I have no experience writing fiction, but 5G estimates even a year out are speculative. Four and five year forecasts are guaranteed inaccurate because 5G is new and changing rapidly.
Yet people building networks need to think years ahead. Reporters love the headlines. The year I spent researching 5G gives me some insight. Originally, I wanted to leave anything beyond 2 or 3 years to my brother, a Hugo-nominated science fiction writer. But inquiring minds want to know.
The surprise free estimate for 2020 is now 210 million, as China and the U.S. are accelerating construction.
China and the U.S. will be the main contributers
The Chinese Politburo has confirmed that 5G is central to the massive recovery stimulus. China Mobile as well as the China Unicorn and Telecom team have ordered 200,000 base stations each. Amazingly, they have pulled up the schedule and expect 600,000 site upgrades by yearend. The telcos have promised 150 million subscriptions by December.
First quarter 5G phone sales in China were about 15 million, so it will require a huge push from the carriers to meet that goal. Almost twice as many “5G contracts” were sold, presumably reflecting people renewing at the 5G level, planning to buy the phone later. 4G and 5G contracts cost about the same, so that’s reasonable. I have no confirmation.
I’d expect an extra US$4-10 billion in subsidies will carry the day and save the jobs of the CEOs. The telcos have $200 billion in annual revenues so can finance the additional marketing cost. The government can indirectly cover it by reducing the pressure on the telcos to reduce prices.
In the U.S., T-Mobile has the golden 160 MHz of spectrum at 2.5 GHz and is building the highest capacity network in the Western world. They plan to sell aggressively this summer. Verizon has raised its capex by a billion in response. It is expecting the iPhone 5G to create demand in the fall if it is released on time. Competition is working to drive the U.S. market in 2020 & 2021.
T-Mobile should cover 80-85% of the U.S. with mid-band 5G at well over 100 Mbps in about three years. Verizon and AT&T have no choice but to respond. Stankey at AT&T has already said he will fire employees and borrow money to maintain capex and especially dividends.
The next two years of U.S. wireless growth will be driven by how fast T-Mobile builds and markets.
Korea and possibly Japan will also contribute
Korea had an amazing start, adding over 800,000 5G users in August alone. The telcos predicted 5 million in 2020 and 15 million – 30% of the country – in 2021. The Korean miracle is faltering. January and February 5G phone sales were half the August figure. The companies agreed to reduce phone subsidies, which were above $500. Consumers are disillusioned, the papers report, as they discover 5G phones have few practical advantages. Andrew Collison has warned that disillusioned consumers could reduce demand, a factor that cannot be ignored. 15 million now looks unlikely in the aftermath of Corona.
Japan has an affluent population of 126 million and a taste for the best electronics. NTT DOCOMO has some of the most respected engineers in telecom and had ambitious plans for 5G at the Olympics. The new 4th carrier, Rakuten, promised 5G at a very attractive price.
Now, the Olympics are in 2021. Rakuten is six month behind schedule and only offering 4G. DOCOMO, KDDI, and Softbank have only modest 5G builds and refuse to provide projections. There’s no good way to estimate 2020 or even 2021 5G subscriptions.
Europe and others continue to lag
The Europeans are moving very slowly as their finances are squeezed. At both Telefonica and Vodafone, the technical leaders want to accelerate the 5G build. The technology is ready. The CEOs of carriers continue to refuse to spend. They fear the incumbents empires will strike back, leaving little gain.
My analysis is this is a mistake. Networks are slow to build. The aggressive challenger will have an advantage initially and can develop an image as the leader. Verizon has long been one of the most profitable companies on Earth. It perceived as better and able to charge a premium. The folks who sign the checks in Europe disagree with me.
No regulator has shown the courage to demand the carriers invest in a national recovery.
There are bright spots in a few small countries. Ireland is 25% covered. Qatar has 100,000 subscribers. But Latin America and South Asia have annouced little of substance for 2020.
A dozen phones from $285-500
I’ve been predicting since December a sharp drop in phone prices and that’s become so. The $285 Xiaomi, announced in December, remains the price leader but every company except Apple has decent 5G phones under $450. Twelve makers are trying to survive while only four or five will be profitable. Prices will continue to fall as chip prices fall. However, the $399_iPhone SE may dominate sales in 2020. Apple services have emerged as a gold mine. That gives Tim Cook strong incentive to sell hundreds of millions more iPhones.
The primary report
The surprise-free, most likely estimates are:
- 2020 210 million
- 2021 500,000,000 (The key to this figure is an assumption half of China’s 400 million phones will be 5G. Some 5G phones will be priced under $200.) April note: 2021-2025 estimates should probably drop by 10-15% in the next full update.
- 2022 950,000,000 (300M China. Western Europe, Japan, South Asia and the U.S. meaningful.)
- 2023 1,550,000,000 (India and others should become significant. China slows down as saturation is in sight.)
- 2024 2,250,000,000 (4G & 5G phones will be similar in cost so probably half the phones will be 5G)
- 2025 3,050,000,000
Low estimates would be
- 2020 175,000,000 Revised from 165 million in April as China is deeply committed to 150 million and T-Mobile is driving the U.S.
- 2021 410,000,000 (Europe and the U.S. hold back. In China as well, customers are disappointed with 5G performance, which has little practical value. European carriers wink and nod and collaborate on holding back investment.)
- 2022 800,000,000
- 2023 1,300,000,000
- 2024 1,900,000,000 (Closer to established estimates such as Ericsson.)
- 2025 2,600,000,000
High estimates would be
- 2020 230,000,000 Revised April from 265 million on low phone sales and economic struggles. (Xiaomi is selling a decent phone for $285 in China. People choose 5G phons because they cost little more and won’t be obsolete as soon. iPhone 5G should be a blockbuster, late 2020 and into 2021)
- 2021 650,000,000 (Phone prices will be down to $200 5G becomes the obvious choice. U.S., Japan, and Canada deploy large networks. Europeans go beyond pr stunts and build networks.)
- 2022 1,200,000,000 (India should come in. Reliance Jio already has equipment in place but politics is holding things up.)
- 2023 2,100,000,000 (Brazil, Indonesia, Thailand, South Africa, & Vietnam contribute.)
