have been launched so far, and service providers in the top 20 5G markets have enjoyed growing revenue that correlates with growing subscription penetration.
Service providers continue to deploy 5G despite a weaker global economy and geopolitical uncertainties. Around the world, about 240 service providers have now launched commercial 5G services, and around 35 have deployed or launched 5G standalone (SA). The most common 5G services launched by service providers for consumers are enhanced mobile broadband (eMBB), Fixed Wireless Access (FWA), gaming and some AR/VR-based services.
The uptake of 5G subscriptions in North America has been stronger than expected, and at the end of 2022 the region had the highest 5G subscription penetration at 41 percent. In North East Asia the penetration was 30 percent, followed by the Gulf Cooperation Council countries at 18 percent and Western Europe at 13 percent. In 2028, it is projected that North America will have the highest 5G penetration at 91 percent, followed by Western Europe at 88 percent.
The global 5G subscription forecast has been adjusted to take into account delayed spectrum auctions in several countries and continued difficult macroeconomic conditions. 5G subscriptions are now forecast to reach 4.6 billion globally by the end of 2028, making up more than 50 percent of all mobile subscriptions. 5G will become the dominant mobile access technology by subscriptions in 2028.
Analysis of developments in leading 5G markets shows a strong correlation between increased 5G subscription penetration and service revenue. When data from Q4 2022 is added to previous analysis by Ericsson, it is evident that the positive revenue trend is continuing. Service providers promoting 5G value in times of surging inflation. Historically, service providers have found it challenging to increase consumer prices for mobile subscriptions in line with inflation.
With the current surge of inflation across many areas, some service providers have now started to adjust their tariffs in relation to the Consumer Price Index (CPI). So far, adjustments have been significantly lower than inflation and this practice is still far from commonplace. As these adjustments only apply to entirely new or renewed contracts, they would have had little impact on revenue growth during 2022.
In contrast to such reactive price adjustments, which provide no incentive for consumers to pay more, the launch of 5G services has enabled service providers to proactively drive a shift to higher mobile tariffs, while adding value for consumers.
5G has created new value for consumer and enterprise customers, with service offerings of larger data buckets, higher speeds, and improved user experiences. For service providers, the additional value provided to consumers and enterprises translates into opportunities for upsell and revenue increase.
Following the launch of 5G services in India in early October 2022, India is seeing aggressive 5G network deployments by service providers. Fast-growing network availability across cities, attractive 5G pricing and the growing availability of 5G smartphones has seen 5G subscriptions reach around 10 million by the end of 2022. Pan-Indian availability of 5G networks by the end of 2023/early 2024 will further fuel growth. 5G subscriptions are expected to reach 700 million and are estimated to account for 57 percent of mobile subscriptions in the region by the end of 2028. eMBB and FWA are already emerging as the initial use cases for 5G.
Meanwhile, 4G continues to be the dominant subscription type driving connectivity and fueling data growth in the region. 4G subscriptions are forecast to decline from 820 million in 2022 to 500 million by 2028. Total mobile subscriptions in the region are estimated to grow to 1.2 billion in 2028.
Service providers in the North East Asia region made significant investments in early 5G deployments. South Korea was the first country to launch commercial 5G networks, and these were available in all five markets by 2020. Currently, 5G population coverage and subscription uptake in the region is ahead of most of the rest of the world.
The region is home to key players from across the 5G ecosystem, including leading service providers, mobile infrastructure vendors, chipset manufacturers, terminal providers and over-the-top (OTT) players. This has helped to realize 5G monetization opportunities in the region with tariff premiums, content aggregation and new service introductions such as Fixed Wireless Access (FWA) and network slicing.
Supported by strong macroeconomics, healthy financial results for service providers and a full ecosystem of wireless and digital industries, regulators and service providers have the shared ambition to be leaders in 5G.
Almost half of global FWA connections to be in Asia-Pacific (APAC) by 2028 and the forecast has taken the high ambitions of 5G FWA in emerging markets into account, increasing the number of connections as well as the share of 5G FWA connections. Higher volumes of
5G FWA in large, high-growth countries such as India have the potential to drive economies of scale for the overall 5G FWA ecosystem, resulting in affordable CPE that will have a positive impact across low-income markets.
An updated Ericsson study of retail packages offered by 310 mobile service providers worldwide shows that as 5G matures, service providers are making it the standard choice for consumers. Only 22 percent of the 182 service providers offering 5G are showing a price difference which the consumer needs to pay in order to gain access to 5G services. Interviews undertaken in December 2022 and January 2023 reveal that many service providers want to actively move users over to 5G, as it is the more efficient technology. This number is expected to continue to decrease as 5G matures and service providers actively move users from their previous-generation networks.
Nearly 70 percent of the service providers who removed their unlimited offerings now provide service-based connectivity packages instead. With this type of package consumers can purchase some form of add-on package, such as a “streaming pass” that allows consumption of video at an attractive price without using data from the base bucket.
(The author is a regular columnist)
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