One of the key reasons that deployment is accelerating is that consumers are now buying devices that are 5G-enabled.
Image: AerialPerspective Images / Getty ImagesThe global switch to 5G is well underway, with the number of connections to the next-generation network set to reach 1.34 billion in 2022, according to analysis by market researcher CCS Insight.
This year has seen connections to 5G triple to 637 million, suggesting that the roll-out of the network is continuing apace. National lockdowns caused by the global health crisis last year slowed network rollout, for example making it more difficult to send engineers on the ground to physically build the infrastructure. CCS Insight also noted that geopolitical tensions related to Huawei's role in 5G rollouts led to delays, especially in Western Europe.
European countries were effectively hesitant to allow Huawei to provide critical infrastructure for their 5G networks after the Trump administration in the US raised concerns that the company might pose a security risk due to its ties with the Chinese government.
"The US being one country, the decisions were made relatively quickly, while in Europe every country had to make its own decision as to what to do with Huawei," Marina Koytcheva, vice president of forecasting at CCS Insight, tells ZDNet. "In some countries, operators had to wait a little bit to see whether they'd be allowed to use Huawei equipment and in which part of the network. That was probably an even more significant delaying factor than COVID last year."
Although the speed of rollout is improving in Western Europe, this relatively gradual start means that 5G won't account for more than half of cellular device connections in the region until 2024, predicts Koytcheva.
Different regions are switching to 5G at different paces, therefore, but the trend across Western Europe, North America, China and other advanced markets in Asia remains the same: operators have now largely committed to upgrading from 4G, and are rapidly getting on with the builds.
One of the key reasons that deployment is accelerating is that consumers are now buying devices that are 5G-enabled: in 2021, CCS Insight expects 560 million 5G-capable smartphones to sell.
In a turning point for the industry, Apple released its first 5G-equipped iPhone at the end of 2020, which triggered a "smartphone supercycle" that saw many users replace their devices. After a huge dip in sales, smartphones have now started selling again, with the second quarter of 2021 seeing a 10.8% increase in shipments year-on-year.
Consumers looking to replace or upgrade their handsets are likely to be looking for premium devices – and all of the high-end products selling now happen to be 5G-equipped, with some 5G-enabled smartphones even starting to appear in the mid-range.
It isn't necessarily that users are actively seeking devices that can support faster networks. Apart from allowing smoother gaming or more realistic virtual reality experiences, 5G is effectively yet to provide a killer app for consumers, who are often satisfied with 4G speeds for applications like scrolling the news or making calls.
But the market has evolved so that users find themselves owning smartphones that can support 5G regardless. "Consumers are buying the latest mobile phone when they need one or want to have one, and it happens to have 5G," says Koytcheva. "It's more of a push of the market towards 5G rather than any consumer pull for the technology."
The bottom line is that sales of 5G-capable smartphones are exploding. Previous analysis by IDC predicted that 5G device shipments will increase by 123% this year compared to 2020, and that by 2022, they will make up more than half of all smartphone shipments.
This is good news for network operators: the more users own a 5G-enabled handset, the more chances there are of boosting the adoption of the technology. In the US, for example, CCS Insight anticipates that strong mobile phone sales in the run-up to Christmas will help penetration rates reach 25%, surpassing the Chinese market.
"From now onwards it is really how quickly the 5G phones get into people's hands that will be determining how quickly network operators manage to transition their connections to 5G from lower-generation networks," says Koytcheva.
In that context, the on-going shortage of computer chips that is threatening the supply of electronic devices like smartphones might appear to be a looming threat to the deployment of 5G.
A combination of exploding demand and stretched supply in the past year has contributed to a global shortage of semiconductors that is now affecting industries ranging from home electronics to car manufacturing.
Smartphone producers have not been immune to the crisis: Apple, for instance, was reported to be cutting production of its iPhone 13 by over 10% because of a lack of computer chips, leading to the company's shares falling by as much as 8%.
But the risk to the adoption of 5G is only temporary, according to CCS Insight, which expects the global phone market to recover in 2022, and the price of 5G handsets to keep falling. The analyst firm forecasts up to 3.6 billion 5G connections worldwide by 2025.
The next few years could also unlock some new applications of 5G outside of the consumer realm that have the potential to be game changing, such as the use of Internet of Things (IoT) devices in industrial settings. Hopes are also high for the deployment of Fixed Wireless Access (FWA), which could see 5G being used to provide high-speed broadband to residents in remote areas, without the need to roll out the infrastructure that comes with fixed fiber lines.
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Smartphone sales are giving 5G deployments an unintended boost - ZDNet
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