- 2024 3,000,000,000 (5G phones will be under $100 and the obvious choice for most.)
- 2025 4,000,000,000 (Africa’s billion people embrace 5G.)
My key assumptions
- 5G phones are already down to $285 (Xiaomi) and Oppo predicts $150 later in 2020. The gap between 4G & 5G prices is narrowing, making 5G the obvious choice for most in any country with extensive coverage.
- Customers want to buy 5G. The Korean and Chinese results are convincing. Surveys elsewhere correspond. At some point, many people will see through the 5G hype and realize there is little practical advantage. My assumption is that will only have a modest effect on sales. April update: Korean sales fell after the carriers agreed to end subsidies.
- 5G networks have enormous capacity, able to deliver far more than most carriers can expect to sell. Once the 5G networks are in place, carriers will have a strong incentive to promote 5G.
- 5G networks are not expensive to build by telco standards.1 They often cost less in total than 4G and cost much less per bit. NTT, Verizon, AT&T, and Orange are building 5G nets and cutting capex. Countries like Germany and Italy could very rapidly reach 70% or better coverage by pulling up 1-2% of sales for added capex. April: I now have data. See $23,000 for 5G Base Stations, $56,000/cell Complete. Quantity 200,000
- China is committed to ~50% coverage by the end of 2020, confirmed by Xi Jinping despite Corona. Even with problems, most of China will be covered by 2021-2022. (China will be 70% of 5G adds in 2019, 2020, & possibly 2021.) See Xi Jinping: Accelerate 5G to Restore the Economy.
- 1/2 or more of the ~400 million phones Chinese buy in 2021 will be 5G. In 2022, it is reasonable to estimate 3/4ths of the phones sold in China will be 5G. April: Chinese phone sales were way down in Q1 2020. May: Chinese sales in April rebounded.
- The iPhone 5G will kickstart sales in the U.S. and Europe, starting in late 2020 or early 2021.
- India will be a major factor starting in 2022-2023. 400 million Indians went 4G in the last 4 years. 5G will be slow getting started but once it’s built, the carriers will promote it strongly to ease congestion in lower frequencies.
- By 2023 & 2024, 5G costs will be low enough operators will deploy fairly widely in countries like Indonesia, Pakistan, and Nigeria. 5G capacity, especially from the use of 3300-4200 MHz spectrum, will be crucial to delivering a decent Internet experience. A respected source estimates only 3% of Africans will use 5G in 2025. My estimates are much higher.
But
- 5G isn’t close to delivering the hype. It usually is little better than decent 4G. If buyers realize that, sales could slow.
- There are no new “use cases” likely to reach volume in the next two or three years and possibly longer. 5G will allow carriers to support much more of what we do today, including better video. Will that be enough to drive sales?
- European carriers are approaching 5G as a cartel would. They are going much slower than makes sense based on the technology and economics. Korea is at 93% coverage. China will be ~50% by the end of 2020. But Telecom Italia and Deutsche Telekom plan only 20% entering 2022. I do not believe anyone is meeting in secret. Defacto agreement can be achieved by public signaling. May update: DT is joining the Americans in selling “5G” in low bands running at 4G speeds. This will pump up figures, The right thing to do is not to include the second-rate “5G” but it will be hard to do that.
- Prices of phones in Europe are twice the price in China. That should change in a few months, but again a cartel would keep prices high. April: $400-500 phones are now reaching Europe.
- Most carriers in the West are holding down capex in favor of higher dividends and stock buybacks. The stock price is more important than profits in future years.
- Apple is having some problems and the iPhone 5G may be very limited in 2020. That would reduce sales in 2020 although 2021 should recover them. April: Latest rumors have Apple back on track.
Corona is looking very serious as I write this, which could create a recession. The effect on 5G sales would be one of the least important impacts but could be large.
There’s much more detail at 5G 2020 Predictions: Surprising and surprise free 195-210 million, Low 165M, High 265M and 5G Country by Country. Both are full scale, detailed analysis reports also released under a creative commons license.
Why these estimates are higher than most
Analysts I respect have significantly lower estimates than I do. I could be wrong, of course. The data on 5G is extremely limited. I believe I’m giving more weight to:
- The declining price of phones. A decent phone (Xiaomi) can be bought today in China for $285. Carriers and vendors expect the price to fall to $200 and then to below $150. Except for the very cheapest tiers, more and more people will choose 5G as the cost difference continues to decline.
I’ve looked closely at the components of a 5G phone that could raise the price. The chip is more complicated, but Moore’s Law will continue to bring down the cost. It’s slowing down but isn’t dead yet. The RF (Radio Frequency) parts including filters and amplifiers are much more complex than 4G but new methods and materials are coming very quickly. - I believe China will meet its plan for 150 million 5G connections in 2020. Xi Jinping has listed 5G as one of the key priorities of the stimulus coming. The CEOs of China Mobile & China Unicom have pledged to install over 550,000 radios in 2020. They will find a way, if only to keep their jobs.
In the past, the Chinese carriers have delivered what the West thought impossible, including 300 million FTTH connections in less than 4 years. That’s homes connected, not just homes passed. - India added 400 million 4G LTE connections in the last four years, an astounding story that is changing the Internet. That was driven by Mukesh Ambani’s Reliance Jio, which is ready to lead into 5G. Much of the equipment is in place, including fiber backhaul. It has promised to start selling 5G within 90 days of getting a license, which is currently tied up in politics.
Jio is well-funded, profitable, and extremely capable. It may not reach volume until 2022 or 2023, but will eventually deliver hundreds of millions of 5G connections. - I have a great deal of respect for African companies such as Liquid Telecom and Safaricom. They have the skills and the financing to accomplish great things in 5G. There are very few landlines in Africa; the quality of the Internet is held back by the limits of wireless. May: Little has happened but talk is strong. One opinion is that Africa will move on 4G Massive MIMO to hold down costs while upping capacity.
Do note
These numbers do not include IoT. I believe that’s industry-standard practice and sensible. 5G IoT has one important difference: it can handle a million units in a single cell.
Low-band is slower today than 4G and will never be much faster. I would prefer to exclude that but the companies are refusing to break out the data.
