Is 550 million 5G subscribers in 2022 Too Many?

Will there be 550 million 5G subscribers in 2022 as Ericsson forecasts in its latest mobility report? I highly doubt it – here’s why.

LTE is a very successful technology that commercially began to roll out in the US, Japan and Korea in 2010 timeframe. Today, it includes over 520 live networks and over 1.3 billion subscribers (1.7 b per Ericsson’s report), recording 100% growth in one year. The reasons for fast adoption of LTE comes down to:

• Validation of data services stimulated by the iPhone launch in 2007; before this date, the ‘killer app’ was still missing.
• Need for US, Korean and Japanese operators such as Verizon, Sprint, KDDI, SKT, and LG for a new technology to get off CDMA/EV-DO.
• Availability of new spectrum such as the 700 MHz digital dividend band, 2.3 and 2.5 GHz bands.
• 3G is a poor technology for handling data services; LTE at least doubled the spectral efficiency of 3G.

Looking at these factors, the case for having a 5G technology reaching 550 m subscribers becomes challenging because:

1. LTE has a rich roadmap to enhance its performance which makes the business case for 5G more challenging forcing carriers to look for new, yet unvalidated, applications to drive revenue.
2. The need for 5G framed around capacity is not alone a sufficient incentive to deploy. In fact, 5G will provide small advantage over LTE in terms of spectral efficiency.
3. The spectrum situation is tighter today than 5-10 years ago when large swaths were becoming available. Spectrum in sub 6 GHz is more limited and new spectrum will take longer to reach the market. Little harmonization exist among major player and trends point towards new ways of awarding and using spectrum.
4. The standards for 5G are expected to finalize in 2018 (phase 1) and end of 2019 (Phase 2). Adding the time required for availability of commercial solutions, testing, certification, etc. it takes on average 2 additional years for commercial launch.  LTE standard, for example, was first released in 2008 while commercial deployments started in 2010/2011.

Considering that much of India, Africa and Latin America still need to get on LTE, in addition to emerging opportunities such as private networks, there is an argument that the growth of LTE may be longer than expected as 2G and 3G networks are turned off in favor of LTE.