Sun. Jan 17th, 2021

What we know: a look at current 5G market trends

5G Market Trends
Over the last year and a half, 5G has continued to roll out globally – representing a landmark shift in ICT history. This period has provided us with rich insights into the appetite for 5G and possible use cases. But what does the market look like today, and how are service providers monetizing 5G? Find out below.

Since the first 5G network went live in April 2019, a lot has changed. The last 18 months have been monumental in the context of 5G, but it’s also been a mixed bag in terms of progress.

On one hand, many service providers have successfully rolled out huge 5G network deployments and are already reaping the benefits. On the other hand, the industry has had to cope with the unexpected anxiety and economic uncertainty caused by COVID-19, which has delayed rollouts and coverage expansions in certain markets. However, this crucial period has provided us with some solid insights into the current state of the market. The outlook, as you can see below, is actually highly promising.

At a recent event hosted by Ericsson, Jasmeet Singh Sethi, Head of Ericsson ConsumerLab, shared some of the current 5G market trends. Here are some of the highlights.


The first year of 5G in numbers

Before we begin, let’s let the figures speak for themselves. As of July 2020, there were:

  • 92 commercial networks in 38 countries
  • 150 million 5G subscribers in China
  • 320 million 5G subscribers forecasted in the US by the end of 2025
  • 8 million 5G subscribers in South Korea – with close to 30 percent of the country’s mobile 5G data traffic in July 2020 being generated by only 11.3 percent of subscribers
  • 6 times higher 5G data usage compared to 4G subscribers in South Korea

Looking at these figures, it’s easy to see that the world is embracing 5G with open arms, and we can expect the pace of infrastructure build-out to quicken in the next two to three years.


The consumer market is playing a key role in 5G monetization

If the last year has taught us anything, it’s this: consumers want 5G, and they’re willing to pay for it. Early rollouts have emphasized and underlined the importance of the consumer market when it comes to monetizing 5G with a capital C.

Today, over 60 percent of communications service providers’ global revenue is generated by the consumer market, and we believe the importance of this market is only going to increase with 5G. There’s a lot of discussion around how 5G will unlock exponential opportunities for the enterprise market, but the consumer market is still substantial and service providers can’t afford to ignore it.

Some of the early commercial 5G launches show encouraging signs when it comes to reversing declining average revenue per user (ARPU). This is evident if we look at the figures coming out of South Korea, for example. Here, close to 30 percent of the country’s 5G mobile data traffic was created by only 11.3 percent of subscribers, indicating there’s a substantial consumer appetite for 5G in this market, and significant changes in usage behavior will follow.


Exciting new startups are cropping up

From Silicon Valley to South Korea, innovative startups are finding new ways to leverage 5G connectivity and create a diverse set of new use cases – from immersive multiview eSports streaming to the world’s first 5G VR headset which, by the way, will be fully portable. Other examples of 5G-led innovations include:

  • Multiplayer AR gaming headsets and handsets
  • 4K live streaming wearable camera
  • AR media and immersive video content apps
  • 3D AR edutainment apps
  • AI-driven 5G live sports event streaming
  • Global edge reflector networks for collaborative apps and games

All of these products will play a key role in unlocking the value of 5G for consumers, and service providers must extend their ecosystem to include these startups where appropriate. To capture this opportunity, it’s also crucial to have the right levels of agility in BSS systems and create transparency between ecosystem partners – which in many cases requires a modernization of existing systems.


Differentiating clearly between 4G and 5G services is proving to be key

 Despite COVID-19, South Korean service providers are flattening the ARPU curve and uplifting wireless revenues. Before 5G was launched, we saw a 10 percent fall in ARPU Year on Year in the Korean market, and since launching of 5G, major service providers have improved their position in the market despite the pandemic.