If you see a mistake or have new data, please email me daveb@dslprime.com. Thank you.
The key factors
- Population
Most 5G phones will be sold in China and possibly the U.S. for the first few years. Korea and possibly Japan will also deploy rapidly, but their populations are much lower. - Number and price of phones sold
Chinese smartphone sales have been ~400 million per year. 25% of the sales in January were 5G. Prices in China are as low as $285 and falling. It’s reasonable to expect 50% and then 75% of the phones in China to be 5G fairly soon. Indians buy less than half as many smartphones as the Chinese. India does have a substantial middle class, but 5G volume in India will be limited until prices come down to $100-200. - Coverage
10% of Koreans bought 5G phones in the first year. The carriers expect 30% (~15 million) to choose 5G by the end of 2020. China already has 130,000 radios in place and plans to add 550,000 more in 2020. May: Well over 200,000 vells have been upgraded and the carriers are likely to meet the new target of 500,000.
European coverage is often less than 5% and most carriers are moving very slowly. Of course demand is low. - Competition
Strong competition is usually the best way to get a large corporation to change plans. When the CEO fears catastrophe, they move. Verizon built the first large fiber network in the world because cable modems were killing them. CEO Ivan Seidenberg said, “W have to get the cable modems out of the house.” He was scared.
Already in 5G we are seeing the power of fear. LG Uplus was the first Korean carrier to aggressively promote 5G. It rapidly gained market share. SK & KT decided they had no choice but to speed up and spend more. May update: The SK & KT empires struck back, matching the LG offers. After a few months, the carriers found a way to all pull back on subsidies and monthly customer adds have been down since December.
In China, the carriers are making sure to keep up with each other. In the U.S., AT&T thought it had to match Verizon before the “low-band 5G” meme confused everything. Sprint’s 160 MHz of golden spectrum at 2500 MHz is about to destabilize things. Verizon is scrambling to keep up. May update: Verizon has added $billion to capex.
I have a thought experiment below: What would happen if Telefonica Deutschland jumped ahead with a fast deployment? The cost would be reasonable, perhaps 2% of annual sales.
With textbook competition, that would be the right move and highly profitable. In the real world of German telecom, Telefonica has to think about what would happen if The Empire Strikes Back. (DT) For now, TD feels safer not angering the giant and is holding back. Germany looks to be years behind Korea and Japan.
Which is not good for the country. Does the government have the power to do anything about the cartel-like behavior? May update: At Vodafone and Telefonica, senior technical people want to accelerate. Top management refuses to spend.
The competition in 5G phones is working wonders. No one expected phones below $300 for another 6 months. But 10 companies are chasing a market where only four or five can make a profit. Xiaomi decided to forward price at $285 for a decent phone. My research found that a 5G phone soon will only cost $15-35 more to manufacture. Competition is working well. May update: The U.S. big 3 sold over 3 million Samsung S20 5G phones in the first quarter. Buyers of phones over $1,000 are choosing 5G. - Business plans of the companies
Early in 2019, it may have been sensible to go slowly on 5G until we had more data from the field. By the middle of the year, it became obvious 5G mid-band was working. Reach is good and deployment costs are reasonable. Demand looked strong. When the price of phones came down late in 2019, investing more should have been the right move – unless you were scared of retaliation.
Last summer, two CTOs I respect told me they agreed but their bosses weren’t ready to go along. 5G cost per bit is so much lower it is the right choice from the technical side. Most of the European carriers are falling years behind the Asians. Verizon is risking its future by cutting capex. Why? Under conventional supply and demand economics, most would be building faster.
The business side sees it differently. A colleague close to telco strategists pointed out to me what your competitor will do often is more important than any technical considerations. Will the Empire Strike Back? With only 3 or 4 companies, that’s highly likely. The common result is cartel-like behavior without any illegal meetings taking place.
In addition, the stock price is top of mind for most CEOs. The price is highly related to buybacks, dividends, and cash flow. To protect the cash flow, many companies are freezing and cutting capex when despite a likely high cost in future years.
Deutsche Telekom, Verizon, and AT&T are clearly making short-term decisions in order to boost the stock price. AT&T CEO Randall Stephenson is leaving the end of the year. A high stock price is worth tens of millions to him. Short term decisions make sense and Randall has cut capex by $2 billion. Vestberg & Höttges are also scared of a price drop if they invested any more. - Government promotion
Korea and China are far ahead in 5G because the government thinks it important. They told the companies to build and they did. In China, Minister Miao Wei said “Accelerate!” in mid-2019. The plan had been to hold off until 2020 but instead the telcos upgraded 132,000 sites by year-end 2019. That’s probably twice as many as the entire Western world.
Governments in the West are also enthusiastic but almost nothing they have done is making much difference. (Except making mid-band spectrum available.) The U.K. required duct sharing. The U.S. reduced the fees telcos pay for rights of way and pole attachments by hundreds of millions or more. D.C. is still claiming that resulted in a faster small cell build but actually the U.S. is adding fewer small cells than had been planned.
In D.C., the telcos spend hundreds of millions of dollars on influence every year. Comcast’s lead, David Cohen, made $18 million a year. That’s literally 100 times as much as the best public advocates make. The going offer for a connected lobbyist is at least $1 million. For that kind of money, they hire some of the best influencers in the world. I call them the 2+2=5 gang, for what they can persuade regulators to believe.
Incentives and nudges rarely work.
Review by countries
Some countries are growing ten times as fast as others of similar size and income. You can’t get a meaningful answer without going country by country, at least for the larger countries. For several years, Korea’s 5G penetration will be more than twice Japan’s despite a lower per capita income.
High Population Countries
More than half of 5G users through 2022 will be in China and the U.S. India should become important in 2022 or 2023. China and India have populations of ~1.4 billion. Add the 331 million people of the U.S. and it’s easy to see the starting point of any forecast. These three countries are about 40% of the world population,
China is moving at breakneck speed and dominates the figures for 2019 & 2020. That is likely to continue for 2021. China Daily estimates 1.24 billion Internet users2 which is not adjusted for people with more than 1 sim card. China also has more than 400 million fixed broadband users, almost all on FTTH. ~400 million phones are sold yearly. How many will be 5G? 1/4th of phones sold in January 2020 were 5G. The government called the telcos to a recent conference and reiterated the “guidance” of 150 million 5G connections by the end of 2020. Over half the phones sold each month will be 5G by late 2020 or early 2021. A reasonable estimate is 150 million 2020, 200 million more in 2021, and continued growth after that.
