5G will transform the telecommunications industry in Asia-Pacific , but its success is by no means guaranteed – with investment costs and business models still uncertain, operators will need careful strategies and strong government and regulator support for 5G to take off smoothly.
That’s according to new research from Frost & Sullivan’s Mobile & Wireless Communications Growth Partnership Service. The report, 5G in Asia-Pacific, Forecast to 2022, estimates that 5G service revenue in Asia-Pacific will reach $4.5 billion by 2022 with 280.4 million subscriptions.
According to the report, an initial focus on select markets and spectrum/network sharing to manage price points could expedite take-off, but operators in emerging markets will find it harder to justify the high implementation costs of 5G alongside 4G, where 4G is still growing from its current 10% penetration and demand for 5G services is finite or limited.
Fitting 5G efficiently into existing 2G/3G/4G MNO networks and services portfolios while managing customer migration will also be challenging, said Frost & Sullivan Digital Transformation Industry Principal Quah Mei Lee.
“The push for faster internet speeds through 5G will come from governments and industry regulators that realize its potential contribution toward a country’s economic growth and digital economy transformation,” said Quah. “At company level, the fact that the true extent of investment required for 5G is not known and business models for monetization are not yet clear complicates matters.”
Frost & Sullivan expects that unless there is sufficient demand from consumers for 5G use cases or specific use cases that can generated volume, MNOs may find it more cost effective to upgrade to 4.5G and then push it to the limits prior to upgrading to 5G.
Spectrum and network sharing is expected with 5G, especially in developing countries. Network sharing can reduce the number of sites required by 30-40%, capital expenditure by 20-30% and operational expenditure by 25-30%. In fact, regulators in each country may decide to mandate spectrum/network sharing to overcome spectrum scarcity and introduce 5G at the right price points to their markets earlier.
Quah said the optimum trigger point for MNOs to rollout 5G will be when the pricing for 5G hardware/software and devices, including smartphones, reaches mass market price points. “This will likely materialize at the earliest by 2023 or closer to 2025.”
Meanwhile, developments in 5G will lead to opportunities for industries such as the cloud, software and network equipment manufacturing to increase their revenue potential. Trials by MNOs will lead to understanding of local demand which is a crucial first step to business model formulation and a necessary step towards 5G monetization.
However, it will take time for the solutions to be developed, the necessary partnerships to be forged and workable business models to crystalize. Also, as with other disruptions, there needs to be time for regulations to catch up with new 5G use cases.
While Frost & Sullivan says that overall, 5G will play a key role in modernizing and transforming digital businesses – and the opportunities lie not only with MNOs but also with the industry – there is still a lot of challenging work ahead if 5G is to materialize by 2020.