Saturday, January 29, 2022

5G: Long Term, Take Rates Matter; Near Term, Coverage Matters

Usage, rather than coverage, is the ultimate test of a mobile network’s success, but coverage is temporarily more important during the early days of construction of a new next-generation network. 


Customers cannot buy what cannot be sold. But once available, whether they buy--and how much--is the issue. That is true for either 5G or mobile internet. According to the GSMA, about 93 percent of people--about 3.4 billion--globally still not using the internet with mobile devices live in low-income or middle-income countries. 


But network availability is not the big problem: Just about six percent of those people--six percent--are not reached by a network, says GSMA. 


source: GSMA 


Right now, in most countries, 5G is being introduced, so coverage is an issue. 


If there are, by 2025, 3.6 billion 5G connections in service,  then 5G could represent about 20 percent of all mobile phone connections globally, according to CCS Insight. Some older estimates called for 15 percent adoption, on less than two billion subscriptions in 2025. Yet other forecasts call for three billion 5G subscriptions by 2025.  


Estimates vary at least in part because possible connections (subscriber identity modules) are higher than the number of devices in use (subscribers). According to GSMA, there could be 8.8 billion connections by 2025, but only 5.7 billion unique people who are subscribers. 


It makes a significant difference whether the denominator is authorized SIM cards or active users. 

source: CCS Insight 


On the other hand, 5G adoption rates seem to be higher than for 4G, as much as four times faster, according to 5G Americas. So estimates for 2025 5G adoption are trending towards the forecast of 3.5 billion connections. 

 

That obviously will be accompanied by matching growth of 5G device sales. According to the IDC Worldwide Quarterly Mobile Phone Tracker, shipments of smartphones are forecast to reach 1.38 billion units in 2021, an increase of 7.7 percent over 2020. This trend is expected to continue into 2022, when year-over-year growth will be 3.8 percent with shipments totaling 1.43 billion.


Source: IDC 


By about 2025 5G devices could represent 80 percent of new device sales globally, IDC seems to estimate. That should scale with 5G account connections as well. CCS Insight believes 5G connections will be about 35 percent of all mobile connections in lead markets such as South Korea by 2025. 


5G Connection in South Korea

source: CCS Insight 


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