China is large enough to dominate 5G in 2019, 2020, and 2021? May: After a very slow Q1, phone sales in April rebounded. China is unlikely to reach 400 million phone sales in 2020.
India is moving slowly but will likely come in strong from 2022. Update March 2. Reliance Jio has developed its own 5G system and applied for permission to test it. CEO Mukesh Ambani met with Donald Trump and Narendra Modi and said. “We are going to do 5G.” [mfn] https://www.businesstoday.in/current/corporate/the-pursuit-of-5g-this-is-reliance-jio-plan/story/397265.html [/mfn] Jio signed up 370 million 4G customers in less than 4 years and one day may be the largest telco in the world. It is the most remarkable telecom story of the last decade. It is changing the Internet.
Few outside India believed GSMA’s estimate of 88 million 5G customers in 2025. [mfn] https://www.gsma.com/asia-pacific/resources/india-5g-updates/ [/mfn]Ambani may grow 5G in India much faster than that.
I wrote,
India has less spectrum per capita and relatively few towers. The carriers will need to put 3300-4200 MHz spectrum to use, probably using 5G rather than 4G. Reliance Jio, which has grown to 370 million 4G customers in less than four years. It is ready to turn on 5G within 90 days of getting government approval.
India has a substantial middle class that can afford $200 5G phones. Except for the political issue, it would be easy to expect 20 million in 2022 and rapid rise from there. It could even go faster if Jio wanted to move customers to the new spectrum.
But I had no idea what Jio was planning.
Bharti and Vodafone are doing everything possible to delay 5G because they have very limited funds for investment. Vodafone has said it will go broke without a government bailout. I can’t predict how long politics will delay things.
158 million smartphones sold in India in 2019. 3 Most were 4G. As soon as a substantial fraction of India’s phone sales become 5G, it will affect the global totals.
United States Takeway: The U.S. will probably connect 20-40 million people to mid-band and millimeter wave by the end of 2021. If T-Mobile rapidly upgrades the new Sprint spectrum, it will be towards the higher figure and earlier. If T-Mobile goes slowly, the lower figure is more likely. One promising sign comes from tower company Crown Castle, which expects a major pickup from T-Mobile orders in a few months. [mfn] https://seekingalpha.com/article/4327929-crown-castle-international-corp-cci-ceo-jay-brown-on-q4-2019-results-earnings-call-transcript?part=single [/mfn]
Meanwhile, T-Mobile and AT&T are advertising “Low-band 5G” that they confirm is actually slower than decent 4G, including their own. Verizon will do the same before June 2020. They’ve already fooled most of D.C. and are praying consumers don’t realize they are being fooled or don’t care.
If you assume that 5G must be significantly better than 4G, then the U.S. is a little ahead of Europe, maybe 10% covered but with so few subscribers no one will release the figures. T-Mobile, using Sprint’s 160 MHz of 2.5 GHz spectrum, will very rapidly build across the country. T-Mobile’s 2.5 GHz spectrum is golden: it has good reach so it’s less expensive to deploy and delivers good performance. Its logical path forward is to deploy 5G in that spectrum to 70-80% of the U.S. in short order. April: I’ve inferred from T-Mobile capex plans it will cover 80-85% of the U.S. in about three years.
Verizon and AT&T will either have to speed up the millimeter build (unlikely,) somehow get mid-band spectrum, or pray consumers don’t realize their low-band 5G is often slower than their 4G. Verizon is deploying hundreds of radios in the new, shared, CBRS spectrum (3.55-3.7 GHz) and has persuaded D.C. to take back hundreds of MHz back from the satellites in 3.7-4.2 GHz but T-Mobile should be able to pull far ahead.
Actually securing the spectrum is taking time despite the political power of the companies. It will require two auctions and numerous court cases. Most of it will not be available until 2021 or 2022. AT&T has already deployed “low-band 5G” (850 MHz) which AT&T VP Gordon Mansfield confirms is often no better than their 4G.
T-Mobile has committed to 80% & 90% coverage as part of the merger deal. It also pledged to keep capex at the level of the combined companies, more than enough for a rapid deployment. It will have a much better network than Verizon or AT&T. That could inspire them to build faster and offer great promotions.
The politicians are doing an incredible job fooling themselves. First, they’ve told each other that 5G could transform the economy. The telcos D.C. front, the CTIA trade association, invented a fake “Race to 5G.” They refuse to believe their eyes when they read the sworn testimony of T-Mobile CTO Neville Ray that 5G at best would be 20%-50% faster.4 In practice, 4G is faster because 5G carrier aggregation and LAA are not yet developed.
May update: The 3.4 million 5G phones sold in Q1 are very encouraging. 15 million or more 5G phones now appear likely in 2020. 2021 estimates should be raised to 30-50 million.
Population by country, in millions (UN figures via Wikipedia)
| China | 1439 | 18.69% |
| India | 1380 | 17.92% |
| United States | 331 | 4.30% |
| Indonesia | 274 | 3.55% |
| Pakistan | 221 | 2.87% |
| Brazil | 213 | 2.76% |
| Nigeria | 206 | 2.68% |
| Bangladesh | 165 | 2.14% |
| Russia | 146 | 1.90% |
| Mexico | 129 | 1.67% |
| Japan | 126 | 1.64% |
| Ethiopia | 115 | 1.49% |
| Philippines | 110 | 1.42% |
| Egypt | 102 | 1.33% |
| Vietnam | 97 | 1.26% |
Countries from 97 million to 300 million people
The next 12 nations are about 20% of the world population, Japan is the only country in this group with more than very modest plans for 2020. Russia may or may not build rapidly in 2021. Vietnam is included in this group because it has aggressive plans.
