Within the next five years, 5G networks will generate more than one quarter (26%) of wireless service revenue, according to new research from Strategy Analytics. But despite the expected impressive technical performance of 5G, the overall 5G revenue impact globally on the wireless service providers will be stagnant, the research firm added.
The latest research also shows that any growth in 5G will be slow for the next 18 months before the technology gains strong momentum in 2021 as network coverage improves, phone prices fall, and use cases mature.
The relatively flat impact of 5G will be similar to the slow initial growth of 4G, the research firm said. Between 2012 and 2018, 4G grew from 4% of all mobile subscriptions to 61% globally, but service revenue increased by less than 1%.
According to Strategy Analytics, while some markets have grown revenue with 4G services, most countries have found that 4G, at best, acts as a modest brake on consumer expectations to spend less each month on more and more data. Those expectations are fueled by competitive pressure between operators, the researchers said.
“There is little to suggest from early 5G launch plans that any willingness to pay a 5G premium can be attached to the service element, rather than device element, of the proposition,” said Phil Kendall, director of Strategy Analytics’ service provider group, in a prepared statement. “Once 5G device prices begin to fall in 2021, the challenge for operators will then be how to monetize the significant additional capacity that the more widely deployed 5G networks will bring. Success here will come if operators can successfully execute on a needs-based segmentation of their customers’ 5G motivations, rather than compete on who has the fastest network and biggest data plans.”
David Kerr, Strategy Analytics senior vice president, VP Global Wireless Practice, added, “4G LTE networks will host over 6 billion subscriptions by the end of 2024, over two-thirds of all wireless subscriptions. Prior to and even alongside initial launches of 5G services, there is considerable time for 4G LTE platforms to evolve [through] LTE-Advanced and LTE-Advanced Pro technologies. LTE continues to have a bright future with much of Africa and Middle East still clinging to older generations.”
