Despite the economic and logistical turmoil wrought by COVID-19, the rollout of 5G has proven to be extraordinarily resilient, with new data showing U.S. coverage is up to 75%.
However, that doesn’t mean the growth of 5G has been totally unaffected. The economic shock of the pandemic has led many consumers to forgo or postpone upgrading their devices, unable to justify discretionary spending during the crisis. This has led 5G device penetration to reach only 8%, according to the latest release of PwC’s 5G US Mobile Index.
With 5G adoption expected to reach its tipping point in 2023, the next few years are key. But the path to full and widespread adoption won’t be without challenges.
Below, we’ll explore the road to 5G’s tipping point, including the steps we expect it will take to get there, opportunities for the enterprise market, and regulatory considerations for the future.
Getting to the tipping point
While acknowledging the industry’s recent success in growing 5G coverage, there are a few factors preventing 5G from taking off more quickly than it already has.
First, we have to consider network availability which, while coming along nicely, is not ubiquitous just yet. This is one of the reasons why we have yet to see wide area use of 5G – such as for logistics or in autonomous vehicles – and won’t for some time. The networks still need to mature.
Second, we need many more users to upgrade to 5G capable devices. Over the past decade, the pace at which people have been buying new mobile devices has slowed – due in large part to slowing innovation, rising prices, and increased device durability. The current lack of clarity on 5G’s worth – is it really that much faster or better than 4G – as well as the unevenness of current availability and performance have also impeded upgrade rates. While industry experts know that 5G offers significant benefits, users still largely have yet to be educated on the promise of 5G.
Previously, a typical user would upgrade their mobile device about every two years, but it’s now closer to every two-and-a-half to three years. This might not seem like a huge change, but it means that in a typical year less than one-third of people are upgrading to a new mobile device. If we’ve got only 8% of 5G capable devices in the market today, it will take until about 2023 to get to the point where more than half of the U.S. has 5G capable devices.
Beyond the mobile world, 5G also offers a significant opportunity in the home broadband market. Consider the increased attention on fixed wireless home broadband amid the rise of the pandemic and, with it, the need for stronger, more reliable connectivity to support remote workers and learners. This will remain important as new research shows nearly a third (32%) of TMT leaders plan to continue offering employees limited remote-work schedules post-pandemic.
The business case
While past generations of mobile technology have typically been led by consumer adoption, we believe that 5G is likely to be different. 5G holds a massive opportunity for the enterprise, and it’s time for leaders to begin thinking about the benefits of 5G adoption for their businesses.
In terms of impact to date, we are seeing tremendous interest in adopting 5G when it is used in localized environments – in office buildings, factories, warehouses, hospitals, and even on college campuses. Ubiquity hasn’t come quickly for the wide area capabilities mentioned above but, within enterprises, there are high value use cases when 5G is applied within “four walls.”
For instance, in the hospitality industry, operators of vacation resorts are able to actualize the benefits of 5G in numerous ways. Here are just three key examples of how 5G can:
- Improve experiences for guests, who expect to have even more seamless and high-speed connectivity and above-and-beyond experiences than what they receive at home – regardless of where they are in the world. This should be a key consideration for hospitality leaders, as consumers – who will likely be hyper-sensitized as they resume travel and book vacations for the first time post-COVID – have come to expect optimized and safe digital experiences, including contactless payments, uncrowded venues, immersive digital experiences, and more.
- Create better work environments for staff – in terms of managing employee schedules, enhancing their experiences, improving workflows, and helping individuals better interact with and serve guests.
- Streamline on-site operations by taking advantage of advanced connectivity to increase automation to enhance safety, reduce energy and water usage, and even alert staff if the temperature of the outdoor pool is too cold or if the buffet needs to be refilled.
Just as with consumers, the mobile industry has a responsibility to educate enterprises on what’s possible with 5G and its use cases across industries, as well as other nuances of the technology. For instance, not all 5G is created equal – performance and cost will depend heavily on the spectrum being used. There is also a new opportunity for 5G to enable greater use of private networks, whether they are managed by mobile network operators or other organizations, including systems integrators, managed service providers, or even the enterprises themselves. Closing these knowledge gaps is critical to helping leaders accelerate the roadmap for their 5G adoption strategy.
Regulatory considerations
Just a couple of years ago, we knew that 5G adoption would take place over a longer period – especially as spectrum in which to deploy the new technology was in short supply and many mobile network operators lacked the deep pockets to fund its rollout. Now that 5G’s tipping point is imminent, it’s up to the new administration in the U.S. to determine how to best enable 5G investments to ensure the U.S. remains on the cutting edge of communications technology and closes the digital divide.
In recent years, the FCC has grown increasingly supportive of making additional spectrum available for 5G, as well as creating opportunities to subsidize connectivity in unserved and underserved communities. The recently-completed CBRS and C-band spectrum auctions have been important steps, and more mid-band spectrum is currently in the pipeline to further enable 5G.
The FCC is also taking bold steps to use 5G and other technologies to close the digital divide. For example, they have launched an effort to evaluate utilizing AI to enhance the accuracy of and broadband maps. The FCC has also distributed $9.2 billion nationally to help close the digital divide across rural America via the Rural Digital Opportunity Fund (RDOF).
For the new administration, it is imperative to ensure the U.S. remains competitive in communications technology. Part of this priority is maintaining affordability in communications services in the U.S., particularly in the face of rising debt levels for all of the major mobile network operators. The industry has also been allowed to consolidate heavily – local network operators are largely gone, swallowed up by effectively only three national operators. The critical question for the FCC today is, how do we ensure the 5G industry remains competitive and at an appropriate value for American consumers?
Looking ahead and measuring success
While the growth of 5G has made great progress despite a global pandemic, it’s clear that the next few years will be critical in order to reach its ultimate tipping point and for consumers and enterprises alike to realize its potential benefits. For individuals, success might be having faster, more reliable mobile device service – again, an attractive feature for remote workers, especially as enterprises look to further extend their return to work deadlines. For businesses, it certainly means actualizing ROI and improving customer and employee experiences. In order for both parties to succeed, however, regulators and policymakers have a critical role to play in making additional resources available for 5G – which will further ensure the U.S. maintains its stance as a competitive leader in communications technology.
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