The global market for the 5G infrastructure is anticipated to witness significant growth in terms of revenue from 2021 to 2027, due to its various benefits such as improved network performance and capacity, enhanced data speeds, and reduced latency. The global demand for this infrastructure will rise exponentially, given the continuous increase in mobile broadband penetration owing to the launch of high-end smartphones and other wireless devices. Owing to these factors, many companies are working on developing a solid subscriber base through expansion plans by offering additional value-added services coupled with lower tariffs. In addition, technological advancements have been made by operators in recent years across all geographies which have led them to introduce 4G LTE networks that support data speeds up to 300 Mbps. To retain their customers and attract new ones, operators are continuously upgrading their existing networks to 5G through the process of equipment upgrades.
There is an underlying shift from 2G/3G/4G technologies towards 5G in most regions due to the increasing penetration of smartphones and other wireless devices among consumers. The increasing of smartphones and internet of things (IoT) devices is expected to bolster the growth of the 5G infrastructure market. The telecom companies are keen to invest in this segment due to the increasing demand for high-speed broadband. The operators are upgrading their existing networks to cater to both voice and data services at higher speeds by introducing 5G, which is set to revolutionize the mobile industry. Operators, including Dutch telco KPN and the US wireless carrier Verizon have already introduced 5G in a limited number of cities in their respective countries.
In terms of geography, the North American region is expected to account for a major share of the global 5G infrastructure market from 2021 to 2027 due to the presence of leading telecom operators such as AT&T Inc., Sprint Corporation, T-Mobile US Inc., and Verizon Communications Inc., which are striving hard to upgrade their existing networks to 5G across various cities using advanced equipment. In addition, many companies operating in this market offers network connectivity solutions under a managed service model that allow to migrate towards 100% cloud-based storage data centers. Furthermore, the Asia Pacific (APAC) region is expected to show tremendous growth in this market owing to the increasing penetration of smartphones and other wireless devices among consumers. The widespread presence of 4G LTE networks across major countries, such as China, Japan, Australia, Korea, and India will contribute to the development of 5G infrastructure in the APAC region during the forecast timeframe.
Current and Future Growth Scenario
Most of the 5G connected devices will be installed on roads and cities, where networks today are patchy at best. To upgrade their infrastructure, telecoms companies need to install fiber optic cables more frequently than before-in addition to radio systems like 4G LTE. And by the end of 2021, IoT devices are estimated to generate 2.9 quintillion bytes of data every single day. That is a massive amount of information. And with 5G data speeds almost 100 times faster than 4G LTE, this data could move in milliseconds. This huge demand for high-speed connections has led companies like Huawei and ZTE to develop chipsets aimed primarily at IoT devices, with speeds up to 10 Gbps (bits per second.)
Huawei's chip can transfer 1 TB of data every 10 minutes. The company is aiming to tap the lucrative growth opportunity considering there will be about seven billion IoT devices connected to the network by 2025. However, the chipsets will become mainstream in the coming 2-3 years. The global 5G chipset market is forecast to top $34 billion by 2025. But telecom companies like Ericsson and Cisco also see applications for these high-speed networks in the traditional smartphone market-where speeds need to be much faster than 4G LTE, enough for users to watch ultra-high-definition video on their mobile devices without any buffering problems. Ericsson conducted a 5G trial in Japan ahead of the 2020 Summer Olympics. The company claims that consumers will be able to watch 8K resolution video on their mobile devices once 5G becomes mainstream by 2021.
But there are several challenges before the technology will become mainstream. Early adopters may likely have to wait until 2025 to experience next-generation connectivity speeds-the same time when current 4G networks may consequently become obsolete.
Players on Deployment of 5G Standalone Infrastructure
Industry analysts have been speculating about the possibility of an initial 5G launch for a few years now. The initial deployment of standalone 5G will occur rather than deploying "5G" as another antenna/radio version of LTE. We are likely to see initial launches in 2020 and 2021 that operate with standalone radios. Our checks suggest equipment makers and operators see value in launching 5G initially with stand-alone features (SA) versus the more advanced options, potentially opening higher returns and demand sooner. We think early technology deployments could use SA radio tech combined with 4G core network enablers, which may simplify the early 5G use cases and equipment design.
