The tendency to see 5G mobile services as a “race” with winners and losers is hard to shake, even if it is largely meaningless. Whether any particular country adopted 4G earlier or later did not ultimately matter. Virtually all countries have most of their users on 4G networks, whether they started earlier or later. The same will happen with 5G.
To the extent there is a “race,” it is among winners and losers supplying infrastructure products. But mobile service markets are not zero sum games, with winners and losers. Some might argue that countries with higher early adoption of 5G have economic, social or other advantages.
But such “advantages” are hard to separate from all the other sources of advantage: stable legal systems, clear property rights, well-developed infrastructure, educational attainment, good credit markets, high gross domestic product or critical mass in key knowledge industries.
Countries in the Asia-Pacific region that are late in adopting 5G technology will get insignificant revenue from the services, Moody's Investors Service said. That statement likely must be qualified, though.
"For the late adopters Bangladesh, India and Indonesia, we do not expect material 5G mobile service revenues over the next 12 to 18 months," the report said. In and of itself, that is a simple enough observation.
Countries with high 5G take rates necessarily will have far-higher revenues than countries that have not yet launched, or are in early stages of adoption. That does not mean long-term take rates will be materially different, given enough time.
Profit margins or gross revenue are dictated by any number of underlying conditions: costs of doing business in any country; consumer ability to pay; the competitive structure of mobile service provider markets; size of gross domestic product and other general economic health metrics.
Such underlying conditions often lead to “later adoption.” But the later adoption is a reflection of the underlying market conditions, not its cause.
Among the four early adopter markets, Hong Kong SAR, China was the first to roll out 5G services, and its 5G adoption rate will be the highest, the report said.
That is almost a tautology. By definition, high rates of adoption by mass market customers means high revenues. Low adoption means lower revenue, at first.
To be sure, India has had a history of high spectrum license fees and taxes that will reduce mobile service provider profits. But India also was relatively late to mass deploy 4G. Having only recently done so, there is reduced appetite to undertake yet another major wave of capital investment. So yes, 5G deployment will be more measured.
That has nothing to do with deployment timing. It has everything to do with fundamental costs of creating widespread 5G availability at reasonable prices and sufficient profits to sustain operations. It has everything to do with the recent major investments to bring 4G to market. There is no “race” to adopt 5G that pits nations against each other in terms of user adoption.
Every market will adopt 5G at levels at least commensurate with overall mobile adoption in each country. Eventually, 5G adoption will be near ubiquitous in every country, just as mobility itself becomes ubiquitous over time in every market and country.
The four pioneer markets, which include (South) Korea and China, will maintain their lead in the adoption of 5G services,” the report said. That would normally be the case for any nation early in the 5G launch period, when take rates are low. "
There is nothing terribly surprising about that conclusion. Early adopters, with strong mass market adoption, generate more revenue than later adopters that are only beginning to commercialize 5G.
There is no “race” between countries in terms of mass adoption of 5G. Earlier adopters of 5G also tend to have other economic advantages that make early adoption possible. Later adopters likewise are shaped by underlying market conditions. But later adoption still leads to full adoption.
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