By 2023 & 2024, 5G costs will be low enough operators likely will deploy fairly widely in countries like Indonesia, Pakistan, and Nigeria. 5G capacity, especially from the use of 3300-4200 MHz spectrum, will deliver a better Internet. My estimates would be 5-25% 5G in 2025. With political will, 5G will spread even faster. People I respect strongly disagree.
Indonesia The 274 million Indonesians nominally have over 300 million mobile connections. More than 150 million are Internet-connected, nearly all of which are on mobile. Minister of Communication Johnny G Plate in January 2020 said, “Don’t rush to 5G.”5 5G will be modest until 2022, but I’d expect the very competitive Indonesian telcos will expand rapidly after that.
Pakistan Zong, owned by China Mobile, advertised its 5G trial until requested to stop by the government. Prime Minister Imran Khan has called for rapidly releasing 5G spectrum.6 It’s a very fluid situation; if Zong or another carrier starts building 5G, things could move fairly rapidly.
Brazil Telefonica Brazil has 11 million homes passed with fiber to the home, about three times as many as British Telecom and Deutsche Telekom combined. The economy is large enough that companies like Huawei are manufacturing domestically. Parent company Telefonica is one of the most technically capable in the industry. It is selling off the rest of its Latin American companies but intends to strengthen Brazil. American Movil/Claro will begin 5G in Brazil and other countries this year, probably modestly.
There’s little announced 5G and the country is in an economic crisis. But it is capable of remarkable advances.
Nigeria Nigeria is proud to be the largest country in Africa with politicians who regularly bemoan its Internet backwardness. Despite a billion dollars in fines, MTN of South Africa refuses to provide a decent Internet. It’s the largest telco in Nigeria and it should do better. I was shocked that CEO Rob Shuster said
This [4G] is the technology that would be used for very specific cases. It would not be a technology for everybody because most people don’t need it, your phone works fine on just 3G … What we are doing now is to learn from the technology and get our network ready for it but I think 3G is much more relevant in most of our markets, [mfn]https://www.benjamindada.com/5g-network-nigeria/ [/mfn]
Shuster has been very successful but that is nonsense. 4G and 5G are about 90% less expensive per bit than 3G. The upgrades will more than pay for themselves in cost savings. Mukesh Ambani’s Reliance Jio has signed almost 400 million subscribers in less than 4 years, all 4G. He’s actually profitable because the 4G costs are so low.
In 2014, Stanford Professor Paulraj told me that MU-MIMO will be the cost-effective way to bring enough capacity for a decent Internet to countries like Nigeria. It’s since been proven that 4G or 5G in the mid-band spectrum, using 64 small antennas of Massive MIMO, is remarkably cost-effective. MTN is a huge international conglomerate with thousands of engineers, some very respected. Any one of them can confirm the advantages of 4G & 5G.
Both Rwanda and Myanmar have 90% 4G coverage despite per capita incomes much lower than Nigeria. I’d like to believe things will get better in Nigeria in a few years.
I don’t know whether the decisionmakers are uninformed or …
Bangladesh
Bangladesh’s economy, I was surprised to discover, “Has grown 188 percent since 2009.” [mfn] https://www.weforum.org/agenda/2019/10/bangladesh-is-booming/ [/mfn] $30 billion of textile production has moved here from China. It has a huge pool of programmers ad engineers graduating from college every year and a rapidly growing Internet. April: Coronavirus is deeply hurting textile exports.
“Bangladesh’s telecom minister has again said that the country will roll out 5G services by the year 2021, and that the government will ensure that the services spread across the country by the same year.” [mfn] https://www.dhakatribune.com/opinion/op-ed/2019/10/26/are-we-ready-for-5g [/mfn]
I have to do more research but it may be a factor in 2023 and later. Huawei already has a large team in the country and is promoting 5G.
Russia
Vladimir Putin and Xi Jinping had a historic meeting in 2019. To firm up the alliance, Huawei and MTS, Russia’s largest carrier, agreed to build a 5G network, starting in Moscow. Huawei is investing heavily in Russia, including large research and training centers. I haven’t seen any significant 5G announcements for 2020 but expect substantial progress after that.
Mexico
Carlos Slim’s American Movil is deploying 5G in all of its Latin American territories. Historically, it has been slow to upgrade but markets like Brazil are becoming competitive.
Japan
Seizo Onoe, NTT DOCOMO CTO, has long been an international leader in 5G. His presentation, The Myths of 5G, was very influential in the tech community. In 2017, he presented data strongly suggesting that 5G deployments would not be more expensive, which is now proven correct.
Onoe and his peers at Softbank and KDDI can match the capability of any other telco. They could easily build whatever the companies choose to invest in and could have been world leaders. DOCOMO instead cut capex 15% and the carriers agreed to hold up 5G until just before the 2020 Olympics. I’ve found no data on how fast the carriers will build.
The wild card here is the new fourth carrier, Rakuten, which is building one of the most advanced networks in the world. Tareq Amin started winning awards as a pioneer even before things were really working. Cloud native RAN, SSN, NFV, huge Edge Cloud, and every other buzzword. The cost per bit should be among the lowest in the world, although it’s months behind schedule.
It’s just getting rolling in March 2020 with projected prices half that of the other three. It’s all 4G for now. The upgrade to 5G was originally set for June 2020 but will likely be late.
In Italy and Canada, the carriers upgraded to meet the new fourth carrier. I expected similar in Japan but capital spending has been modest. The companies aren’t providing estimates and I don’t want to make a wild guess.
May update: NTT DOCOMO released a plan for 2.5 million 5G subscribers by the first quarter of 2021 and a rapid coverage increase next year. Rakuten’s 5G, as expected, is not yet ready.
Ethiopia
Telcos from many parts of the world are bidding billions for the rights to compete with the current state-controlled monopoly. Two are likely to win franchises. The prices of 5G gear has come down so rapidly it may be included. Ethiopians need a better Internet; Mid-band Massive MIMO, 4G or 5G, is the right technical solution.
Philippines
China Telecom and local investors are building a new third carrier with strong government support. CT is partnering on 250,000 5G radios in 2020 in China. It easily can deploy in the Philippines, but I haven’t heard anything concrete.