The launch of LTE-Advanced (LTE-A) multiple carrier aggregation (MC) has led to rapid adoption by global carriers as it provides a significant speed boost over traditional LTE technologies and offers lower latencies than other radio access technologies for an enhanced user experience. We expect operators will be nervous about deploying this technology without first having 4G core enablers in place to secure their business case and reduce capex exposure. Nonetheless, we believe many will take a wait-and-see approach on SA 4G enablers before deciding to deploy SA MC. For those that do, demand for standalone radio units could be strong given those vendors have already launched pre-standards 5G air interfaces in preparation for 2020/2021 launches.
We believe the initial SA equipment market could be about $1bn across RAN, backhaul, and Fronthaul, split around equally between RAN and core network enablers. This would be higher than an LTE-A MC deployment due to the requirement of independent cells (rather than aggregating multiple carriers over time slots within a single cell), which we expect will require dedicated radio channel bandwidths. We also believe this technology will enable more mobile edge computing applications, such as AI and VR/AR, forcing operators to upgrade their networks with speed and latency requirements that allow for real-time processing of data delivered from the radio access network.
Demand for standalone units could be more than two-thirds of the overall SA equipment market, with RAN accounting for 60% and Fronthaul/Backhaul accounting for 40%. We expect Qualcomm (QCOM), Ericsson (ERIC), Nokia (NOK), and Huawei to be well-positioned in this new 5G radio space given their current technology portfolio and lead over the competition. Other potential winners include Samsung (OTC:SSNLF) and China's Unigroup Spreadtrum (UNTD).
5G Infrastructure Market Competition
In the US, there is a global race for 5G wireless technology. In early February 2017, AT&T announced it would acquire Straight Path Communications to strengthen its position in this technology. This move came shortly after Verizon filed a lawsuit against Straight Path accusing it of infringing on several wireless patents before selling off the company. This trend was further boosted by news that China will set up large-scale 5G test sites covering all city levels by 2020 and has started to evaluate mobile phones with integrated 5G chipsets. The Chinese government has also reportedly applied pressure on national smartphone manufacturers to speed up the development of mobile devices compatible with 5G infrastructure. Globally, there are currently only two commercialized chipsets that support an interface between 4G and 5G.
The evolution to higher frequency bands (the millimeter wave) and the introduction of new network architecture will drive radical changes in wireless communication networks. The capacity, performance, and potential applications of this technology are expected to take a huge leap forward. However, the total cost for all operators worldwide is estimated to reach $300 billion between 2016 and 2025 – yet another motivation for global expansion and escalating competition among existing players.
Industry 4.0 to Play Key Role in Rapid Expansion of 5G Infrastructure
5G not only means faster data transfer rates but also brings significant improvements to overall spectral efficiency – making it possible for more users and devices to connect simultaneously without compromising quality – as well as reduced latency. As 5G supports wider bandwidths (up to 1 Gbps), it can serve even more customers with multiple services beyond wireless communications.
5G-ready ICT (information and communication technology) and 5G software and applications will power the next wave of automation, bringing benefits to several industries: from manufacturing, transportation, and farming to healthcare. More importantly, they will also enable new business models such as the 'Industry 4.0' – which is based on collaborative networking (also known as cyber-physical systems or CPS), smart homes, smart factories, and connected/autonomous cars among others – leading to improved customer satisfaction, reduced costs for operators and faster response times.
The enormous amount of data generated by every device within the 5G infrastructure cannot be processed adequately by humans alone. According to IDC reports, Artificial Intelligence (AI)-driven automation and analytics have already been adopted by almost half of the organizations for use in the IoT environment. Most of these companies (58%) consider cognitive computing as a key element that will help them derive maximum value from their IoT environments and applications.
The key players operating in the global 5G infrastructure market include Nokia Corporation (Finland), Cisco Systems, Incorporated (US), Ericsson AB (Sweden), Huawei Technologies Co., Ltd. (China), NEC Corporation (Japan), Qualcomm Incorporated (US), ZTE Corporation (China) among others.
Key Elements Included In The Study: Global 5G Infrastructure Market
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