30 March 2020
2020 will see the proliferation and rapid acceleration of 5G-enabled networks, prompting a new era of technological innovation and global adoption.
As the next generation of wireless broadband, 5G promises to deliver increased speed, scale and revolutionary network capacity and responsiveness.
Today, most people associate wireless broadband with its application in mobile handsets. In this sense, the adoption of 5G is well underway, with Ericsson estimating the current number of 5G-enabled subscriptions will jump from ~13 million at year-end 2019 to ~2.6 billion by 2025, a 200x increase.
However, the market for 5G is much larger than traditional handsets, and the artificial intelligence (AI) industry is one likely beneficiary. According to a study by Transparency Market Research, the global AI market is expected to grow from $US953 billion in 2019 to more than $US5.5 trillion by the end of 2027.
Furthermore, the worldwide installed base of connected Internet of Things (IoT) devices is expected to exceed 31 billion devices by the end of 2020. This IoT device base is expected to unlock a variety of new services and applications, such as smart cities, connected homes and connected cars. As consumer appetite for this new technology and service grows, 5G capabilities will continue to proliferate.
“5G infrastructure will be the lynchpin for many greenfield services," says Chris Holt, Managing Director of Macquarie Capital's Technology, Media and Telecommunications business.
"New applications will bring incredible benefits to the community – and telecommunications companies will be a key part of the new services delivery."
This means that companies are looking to find ways to free up expensive wireless spectrum, which enables mobile data transmission, and then deploy the technology in a more efficient way. Newer technologies such as Network Function Virtualization (NFV) is one such example. NFV uses software to supply network services that were previously run through expensive, proprietary, hardware-based solutions to improve cost efficiency, scale and speed.
As the shift toward these next-generation technologies accelerates, Holt says the industry will become more creative in what it can offer enterprises and consumers. This could mean that 5G and the connected device boom will benefit not only direct consumers of wireless broadband, but also sectors that are ripe for disruption, such as healthcare and education.
As the Coronavirus pandemic unfolds, the healthcare and education sectors are faced with a unique and challenging moment in time. 5G, with its provision of fast and reliable networks, could have a large role to play in the performance of these sectors as they continue to virtualize.
In healthcare, 5G could mean reduced patient and provider risk. “Whether it be through the growth of remote care, or the evolution of wearable medical devices, with 5G there will be more data being sent more often, allowing for quicker and more accurate healthcare interventions," says Bo Crowell, Head of US Healthcare Services, Macquarie Capital. “This could help improve patient and physician confidence in the ongoing diagnosis and management of chronic and communicable diseases."
Education could also benefit from the improved network reliability, capacity and speed of 5G. As the industry comes to grips with the explosion of the “anytime, anywhere" learning movement, this improved capability will have a significant role to play in increasing the access to, and quality of, education for all.
If you think about what 4G did for the likes of Uber and Spotify, and how radically that has changed our day to day lives, what will 5G do?
Chris Holt, Macquarie Capital
Despite the expected high-profile impact of 5G, less than 10 percent of Communications Service Providers (CSPs) worldwide have deployed 5G infrastructure in their networks today.
However, that is not set to last. According to Gartner, global revenue for the 5G wireless network infrastructure industry in 2019 was ~$2.2 billion. This is expected to increase to ~$4.2 billion in 2020 and to ~$6.8 billion by 2021 as CSPs make this a major ongoing focus of operations.
Holt says one challenge for operators is that consumers are more selective about what they will pay for their service, forcing operators to upgrade their infrastructure in a lower spending environment.
“There's an imbalance between data demand and the ability for mobile operators to charge their customers for that increased data usage," he says.
“Speed and scale requirements are increasing exponentially while consumers are reducing their spending."
But Holt says this is creating opportunities for innovation in the sector and accelerating the transition to next-generation technologies that can work more efficiently, reduce operating costs and better support a more connected world.