In the 5G-aliser, we assess the outlook for the 5G market based on 18 key factors that we believe will drive supply and demand, splitting them into primary drivers which have the greatest importance now, secondary drivers which could become more important over time, and wildcards which could have a large impact but are less predictable. The COVID-19 pandemic features in this category.
The top row of the 5G-a-liser shows the supply and demand levels for 5G, the middle row shows the relative position of each driver, and the bottom row shows the absolute level impact of each driver on 5G development, i.e. how important each driver is to 5G growth right now. Our intention in the inaugural 5G-aliser was to start all drivers at the same relative level, reflecting our core assumption, but given the rapid escalation of the COVID-19 pandemic, we have dropped this driver into the red already as we expect telcos’ first priority during the crisis to be on keeping their current operations running smoothly.
In the first phase of 5G, the regulatory and policy environment is by far the most important, as this determines availability of spectrum, cost of deploying a network, and early-stage investment into developing 5G use cases – hence why, on an absolute level, these factors rank highly now. Countries with more available spectrum, streamlined planning permissions for network equipment, and vibrant 5G testbeds bringing together industry and government will enable faster deployment of the first phase of 5G, setting a good foundation for the following phases.
As 5G technology matures, starting around 2023, technology and business model factors will have a greater impact on the evolution of 5G. The market will become more fragmented because MNOs are unlikely to be able to address the wide range of niche use-cases and coverage requirements across industry verticals. The rise of new networking players will be further enabled by the shifting spectrum landscape, with local licensing and potentially the emergence of a secondary spectrum marketplace, which will allow many localised or bespoke players to enter the market – driving development of many new telecoms business models.
We will monitor the development of the 5G market on a quarterly basis and update the markers for each factor to reflect the emergence of upside or downside risks, and rising or falling importance of different growth drivers. Although this is a global view, some factors are highly dependent on local market conditions, so get in touch if you would like us to evaluate the outlook for your national market.