5G hype needs a reality check

Mike Roberts/Ovum
5G Insights

Beware 5G hype...

Companies across the mobile industry are hard at work developing 5G technology, but it’s still three years until the initial 5G standard is finalized, and five years until 5G services launch. But we’re already seeing 5G reality clouded by 5G hype - for example, Ericsson recently released a forecast that 5G will have 150 million subscriptions globally at the end of 2021, just a year after services are set to launch. For the forecast, however, Ericsson defines a 5G subscription as follows: “A 5G subscription requires a device capable of supporting LTE Evolved or NX, connected to a 5G-enabled network, supporting new use cases.” NX is defined as the new radio access technology for 5G. This definition means that the vast majority of early “5G subscriptions” will actually be via 4G “LTE Evolved” devices, given that one of the early barriers to adoption of 5G will be limited availability of 5G devices.    

This method of defining a 5G subscription makes sense - as 5G will rely heavily on 4G and its evolutions - but inflates the early potential for 5G. A more traditional definition of a 5G subscription would be something like: “a 5G commercial device connecting to a 5G commercial network.” Similarly, a 4G subscription is commonly accepted as a 4G LTE commercial device connecting to a 4G LTE commercial network. HSPA+, which is an evolution of 3G, has been marketed as 4G in some regions, but we should not let marketing claims change the reality that HSPA+ is not actually 4G.     

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5G Insights February 2016

...and IoT hype    

5G will be the first system built from the ground up with the IoT in mind, but beware the massive hype of the IoT market. In 2009, Ericsson issued its famous prediction that there will be 50 billion connected devices worldwide by 2020, a forecast echoed by other vendors such as Cisco. However, in June of this year Ericsson redefined its forecast and revised it down to 26 billion connected devices by 2020. Then in November the group refined the forecast to 28 billion connected devices in 2021.

Different groups have very different approaches and methodologies to address the challenge of forecasting connected-device numbers. But cutting a forecast roughly in half suggests an element of hype in the initial forecast. And if companies used the initial forecast to build their business cases, what happens to those business cases (and overall businesses) when half the expected market disappears?

Ovum does not have an overall forecast comparable to Ericsson’s, but our forecast for cellular M2M connections can be compared to one segment of the Ericsson connected devices forecast.

Ovum projects that cellular M2M connections globally will increase from 297 million in 2015 to 660 million in 2020, while Ericsson expects devices with cellular M2M connections to increase from 400 million in 2015 to 1.5 billion in 2021.

Mike Roberts is practice leader for the Americas at Ovum

This article was first published in Telecom Asia 5G Insights February 2016 edition

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