Analyst firm raises 5G subscriber forecast by 50%, but profit outlook remains cloudy

Due to the growing number of carriers globally that have committed to launching 5G as early as this year, analyst firm CCS Insight said it is increasing its 5G subscriber forecasts.

“CCS Insight now expects almost 60 million 5G connections worldwide in 2020, a 50% rise on our October 2017 forecast. We have also raised our outlook for 2021, by 25% to 280 million,” the firm said in a new report. “Changes toward the end of the forecast period are more moderate: We still believe the 1 billion mark will be breached in mid-2023, and our projection for 2025 has inched up to 2.7 billion.”

Indeed, much has changed during the past 12 months on the 5G front. The 3GPP late last year released the first standards for the network technology, early than initially planned, thus allowing network equipment providers to build and deploy 5G gear. Later this year, the standards group is expected to release the software portion of the non-standalone version of 5G, thereby allowing operators to upgrade their 5G-capable hardware with that 5G software standard—and then to turn on commercial service.

And, at least in the United States, many operators will do just that. AT&T has promised to launch some kind of mobile 5G service in a dozen cities this year, while T-Mobile and Sprint have said they will turn on commercial 5G service early next year. Verizon, for its part, has said it will launch fixed wireless services using its V5GTF standard—which the carrier has said is very similar to the 3GPP’s 5G specification—in three to five markets this year, and will also launch mobile services in roughly that same timeframe, though the carrier hasn’t provided specifics. Verizon has also said it will upgrade its equipment to the 3GPP’s 5G standard.

As a result, CCS said the U.S. market will lead in 5G. “CCS Insight sees the U.S. as a pioneering market for 5G. We expect it to pass 100 million connections in 2022, equivalent to almost 1 in every 5 connections on a global basis.”

However, the firm warned that the United States’ leadership in 5G will be fleeting. “China may not emerge as the first market to launch 5G, but it will rapidly become the undisputed leader in terms of the number of 5G connections,” the firm wrote. “Size and scale inevitably give China a head start, but political ambition to spearhead 5G developments, combined with the inexorable rise of local manufacturer Huawei prompt us to be bullish about its credentials. Our forecast expects China to become the largest 5G market in 2020 and surpass 100 million connections in 2021.”

CCS said the European continent, however, will lag in the race to 5G.

Although CCS said the global wireless industry is moving toward commercial 5G services much faster than it expected, it cautioned that there still isn’t a clear business model that will set 5G apart from the industry’s previous Gs. Specifically, the firm said that mobile broadband will still represent a huge 98% of all 5G connections even in 2025.

“CCS Insight has no doubt this will be a transformative technology, but the struggle to justify operator business models risks creating unrealistic expectations for short-term uses,” the firm wrote. “New applications will establish themselves over time, as they did with 4G. We know that they will be heavily centred on the Internet of things and mission-critical services, but it is simply too early to present these as a reason to invest and a business case with any level of certainty.”