Ericsson ConsumerLab has identified a key reason why South Korean service providers have been so successful in monetizing 5G: they’ve focused on differentiating clearly between “traditional” and “5G rich” services. They’ve also:

  • Launched high-value tariff plans and premium 5G plans which have increased revenues. Most consumers have 5G unlimited, which serves as a clear differentiator between “traditional” and “5G rich” services.
  • Leveraged existing 4G drivers: premium plans with added roaming, loyalty rewards, multi-device add-ons and handset insurance benefits are also driving revenue for 5G.
  • They’re offering 5G rich apps, including AR 3D shopping, VR cloud-gaming and generalist AR and VR apps. Most are bundled, which is key to enticing users over from 4G.

The main takeaway? South Korean service providers are clearly differentiating the 4G experience from the 5G experience – and it’s leading to widespread 5G adoption among consumers.


5G presents an opportunity to reestablish consumer market share

Regardless of whether you’re a market challenger or a market leader, 5G seems to present a unique opportunity to change the market landscape. Let’s take LG U+ in South Korea as an example. Since launching 5G they’ve significantly increased their market share, and they were successful in doing this for two reasons:

  • They offered superior user experience on the 5G network side
  • They offered new innovative digital services

If you’re a challenger in the market, it doesn’t matter what your position is right now in the 4G space. What’s important is how you play in the 5G arena and you can accelerate this going forward.


Most 5G launches today lack use cases

Today, most 5G launches are still lacking the use cases needed to truly highlight the value of 5G. However, it’s important to focus on network adaptive use cases – not 5G only use cases – especially in the early years of 5G rollouts as we wait for blanket 5G coverage. Jasmeet Singh Sethi believes there’s an immense opportunity when it comes to augmented reality (AR), which has been magnified as a result of the latest iPhone launch, which enables a more immersive AR experience.

Augmented reality is a use case that can still be delivered on 4G but enhanced by 5G for both consumers and enterprise – for example, multi-player gaming or immersive on-the-job training. The key is to start somewhere and discover which use cases work well in your local market, then continue to rollout new 5G rich use cases using a stepwise approach.

Currently, many service providers are overlooking this opportunity and their go-to-market strategies have let “rich media” fall by the wayside – focusing on innovative pricing strategies instead. What is being bundled as far as media or content is concerned, is very similar to what was bundled on the 4G side – leaving consumers wondering what the difference is with 5G and what they are paying for.

Research from Ericsson ConsumerLab shows there any many possibilities when it comes to consumer 5G use cases, and there is not just one, but many “killer apps” for 5G. Service providers must think about how they can differentiate the 5G experience through a variety of use cases across entertainment and media, education, in-car connectivity and entertainment.


The pandemic is impacting use case relevance

Since the outbreak of the pandemic, screen time has shot through the roof. Over 50 percent of people worldwide say they are watching more streaming services, and almost 45 percent are spending more time on social media and messaging apps. The subscription growth rate for video streaming companies also grew sevenfold in March 2020 compared to the growth rate over the previous 12 months.

Previously a lot of markets downplayed the idea of digital education, but the pandemic has shown there is a dire need for this. Recent ConsumerLab research showed that the fastest-growing mobile app categories during the COVID-19 period have been linked to remote working, education/e-learning and wellness, and as people continue to adapt to the new normal, many of these trends are here to stay. For example, post-pandemic, 6 in 10 US workers still expect to switch to video-based conferences permanently, and the same amount believe online healthcare consultations will replace physical visits to the doctor.

The impact on other industries should also be considered in terms of evolving use cases. A massive global reduction in travel could drive a huge demand for AR and VR-enabled smart tourism and virtual holidays. The same goes for smart venues and stadiums. We’re already seeing a big push in this area, specifically on the mmWave side, and deployments are already happening in venues in the US, including both sports arenas and concert halls. This is a demanding use case that requires many capacity enhancements to achieve this sort of scale, but it presents a great opportunity for innovative service providers to differentiate themselves.


It’s time to unleash the power of 5G

Early rollouts have shown us how real the 5G market potential is. First movers have had a significant advantage, but there are still opportunities waiting to be seized. The time to accelerate your 5G rollout is now. Find out how with  Ericsson 5G.

This blog post was adapted from a discussion at our recent BSS Days Live event. This event is open to all Ericsson BSS customers. If you missed the first sessions just contact your Ericsson partner and we will provide you the opportunity to listen in on-demand.