What will make or break 5G growth?

The roadmap from today’s 5G hype to mass consumer adoption and 5G-enabled enterprise applications is far from clear. This report identifies the key factors that will influence 5G development, and plots them on the 5G-aliser, which we will update regularly to track progress in 5G supply and demand.

5G is a long way from delivering on the hype

This report is a crib sheet outlining the 18 factors that STL Partners believes will have a significant impact on the development of the 5G market. We put forward our core assumption on how we expect each factor to affect the 5G market, and highlight the upside and downside risks to our assumption.

The purpose of the report is to pull together knowledge from across different areas – networks, enterprise services, consumer services, regulatory and commercial environments – to give a holistic view of what we think will influence 5G development. Although everyone in the industry has an eye on how 5G is developing, often this is from a relatively narrow view of the market. But the reality is that over the long term, 5G will not be just another G, but an amalgamation of many emerging and maturing network technologies, increasingly bespoke and fragmented enterprise and consumer demands, with high government expectations for contributions to economic growth. So to understand how quickly or slowly 5G will deliver on these promises, operators, vendors, customers and governments need to consider how a wide range of factors are playing out in their countries. By benchmarking their progress against our core assumptions, upside risks and downside risks, industry players can make a well-rounded assessment of whether they are ahead or behind in 5G development and identify ways to drive the market forward.

This report builds on STL’s extensive coverage of 5G and other enabling technologies:

• The 5G core and NFV: Different sides of the same coin?
• 5G strategies: Lessons from the early movers
• 5G: ‘Just another G’ – yet a catalyst of change
• The changing spectrum landscape: WRC19, 5G and beyond
• Private and vertical cellular networks: Threats and opportunities
• 5G and MVNOs: Slicing up the wholesale market
• AR/VR: Won’t move the 5G needle

Key factors influencing 5G development

We have organised the factors affecting 5G development into three categories:

1. Primary drivers: We believe these will have the greatest impact on 5G development, owing to their influence over the cost and ease of deploying network infrastructure and services, and accessibility and value of 5G connectivity to end-users.
2. Secondary drivers: These factors have a less direct impact on the 5G market development, especially over the short term, or will only influence a specific part of the market, such as fixed wireless access. However, in some instances telcos have more control over secondary factors than the primary ones, so depending on their strategies, secondary factors could have a disproportionate impact on 5G market development.
3. Wildcards: These are factors which are less likely or predictable, but that if they do occur would have a decisive impact on how the 5G market (and wider telecoms industry) evolves.

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The 5G-aliser

Over the coming quarters, we will use these 5G factors as a means of measuring progress. The diagram below shows the inaugural 5G-aliser. The top row shows the supply and demand levels for 5G, the middle row shows the absolute level impact of each driver on 5G development, i.e. how important each driver is to 5G growth right now , and the bottom row shows the relative position of each driver. While our intention was to start all drivers at the same relative level, reflecting our core assumption as of March 2020, 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.

The 5G-aliser, March 2020

Source: STL Partners

On a quarterly basis we will monitor the development of the 5G market and update the markers for each driver to reflect the emergence of upside or downside risks, and rising or falling importance of different growth drivers. Evidently, some factors are dependent on local market conditions, so we will also evaluate the drivers on a market by market basis, when important local developments occur.

Table of contents

• Executive Summary
  • Key takeaways
  • The 5G-aliser
• Introduction
• Key factors influencing 5G development
  • Primary drivers
  • Secondary factors
  • Wildcards
• Conclusions

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