It is a truism that the next generation of mobile networks coexists with the prior generations for quite some time. That observation is true also for the “next generation” of fixed networks as well. Some might argue that often, if not always, leads to a “cap and grow” strategy, where investment in the legacy networks are curtailed in favor of building the next-generation platform.
Such transitions always pose a concrete problem for infrastructure suppliers, service and device suppliers. All would like to maximize revenue of the legacy products while new product sales volumes scale. Some might argue that especially is true for 5G, which actively builds on many investments in 4G, ranging from near-term use of the 4G core network and tower sites, as well as dynamic spectrum sharing allowing a 5G radio to use 4G spectrum.
On the other hand, suppliers making such transitions often argue that the legacy products still offer high value. While logical and in supplier interest, projections for mobile network capital investment suggest the “cap and grow” strategy is precisely what will happen.
GSMA Intelligence predicts that, on a global basis, mobile infrastructure spending is going to remain mostly flat through 2020. And history suggests that will not change post 2020, as more 5G networks are built.
Many forecasts predict a decline in 4G investment, logical in light of the completion of most 4G network builds.
And many rightly predict that 5G capex will start to grow by about 2021.
The big takeaway is that if mobile infrastructure capex remains relatively flat, but 5G networks must be built, there has to be a shift from 4G capex to 5G capex. That is not to say 4G is going to lose its status on the driver of the majority of retail revenue.
But in a flat capex environment, if funds are shifted to build 5G, 4G investment has to drop.
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