By Damian Martinez, journalist at G&M News.
There is an exciting time ahead, as leading communications service providers are now preparing to build high-performing, open and programmable 5G networks. Today, the main connectivity offerings for consumers and enterprises are based on a best-effort performance model.
High-performing, open, programmable networks that utilize 5G standalone (SA) architecture provide new opportunities for service innovation and open possibilities for performance-based business models. In this sense, 5G is an innovative platform for driving digital transformations of business and society.
The deployment of 5G is still ongoing and is far from being completed. The industry continues to see a robust uptake of 5G subscriptions worldwide, anticipating the addition of nearly 600 million new 5G subscriptions in 2024. To fully realize the potential of 5G, there is a need for continued deployments of 5G SA and more densification of mid-band sites. To date, around 50 service providers have implemented or launched 5G SA in public networks, and the global expansion of 5G mid-band coverage is primarily propelled by extensive operations in India and North America.
Impressive numbers
Looking into the future, it is expected for 5G to become the dominant mobile access technology by subscription in 2028. Global 5G subscriptions are forecasted to reach close to 5.6 billion in 2029, making up 60% of all mobile subscriptions at that time. It is projected that North America will still have the highest 5G penetration in 2029 at 90%, followed closely by the Gulf Cooperation Council (GCC) at 89% and Western Europe at 86%.
At the end of 2023, North America had the highest 5G subscription penetration globally at 59%. In Northeast Asia, penetration reached 41%, followed by GCC countries at 34% and Western Europe at 26%. 5G subscriptions increased by 160 million during the first quarter of 2024, to total 1.7 billion.
Previous systems are falling behind since subscriptions for 4G now total 5.2 billion, dropping by 26 million during Q1 2024. In fact, 4G subscriptions are projected to continue declining to around 3 billion by the end of 2029, as subscribers keep on migrating to 5G. On the first quarter of 2024, 3G subscriptions fell by 37 million, while 2G subscriptions cut by 41 million. 2G and 3G network sunsetting continues around the world.
The timeline for this transition varies based on the country and service provider, but the phase-out of 3G networks is anticipated to happen more quickly than for 2G in the coming years. For example, an overwhelming majority of service providers in Europe are currently shutting down 3G networks to reform spectrum for use with 4G and 5G, while maintaining 2G for legacy Internet of Things services. Around 300 service providers have now launched commercial 5G services, and 50 have deployed or launched 5G standalone.
North America: A closer look
In the United States, 300+ million people (90%) live in areas served by 5G low-band from all three tier-1 service providers, while 210-300 million are covered by 5G mid-band. Furthermore, 5G mmWave is deployed in major metropolitan areas. These significant distributions reflect commitment to technological advancements and innovation five years into the 5G deployment cycle. The rapid network build-out has enabled 5G smartphone subscriptions to grow faster than any previous generation.
Today, 59% of North American smartphone subscriptions are 5G, with 53% of U.S. subscribers and 37% of Canadian subscribers satisfied with their 5G services. With the introduction of 5G, there are now various data plans beyond fast and reliable connectivity services. Four 5G data plan building blocks stand out: micro-segmentation of the market, differentiated connectivity, service bundling and commercial bundling. These building blocks are the basis for between two and four data plans per target segment.
The combination of powerful networks that hold customers’ growing data traffic needs and attractive plans has led to monthly post-paid churn rates of below 1%. With 5G, service providers have been able to turn the declining revenues per subscriber that characterized 4G into growth. Revenue expansion is still below inflation and will depend on connectivity, device and application innovations to deliver on the full 5G potential.
Smartphone market recovery in 2024
Smartphone shipment growth is back after nearly a three-year decline, with a year-on-year increase of 6% in the first quarter of 2024. In the high-end device segment, Artificial Intelligence (AI) powered smartphones are becoming increasingly available, while the mid- and lower-tier segments are refreshing their offerings and experiencing double-digit augment. Meanwhile, the replacement cycle of smartphones has been prolonged in recent quarters, as consumers hold on to their devices for longer due to growing financial and environmental concerns.
However, AI and new chips for on-device AI might move more users to upgrade their devices. Multiple new extended reality (XR) device models are expected to come to market during 2024, but mass-market uptake is still limited. 5G non-standalone (NSA) networks are dominating the market, but there are compelling reasons to move to a 5G standalone (SA) architecture.
Low-cost devices will play a big role in the continued 5G smartphone market uptake, as the low price point will facilitate 4G device replacement in price-sensitive market segments. There are industry initiatives to provide SA-only devices, with 4G-LTE fallback, but no NSA support, addressing the sub- USD 100 smartphone market segment.