Egypt
Etisalat is rapidly deploying 5G in the Gulf. Vodafone offers 5G in all its European networks. Orange has begun 5G in Europe. I believe that the government should demand the companies also bring 5G to Egypt, but I find no evidence that’s about to happen.
Vietnam
Viettel has become an international giant, with 110 million subscribers across 11 countries:
- Laos
- Cambodia
- Haiti
- Mozambique
- East Timor
- Peru
- Cameroun
- Burundi
- Tanzania
- Myanmar
An investment of over $1B has brought 4G to ~90% of Myanmar. It is controlled by the Vietnamese military and strongly supported by the government.
The BBC is skeptical about Viettel’s plan to build its own 5G equipment. [mfn] https://www.bbc.com/news/technology-51178369 [/mfn] The country has been growing at about 6% per year for the last six years and intends to become a technology powerhouse.
Viettel plans to begin 5G in June 2020 and deploy widely in 2021.
Further Countries
| DR Congo | 87 | 1.13% |
| Germany | 84 | 1.08% |
| Turkey | 83 | 1.08% |
| Iran | 83 | 1.08% |
| Thailand | 69 | 0.90% |
| United Kingdom | 68 | 0.88% |
| France | 65 | 0.85% |
| Italy | 61 | 0.79% |
| South Africa | 59 | 0.76% |
| Tanzania | 58 | 0.75% |
| Myanmar | 54 | 0.70% |
| Kenya | 53 | 0.68% |
| South Korea | 51 | 0.67% |
| Colombia | 50 | 0.65% |
| Spain | 47 | 0.61% |
| Argentina | 45 | 0.58% |
| Uganda | 44 | 0.57% |
| Ukraine | 44 | 0.57% |
| Algeria | 43 | 0.56% |
| Sudan | 43 | 0.56% |
| Iraq | 39 | 0.51% |
| Afghanistan | 38 | 0.49% |
| Poland | 38 | 0.49% |
| Canada | 37 | 0.49% |
| Morocco | 36 | 0.47% |
| Saudi Arabia | 34 | 0.45% |
| Uzbekistan | 33 | 0.43% |
| Peru | 33 | 0.42% |
| Malaysia | 32 | 0.41% |
In brief
In Western Europe, the telcos seem to be investing more in pr than in 5G deployments so far. The Gulf countries are doing much better. The UAE, Dubai, Qatar, and Saudi Arabia are building quickly. Only Saudi Arabia has enough people to affect worldwide 5G figures.
Latin American and African potential should not be underestimated. The key advantage of 5G is greater capacity, which is badly needed. African telcos, many African owned, have connected hundreds of millions. They have the skills and substantial capital.
Some smaller countries – Ireland, Taiwan, Australia, UAE, Scandinavia, Benelux – will have fast growth but not enough consumers to make a large difference in world totals.
Europe
Europe is 2 or 3 years behind Korea and China. With the exception of Xavier Niel’s Eir (25%), I believe no European carrier has revealed current coverage or 2020 coverage plans. No subscriber counts are available, presumably because the count is remarkably low.
For the moment, the outlook is very pessimistic. I hope that changes.
DT & Vodafone have made many assertions, but as far as I can determine have upgraded fewer than 3% of their sites. Telefonica Deutschland has interesting ideas and has just raised capital spending $200 million. That’s enough to put them ahead.
The Brits, Spaniards, Turks, and Italians are just getting started. None of them have indicated they will reach even 10% coverage in 2020, although I’m hopeful about BT. The French, in cooperation with the government, haven’t even begun.
Vodafone and Telefonica, as challengers in several countries, would normally be much more aggressive.
This has to be considered both a market and a regulatory failure.
Turkey, in both Europe and Asia, has a large, Internet savvy population and a great deal of potential.
Latin America
American Movil of Mexico, with companies in most Latam countries, promised to begin 5G in 2020 across the network. Telefonica will do similar, at least in Brazil. None have announced substantial plans. It’s natural for Latam to grow rapidly between 2022-2024.
Uruguay months ago announced it had begun offering commercial 5G service, but I’ve seen few facts on the ground.
Africa
Put bluntly, the Internet sucks in most of Africa, with caps so low you can’t watch many videos. The only way to change that is by adding wireless capacity because landlines are few.
Despite that, Kenya and many other African countries have an exciting Internet culture.
Massive MIMO with plenty of spectrum (100 MHz or more) is the best technical response. There’s enormous amounts of spectrum available from 2.5 to 4.2 GHz if regulators are effective. That band was designed for 4G, which works well. Almost all new equipment is 5G, not 4G, which will be the common choice.
GSMA predicts only 3% of Africans in 2025 will be using 5G. That would be a serious failure of regulation.
Arab world
The Gulf States are probably second only to Korea in 5G deployment. Starting in 2018, Dubai, Abu Dhabi, Qatar, and even Oman have competed for who can make the earliest and most extravagant claims. The actual build lagged the announcements but is substantial.
Saudi Arabia, an affluent country with good 5G coverage and 34,000,000 people, is large enough to matter for the figures.
North Africa, Jordan, Syria, and Iraq have little beyond announcements so far.
South Asia
Thailand, Singapore, Malaysia, and Vietnam have ambitious plans. Even Myanmar has 90% 4G coverage despite extreme poverty. The civil qualities of the governments are unfortunate, but they have done a relatively good job delivering communications.
Key Factors
Number of phones sold
With similar populations, Indians bought ~158 million phones in 20197 while the Chinese bought more than twice as many.
1/4 of phones sold in China in January 2020 were 5G. If that trend continues, China would sell ~100 million 5G phones in 2020. The % of 5G phones will probably increase enough to reach 150 million.
India is unlikely to reach 25% 5G phones until 2023 or 2024. Even then, it will only amount to 40 or 50 million phones. That would be twice any likely European country but far beneath China.
Overall, smartphone sales have been flat to down the last two years. People are holding on to their phones longer because three and four year old phones work fine. That’s likely to continue, keeping annual sales around 1.5 billion.
April: Q1 2020 was far down and recovery looks very slow.
