Chris Pearson, President, 5G Americas | November 2019
A few weeks ago, when I was at Mobile World Congress in Los Angeles, I overheard more than one industry analyst observe that 5G is at the top of the “Hype Cycle”. The implication was that the cellular wireless industry had revved up marketing to such a degree that networks were only beginning to catch up to the promise that 5G would deliver.
On the face of it, the comments were somewhat understandable. We’ve been working on 5G standards and have been talking about the promise of incredible new 5G services and use cases for a few years now. Yet anyone that has heard me speak about the commercialization of 5G in 2019 realizes that the industry is only in the second inning of a nine-inning baseball game.
But on the heels of that discussion, IHS Markit has released a study which suggests we’ve been underestimating 5G’s impact all along. According to the study, 5G will generate $13.2 trillion in sales enablement by 2035, an increase of $1 trillion when compared to the original 2017 forecast. This increase is due to the accelerated launch of 5G in 2019.
Then another forecast by ReportsnReports suggests 5G markets are going from $31 billion in 2020 to $11 trillion by 2026. Now this includes all 5G markets, including virtualization, cloud, edge, and functional splits, but that is a staggering number – and tracks well with IHS Markit’s forecast.
In fact, according to the IHS Markit report, 5G’s global value chain will ripple across the world economy, supporting up to 22.3 million jobs by 2035, which is 3.4 times as much as we see today. Investment in 5G will average $235 billion annually to continue to expand and strengthen the 5G technology base, with the US forecast to lead in cellular R&D and capital expenditures, followed closely by China.
Whatever the actual numbers suggest, it’s clear that 5G technology could greatly expand the value of mobile wireless networks, as they take on a much larger role than previous generations in empowering many new connected services across an array of world-changing use cases. With 1.3 billion 5G connections predicted by the year 2023, according to Ovum, it is clear that 5G mobile technology is going to drive enormous benefit to entire economies and societies.
In 5G Americas’ latest white paper, 5G Service Innovation, we take a deeper dive into what’s driving some of these trends in 5G technology adoption. Let’s look at a few:
Fixed Wireless Access (FWA): The “low-hanging” fruit of 5G is fixed wireless access, which is offering options for wireless broadband access that can serve as a replacement or complement for home or business broadband, eliminating the need for costly deep-fiber fixed access. These solutions can achieve 10 to 100 times more capacity than existing 4G networks. SNS Telecom has forecast 5G fixed wireless access revenues of $1 billion worldwide by the end of 2019, and an 84% CAGR between 2019 and 2025, leading to a global market worth more than $40 billion.
Cloud Gaming: Cloud gaming represents a fundamental change in gaming because it shifts the computationally intensive graphics rendering and processing from the user’s device to network servers. 5G low latency connectivity enabled by edge servers will be required to deliver enhanced cloud gaming services on mobile devices. The global games market is expected to grow to $180 billion in 2021, led by mobile games increasing their share to 59% to be valued at $106 billion. By 2024, there will be over 42 million active cloud gaming users, according to ABI Research, a 61.7% CAGR between 2018 to 2024.
Smart Grid: Two-way communication networks for the electricity grid will allow wirelessly connected devices to remotely detect, monitor and adjust electricity usage and power consumption. 5G will be a catalyst, allowing networks to provide the required throughput and ultra-low latencies essential for smart grid applications. The Smart Grid Market is expected to reach $92.97 billion by 2026, according to a new report by Reports and Data.
Extended Reality (XR) – Augmented Reality (AR) & Virtual Reality (VR): 5G will provide renewed momentum towards expansion of the XR market. Extended reality (XR) applications are some of the most critical edge applications being developed by the industry. According to SuperData Research, this market will reach $33.9 billion by the end of 2022 – just on the consumer side only! There are already 14 million VR devices as of the end of 2018, which will grow to 51 million by 2022.
Non-Terrestrial Networks with 5G: This is one major area of standards development in 3GPP Release 16. The aerospace industry is on the precipice of a revolution as a result of innovation and investment in the areas of Low Earth Orbit (LEO) and High-Altitude Platform Station (HAPS) systems, which will allow 5G operators to reach areas of the globe that would ordinarily be difficult to reach with traditional ground networks. For instance, the global maritime satellite communication market alone was valued $1.84 billion in 2017 and expected to reach $ 3.40 billion by 2024, a CAGR of 9.2%.
Unmanned Aerial Vehicles (UAVs): We’ve been waiting for flying cars for decades. Is their future here? Ultra-low latency 5G coupled with advanced robotics will usher in a new era of remote and autonomous flying machines or Unmanned Aerial Vehicles (UAVs). 5G will enhance UAV capabilities with sophisticated traffic management system operations. The UAV market is estimated at $19.3 billion in 2019 and projected to reach $45.8 billion by 2025, at a CAGR of 15.5% from 2019 to 2025. According to
Statista projected drone revenue is expected to reach 12.6 billion by 2025.
Healthcare: It’s almost impossible to forecast the size of 5G’s impacts on the healthcare industry due to its size and nearly limitless applications. However, healthcare telemetry for remote IoT sensing and monitoring is one of the leading IoT use cases expected to deliver the fastest spending growth expected to register a CAGR of ~21% during the forecast period of 2019 to 2024. By 2026 total telecom operator revenue potential in healthcare with 5G is $75.7 billion. This is comprised of Patient Applications – $49.2 billion, Hospital Applications – $19.8 billion, Healthcare Other – $5.2 billion and Medical Data management – $1.6 billion according to a report by Ericsson.
New treatment devices will rely on the URLLC and time synchronization capabilities of 5G to support accurate and timely information sharing and control. Tasks may range from sharing video to diagnostic purposes, to controlling an insulin pump or performing a robotic surgery.
But how will we get there?
5G will require a wide array of available spectrum bands and regulatory paradigms to support emerging use cases. Getting to our 5G connected future will require a concerted and collaborative effort by our local, state, federal and international organizations to make more licensed spectrum available, streamline cell siting processes, and be welcoming to innovative technology solutions that will shift their industries for the good of society.
From a spectrum standpoint, the flexible 5G framework is designed to support licensed, shared and unlicensed spectrum. Spectrum diversity enables 5G to scale from traditional wide area, to enterprise and to indoor/outdoor hotspot deployments. All these kinds of spectrum, along with high, mid, and low bands will be necessary to make this happen.
Beyond this, 3GPP is continuing make advances in developing successful 5G standards. Release-16 is continuing to expand 5G requirements, moving into a smarter work phase that focuses on industry verticals. Rules for autonomous vehicles, industrial IoT, ultra-reliable low latency enhancements, unlicensed spectrum, spectral efficiency improvements, and enhancements to common API frameworks will make 5G more accessible for developers.
As you can see, the future is exciting for 5G networks. This is a technology that could touch virtually every aspect of the new economy. It is a real pillar of the Fourth Industrial Revolution. 5G can be much bigger than you may think it is.
-Chris
Viewpoints are the expressed opinions of independent wireless industry analysts and stakeholders. They do not necessarily reflect the opinion of the 5G Americas association or its member companies.