5G is different from 4G in at least a few ways, says Ericsson. When looking back at when 4G networks were launched, there were real questions about when to adopt, on the part of mobile operators. So far, 5G introductions show global adoption, with about 15 times the number of 5G network launches in the first year, compared to the pace of 4G network launches.
On the supply side, In the first year 5G infrastructure was commercially available, 59 networks were launched. In its first year (2010), 4G had but four launches.
Trends on the demand side also show faster adoption than 4G. Some 17.7 million 5G subscribers were gained in the first year. For previous mobile generations, reaching the same volumes took 10 quarters for 4G, 11 quarters for 3G, and 14 quarters for 2G.
What might not yet be clear is whether early adopters will gain a disproportionate share of subscription growth, as was the case when 4G launched. Ericsson likens the pattern to “winner take all.”
The compound average growth rate for the 49 “first mover” 4G network operators worldwide was 8.5 percent up until 2018, at the same time as the remaining 238 services providers declined by 1.95 percent.
That might require some explanation. Perhaps the first movers were operators in economies with stronger economic growth, bigger internal markets, higher average revenue per user, mobile operators with higher profit margins and revenues to begin with.
The caveat is that 5G is likely not a “silver bullet” that automatically confers revenue growth advantages on every mobile operator, in every market, without exception. First movers arguably have other reasons to believe they will reap the advantages of higher growth.
Consider edge computing and internet of things applications, which many believe will drive new use cases and revenue. As often is the case, opportunities hinge on scale. Outside of China, the United States and Europe, large internal markets, financial incentive and other favorable preconditions might not exist.
There are other differences. The 4G business model focused on the consumer value proposition, notes Peter Linder, Ericsson head of North American 5G customer engagement marketing.
In contrast, 5G is likely to favor use cases in enterprise and business markets. At least that is what enterprise executives say they believe. Fully73 percent of enterprises polled by Ericsson saw first-mover advantages as the most important strategic objective for 5G.
The desire to be perceived as innovative (54 percent), and the understanding that 5G is key to digital transformation (53 percent) also are top advantages seen by enterprise executives.
Some other differences between 5G and 4G early deployment might not be so different, though.
Ericsson notes that the initial performance difference between advanced 3G (HSPA with a maximum 168 Mbps downstream speed) and 4G LTE (maximum 150 Mbps) was small.
But that was not the case in every market, and was complicated by the fact that some markets launched WiMAX, which did offer speeds quite substantially faster than 3G, earlier than 4G was available. In such cases, the user experience of 4G might have been quite a bit better than 3G. My own experience was that WiMAX was notably better than 3G, as U.S. networks were not then notably fast.
And many early 5G launches have not supplied a user experience dramatically different from 4G. That especially is the case where 4G is advanced and 5G uses low-band spectrum or even mid-band spectrum in many cases. Networks using millimeter wave are the exception, but such deployments have not been widespread, yet.
The point is that in the early transition to 4G, the performance improvement might not have been significant in all markets. In some, though, 4G really was a noticeable improvement. Despite Ericsson’s hopes, 5G might have similar early outcomes. The 10-times-better speed might not initially be widely available. Nor might consumers actually reap advantage from the higher speed. Beyond a certain point, faster access speeds do not improve user experience for today’s apps.
Still, 5G is getting first-mover activity by service providers on a wider scale than did 4G. Whether that matters, in the long run, is perhaps dependent on what new use cases and revenue models can be created, and where.
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