In the Near Term, Almost No Prediction about 5G Matters

Almost everything one can predict about 5G in 2020 must be considered transitory and conditional. Most basically, especially in larger countries, a new mobile network takes time to build, so coverage, subscription numbers, use cases, revenue impact and so forth will take some time to develop. 

Almost no claims made in the short term will matter longer term. That applies to fears about business models or hopes for new use cases. It is way too early to say anything definitive about potential innovations in retail models, revenue or “leadership” and “impact” in general, and 2020 will not change that.

The simple fact is that it might take five years before half of people in larger countries, or some mid-size countries, will be able to buy 5G service. So any conclusions about 5G impact will be made on a base of about half the population, most of whom will have had a chance to buy only in the latter two or three years. 

In other words, most customers will have been through about one handset cycle, after 5 years of 5G availability. It will be difficult to make long-lasting claims about behavior and results after just one handset cycle.  

Consider 4G, which launched by Verizon in 2010, with a buildout that essentially reached national coverage similar to 3G in about four years. The other national carriers took longer to reach similar coverage levels. 

source: FCC

5G coverage will be incomplete; even spotty. Older networks will continue to represent the primary connections (either 3G or 4G). 

Though small city states can deploy a whole new network rather quickly, a continent-sized network always requires five years or more to reach significant coverage of the population, and longer to achieve anything close to 98 percent coverage of the surface area. 

Since most people live in cities in most countries, population coverage and territory coverage are not synonymous. Still, U.S. 4G coverage reached about 55 percent of the population after about five years. In Europe, 4G coverage reached about 34 percent of people after five years. In East Asia, 4G reached perhaps 24 percent of people after five years. 

source: GSMA

The point is that it is reasonable to expect 5G deployments will reach about half of people in perhaps five years, at best, in North America, Europe or East Asia, with faster adoption possible in smaller countries. 

The point is that we are in for a period of at least half a decade where nearly every claim or assertion is only temporarily correct. Almost every numerical measure will change, continuously, as investment continues. 

Virtually the same might be said for innovations and changes in use cases, applications, subscriber numbers, pricing and other terms of service changes, revenue and cost structures, handset availability, handset cost and features. 

Early on, 5G will often be a capacity reinforcement strategy, as 4G was, early on. Marketing will be challenging, as always when a new network is coming online, as mass media casts too broad a footprint, stimulating demand where supply is not available. 

It is conceivable that some mobile operators will experiment with new retail packaging plans, perhaps moving to emulate fixed network differentiation based on speed tiers. 

In some markets where millimeter wave spectrum is available, some operators might expand unlimited usage plans or use millimeter wave spectrum to compete directly with fixed networks for internet access accounts. Up to this point, mobile spectrum has cost an order of magnitude more than fixed access, making it a poor substitute for fixed network services.

In some cases, millimeter wave assets will allow full competition for the first time. But it will take years before we are able to assess the magnitude of such opportunities, as network coverage and marketing will be limited for some years to come. 

As always, the next-generation 5G network will, at least temporarily, widen the gap between urban and rural services (speeds, especially). That always happens because new networks are built first in cities, where the payback is quickest and demand the greatest. 

“All of the above” will be a key feature of 5G spectrum usage, with different countries using different frequencies.

The bottom line is that any 5G trends will be tentative, possibly short-lived, and ever-changing, for the better part of a decade. That will be true for network coverage, applications and use cases as well as devices and revenue models.