Price of phones
Decent 5G phones in China cost $285 (Xiaomi.) It will fall rapidly as 11 companies are chasing a market where only 4 or 5 can make a profit. The parts cost of a 5G phone is only $20-45 more than a 4G phone. The gap is narrowing as less expensive chips reach the market,
5G phones in Europe and the United States cost from $800-$1500. It only costs about $1 to airfreight a phone. Carriers that bring China prices to the West will see a surge of sales. Xavier Niel, I’m looking at you. April: Several $400-500 phones have been announced in Europe and the U.S.
The important band for 5G is from 3300-4200, both in China and around the world. If the telcos don’t step up, others will and customers will buy sim-only service.
The price coming down will be particularly important in India. It has a large middle class that can absorb tens of millions of 5G phones. When the price falls to $150 and less, hundreds of millions of Indians can buy 5G. That is likely in 3-5 years.
Price is also important in Latin America. Argentina, Mexico, and Southern Brazil have higher per capita incomes than China. American Movil will offer 5G in the major Latin American countries in 2020. Initially, coverage will be modest but in a few years Latin America should see a significant 5G take rate.
Africa is experimenting with 5G and will deploy modestly north of the Sahara and in South Africa. Kenya has an ambitious Internet startup culture. South Africa and Egypt have substantial middle classes. However, volume 5G will depend on the price trend.
5G phones March 2020 Source: Analysis Branch/Dave Burstein
| Company | Model | Release date | Size (Inch) | #Rear Cam | Grams | Battery | Price China | Chip |
| Huawei | Mate 20 X 5G | August 1 | 7.2 | 3 | 232 | 5000 | 900 | Kirin |
| Huawei | Mate X Fold | October 2019 | 2500 | Kirin 990 | ||||
| Huawei | Mate 30 Pro 5G | Dec 2019 | 6.5 | 4 | 198 | 4500 | 810 | Kirin 990 |
| Huawei | Mate 30 5G | Dec 2019 | 6.6 | 3 | 196 | 4200 | 710 | Kirin 990 |
| Huawei | Honor V30 | Feb 2020 | 6.6 | 3 | 4100 | 470 | Kirin 990 | |
| Huawei | Honor V30 Pro | Feb 2020 | 6.6 | 3 | 4200 | 550 | Kirin 990 | |
| Huawei | Nova 6 5G | Decenber 2019 | 6.6 | 3 | 212 | 4200 | 550 | Kirin 990 |
| Huawei | P40 | March 2020 | Kirin 990 | |||||
| Huawei | P40 Pro | March 2020 | 5 | Kirin 990 | ||||
| Lenovo/Motorola | Z6 Pro 5G | March 2020 | 6.4 | 4 | 185 | 4000 | 455 | |
| LG | V50 ThinQ | July 2019 | 6.4 | 3 | 183 | 4000 | 700 | Qualcomm 855 |
| Nokia | 5G | March 2020 | ||||||
| OnePlus | 7 Pro 5G | June 2019 | 6.7 | 3 | 216 | 4000 | 840 | Qualcomm 855 |
| Oppo | Reno 3 5G | 12/1 | 6.4 | 3 | 181 | 4025 | 458 | MediaTek chip |
| Oppo | iqOO 5G | 3/1 | 6.4 | 4 | 215 | 4440 | 510 | |
| Realme | X50 | 1/1 | 6.6 | 4 | 202 | 4200 | 360 | Qualcomm 765 |
| Samsung | A90 | September 2019 | 6.7 | 3 | 206 | 4500 | 825 | Exynos, 855 |
| Samsung | Galaxy 10 5G | May 2019 | 6.7 | 4 | 198 | 4500 | 800 | |
| Samsung | Galaxy S20 | March 2020 | 6.7 | 4 | 188 | 4500 | Exynos or Qualcomm | |
| Samsung | Galaxy S20 Ultra | March 2020 | 6.9 | 4 | 222 | 5000 | Exynos or Qualcomm | |
| Samsung | Note 10 5G | August 2019 | 6.3 | 3 | 168 | 3500 | Exynos, 855 | |
| Samsung | Note 10+ 5G | August 2019 | 6.3 | 3 | 198 | 3500 | 855 | |
| Samsung | Fold | Sept 2019 | 7.3 | 3 | 263 | 4235 | 855 | |
| Sony | Xperia 1 II | June 2020 | 6.5 | 3 | 4000 | ?1300 | 865 | |
| Vivo | iQOO 5G | August 2019 | 6.4 | 3 | 196 | 4500 | 536 | Qualcomm 855 |
| Vivo | X30 | January 2019 | 6.4 | 3 | 4350 | 470 | Exynos 980 | |
| Vivo | X30 Pro | January 2019 | 6.4 | 4 | 4350 | 570 | Exynos 980 | |
| Xiaomi | Mi Mix 3 5G | July 2019 | 6.4 | 2 | 218 | 3800 | 700 | Qualcomm 855 |
| Xiaomi | Mi 9 Pro | November 2019 | 6.4 | 3 | 4000 | 520 | ||
| Xiaomi | Redmi K30 5G | January 2019 | 6.7 | 4 | 4500 | 285 | Qualcomm 765 | |
| Xiaomi | Mi 10 | Qualcomm 865 | ||||||
| ZTE | Axon 10 Pro 5G | August 2019 | 6.5 | 3 | 175 | 4000 | 710 | Qualcomm 855 |
| ZTE | Axon 10s Pro | ?March 2020 | Qualcomm 865 |
May update: All the above are releasing new 5G phones. Lenovo/Motorola is in the game with high ambitions.
Coverage & Competition
Except Ireland and maybe Switzerland, no major European country claims even 10% coverage of 5G. The claim is made that European demand is weak. Of course demand is weak. Why would people pay the very high prices of European or U.S. 5G phones when they virtually can’t use them anywhere?
Every survey and measure of demand, as well as the Asian experience, suggests many will choose 5G. I believe that the first carrier with decent coverage and reasonably priced phones will gain a major advantage. (People I respect strongly disagree.)
—————-
A thought experiment Say a carrier like Telefonica Deutschland covered 20% of Germany in the next 4-6 months and publicized 75% coverage next year. Say they offered decent phones at 25% higher than the China price, with many between $370 & $550. Say – as is likely – that the competition coverage is ~10% and growing slowly. Say the price per month of 5G was similar to the price of 4G. (It is.)
