5G deployment plan postponed to 2021, will operators agree?

The sudden COVID-19 outbreak in 2020 is having a significant impact on mobile operators planning to launch 5G services. The rapid spread of the epidemic continues to disrupt the global economy and may further intensify, with no signs that the epidemic will end in the short term. According to Strategy Analytics, smartphone sales will fall by 21% this year (although they will recover well by 2021), which will also affect the number of users who upgrade to 5G terminals. Despite this, there are many positive signs in 2020 that 5G still has great growth potential, including its ability to respond to the epidemic.

5G networks continue to grow

According to statistics from Strategy Analytics, operators have still launched 15 5G commercial networks since the beginning of 2020. Starting from late February, despite the increasingly obvious impact of the new crown epidemic, Thailand AIS, Hong Kong HKT, Hong Kong China Mobile, and Japan NTT DoCoMo, KDDI and Softbank all launched new 5G networks. In addition, Japan's Rakuten Mobile also released a new 5G plan before the summer.

Meanwhile, global operators are also continuing to expand their 5G networks. In China, the government is using infrastructure projects to offset the impact of the epidemic on the economy, and 5G is one of the core infrastructures. China Mobile plans to deploy 300,000 5G base stations by the end of 2020, while China Telecom and China Unicom have also set a goal of deploying 250,000 base stations in their 5G co-built and shared networks by September 2020. In the United States, 5G investment plans remain strong, and Verizon has increased its CAPEX investment in 2020. Fitch Ratings pointed out that "despite the challenging economic environment, there should be sufficient cash flow to support the planned 5G budget and support the launch of a wider range of 5G services later this year." Although operators in some countries and regions under lockdown have prioritized network maintenance goals over network upgrades, 5G deployment is still ongoing, and operators need to be prepared to cope with the increase in 5G terminal sales in the second half of 2020.

In response to the more than 40% growth in fixed broadband traffic caused by home office, distance education and other services, operators have increased their investment in backhaul networks. Backhaul networks account for nearly a quarter of the cost of 5G deployment, and these investments in enhanced backhaul networks will greatly simplify and accelerate 5G deployment.

The 5G terminal ecosystem continues to expand

The cancellation of MWC2020 did not affect the momentum of smartphone releases in the first half of 2020. Although it is still uncertain whether 5G smartphones priced below $200 will appear in the Chinese market by the end of 2020, the successive release of a series of affordable 5G terminals around the world has been very encouraging, including the $340 Huawei Honor 30S, the $380 Xiaomi Mi 10 Lite, the $380 Vivo S6 5G, the $490 TCL 10 5G, and Samsung's latest two new 5G terminal phones, the $500 Galaxy A51 5G and the $600 Galaxy 751 5G. Although operators also have to consider the expectations for the network from the 5G iPhone and Samsung Galaxy Note 20 launched in the second half of 2020, the emergence of more affordable 5G smartphones is still a key factor affecting the mid-term 5G construction goals.

5G has made positive contributions to the response to the COVID-19 pandemic

The COVID-19 pandemic has had a profound impact on healthcare and public services in countries around the world. Hospitals and healthcare service providers must adapt to new ways of working and equipment in a matter of hours or days, not weeks or months. Companies, employees, teachers and students have adapted to online services such as online communication, distance education and remote entertainment.

As we all know, in order to fight the COVID-19 pandemic, China has newly built the Huoshenshan and Leishenshan hospitals in Wuhan. Operators need to quickly provide broadband networks to hospitals. Compared with optical fiber, 5G has the advantage of rapid deployment. China Mobile, China Telecom and China Unicom have provided network services to the two hospitals. In addition to the basic "emergency" network, 5G robots are also provided to reduce the risk of contact. Neolix's driverless vehicles are used for temperature monitoring, spray disinfection and distribution of medical supplies. CT scans, X-ray examinations and online consultation services are provided through high-definition video using 5G cloud collaboration tools.

As work and education moved online during the lockdown, 5G played a role in improving broadband network performance in the community. This role was most clearly demonstrated in the field of education, where high-quality home broadband networks became particularly important in rural and underdeveloped areas due to the inability to go to school normally. In China, the Ministry of Industry and Information Technology once again asked operators to expand 4G and 5G coverage to support online education. In the United States, Ericsson has partnered with Vermont Telephone Company to deploy 4G and 5G networks and provide modems and routers to homes to provide students with free high-speed wireless network access. Inseego's data shows that sales of its flagship 4G and 5G MiFi continue to grow, and operators are offering 5G FWA services at discounted prices: South Africa's Rain offers unlimited 5G home services for 699 rand (about US$38) per month, which has doubled demand every week, while Saudi Arabia's Zain's low-cost 5G plans have also increased demand by 25%.

Can 5G speed up economic recovery?

We have noticed that the Chinese government hopes that China's three major operators will accelerate the pace of 5G deployment and are committed to promoting economic growth through infrastructure construction. China's Ministry of Industry and Information Technology has issued policies to encourage local governments to open public buildings and public facilities for operators to build 5G base stations. The government will also work with power grid companies to reduce the electricity costs of 5G networks. After completing the spectrum auction in March, the Hungarian government is also eager to complete the early deployment of 5G in some key areas, such as hospitals, universities and major transportation routes, to help society cope with the health crisis. Obviously, the Hungarian government has recognized the important role that 5G will play in economic recovery after this crisis.

On the first anniversary of 5G commercialization in South Korea, a strategic committee composed of 12 government departments outlined the important role they see 5G playing in leading the economic recovery after the COVID-19 pandemic. While the government encourages Korean companies to continuously increase their participation in the global 5G market, it also hopes that Korean operators will continue to improve 5G coverage in the country. These operators have increased their investment budgets from 2.7 trillion won (about US$2.3 billion) to 4 trillion won (about US$3.3 billion) in the first half of 2020, including indoor coverage in more than 2,000 locations. The Korean government has fully recognized the importance of stimulating the economy through the creation of new markets and the transformation and upgrading of traditional industries through 5G, and has already focused on the development of smart factories, smart cities, digital healthcare, autonomous vehicles with 5G V2X and drones in 2020.

Strategy Analytics pointed out in its report titled "5G and Its Impact on Enterprise Digital Transformation" that "5G is a core component required to create an IT environment that is virtualized, agile, software-defined, and particularly responsive to user experience for enterprises." The global COVID-19 pandemic is by no means an "opportunity", but it is prompting many companies to accelerate their digital transformation process, and 5G will undoubtedly play an important role in this.