How many people would switch?
Consumer surveys find many would change providers. The early Korean experience was a large shift to LG Uplus until KT and SK caught up.
Telefonica Deutschland (or Vodafone Germany) could do that by raising capex $200-350 million. That’s a rough estimate for upgrading several thousand existing towers. Upgrading selected towers just isn’t that expensive.
Make your assumption about how many of the 82 million Germans will switch. Add something for the value of being perceived as the most advanced. Do the arithmetic.
It’s absolutely the right move if the competition does not change plans to match. I’m 90% sure it makes sense even if the other companies decide to catch up. Networks take time to build. It would probably take 6-12 months to plan and build, enough time to more than recover the costs.
Using Telefonica Deutschland as an example is deliberate. It recently raised capex ~$200 million. It’s public comments do not suggest a rapid expansion of 5G so far. Xavier Niel’s Eir has covered 25% of Ireland. Vodafone (and AT&T) are holding back against the strong advice of technical experts.
———————–
Korea reached 93% coverage in the first year. China installed 132,000 radios in 2019 and has 550,000 in the plans for 2020. Even Ireland is 25% covered.
70-80% by 2022 is practical in almost every developed country by 2022. At most, it would require pulling 1-2% of sales into capex a year or two.
It’s been clear since the middle of 2019 that the cost of 5G deployments is not higher than 4G. NTT DOCOMO CTO Seizo Onoe has been calling the high cost of 5G a “myth” since 2016. The experience of the first year, including Sprint in the US, proves he is right.
22 out of the first 24 5G networks are mid-band. Massive MIMO – 64 small antennas – delivers the reach and performance of 4G 1800 in 5G 3300-4200. The cost isn’t small, but telco capital budgets are huge.
If 5G is important, almost every developed country should be mostly covered quickly.
Government promotion is making a difference in Korea and China
From Angela Merkel to Donald Trump, western leaders have declared the importance of 5G. Except for releasing mid-band spectrum, the governments have done very little that has resulted in more deployment.
The telcos have used the desire for 5G to advance their agenda but haven’t built very much. In the U.S., the FCC reduced telco payments for pole attachment and municipal right of way because the telco people in DC said that would result in a massive increase in small cells. A year later, small cell deployments are below previous plans.
Nearly all “incentives” for telcos fail at their primary purpose. Instead, most become boons to the companies and the shareholders. Few officials can stand up to the company lobbying, especially the million dollar silver tongues in D.C. with budgets in the hundreds of millions. It’s called “regulatory capture” and is not quite ubiquitous.
My completely unscientific observation is that typically only about a quarter of the funds spent efficiently serve a purpose such as reaching the unserved; more go to waste and company profits. But the results vary widely. Nearly all of the U.S. Broadband Stimulus was wasted. The U.S. Lifeline $10/phone for the poor does have waste, but most of the money connects people.
On the other hand, Korea “urged” the companies to build, with specific targets. The Chinese gave a firm direction “Accelerate.” In both cases, the government set 5G as a priority and worked directly.
Similar could be achieved in other countries by attaching requirements to the decisions telcos need. Rarely is this done well, but Mathias Kurth successfully required filling in the “white spaces on the map” before LTE spectrum could be used in the more profitable cities.
It seems like every fourth story in the Chinese tech press trumpets 5G and how it will transform the economy. People’s Daily & Xinhua also are loaded with promotion. The telcos would have to spend billions advertising to achieve as much.
Xi himself has called 5G a crucial part of the recovery plan. In China, when the leader speaks, everyone falls in line, including almost all of the press.
The government owns the telcos. Since Minister Miao Wei in Spring of 2019 said “Accelerate 5G,” the response has
Spectrum
Spectrum is only a major coverage factor in countries that haven’t distributed mid-band. As I write, that includes the U.S. and India but both are moving forward. In countries where most telcos have 80 or more MHz between 2.5 GHz and 4.2 GHz, more spectrum is unlikely to have much effect.
80-100 MHz in mid-band has enormous capacity, more than most carriers are able to sell. Where carriers have mid-band, purchases of higher frequencies are for the future or to prevent competition.
More spectrum will reduce carrier costs in time, a good thing. It’s possible added But it will be years before a meaningful impact is likely.
3300-4200 MHz is the primary frequency for 5G. 5G is designed to use a 100 MHz band of spectrum, which is nearly never available below 2500. Massive MIMO, deploying in 4G since 2016, makes this band practical for mobile.
2500 MHz is also important. It’s in use at China Mobile and Sprint, both of whom are getting excellent results. 2500 MHz is golden spectrum, with good reach and low buildout costs.
Millimeter wave – 24 GHz and up – has gigabits of capacity, about three times as much as mid-band. The only carrier in the world with extensive plans for mmWave is Verizon, which will use lower frequencies for the majority of its network to keep the cost down.
Everyone agrees that millimeter wave will be necessary one day if demand keeps expanding, but most think that day is far off, probably a decade. AT&T, Telstra, the Japanese, and the Koreans have modest plans for mmWave but little deployment. Neville Ray at T-Mobile U.S. believes mmWave will be cost effective in certain high-traffic locations and has invested heavily in spectrum. This was a big win for the mmWave advocates because Neville had been one of the strongest critics.
I continue to recommend that most telcos do a trial or even a modest deployment of mmWave. Adding mmWave requires extensive staffing training and revised systems. Neither can be done quickly if you discover you need to expand your capacity.
Hans Vestberg of Verizon believes the greater capacity of mmWave will prove a strategic advantage. That’s possible, although Hans has never given specifics beyond fixed wireless in some locations. If Verizon proves to be on target, your competitor might follow and force you to do likewise.
Having multi-gigabit mmWave in your network can be great for image and pr. Everyone wants to be the best, but few have capitalized on the reputation as well as Verizon has. Verizon was first in the U.S. to fiber to the home and was first in the world in 4G. It was perceived to be much better and in many ways it was.
I’m confident that a (modest) effort in mmWave is good insurance against surprise moves from the competition. It should more than pay for itself in marketing.
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