skip to main content
Close Icon We use cookies to improve your website experience.  To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy.  By continuing to use the website, you consent to our use of cookies.

Straight Talk Service Provider

 

Ovum view
Modern communication networks provide a lifeline that in a time of crisis can help to deliver critical services, sustain commercial activity, and allow human interaction to continue. Longer term, 5G promises to extend networks’ role deeper into the social and economic fabric, with significant associated benefits.

However, this early in the technology lifecycle, 5G looks more like something of a luxury when set against the impact of the COVID-19 pandemic, barring a few exceptions where it has been used to support medical services during the crisis. Most probably, and for many reasons, 5G rollout will almost certainly be significantly slower than was anticipated for 2020, with China being a possible exception.

As commercial activity stalls and business plans are overturned, all sectors are experiencing disruption to global supply chains. Network equipment vendors suggest that these are so far being managed effectively with zero impact, but maintaining production facilities in seriously affected markets is likely to become more challenging over time. So too is access to alternative sources of materials and components when existing markets are affected.

Reduced levels of staffing at operators, vendors, tower companies, and related engineering businesses will be a consequence in the short term as outdoor activity is curtailed, with field staff stretched as they work to maintain services throughout the present crisis. Coupled with reduced capacity for equipment manufacture and testing, this may well put a natural brake on 5G deployments.

Reduced demand expectations are also causing smartphone manufacturers to cut back on component orders and reduce sales forecasts for affected countries for much of 2020. As retail stores shut down, consumers who want a 5G phone will find they are increasingly difficult to obtain.

The recently announced delay in 3GPP Rel 16 and 17 could impact 5G uptake for the next several years as well. Spectrum licensing is also likely to be put on hold or at least postponed until the crisis begins to recede.

Overall, network traffic may well increase rather than decrease as virtual communications and e-meetings replace face-to-face working. But as the workplace switches from the office to the home, domestic broadband networks and fiber will fulfil much of this displaced activity and extra demand.

Network operators may well conclude that 5G is best given a lower priority until normal service can be restored. This will have the advantage of allowing more resources to be given over to maintaining or upgrading existing networks, enabling them to remain resilient, and keep services available to the widest possible section of the population.

The progressive geographical spread of the COVID-19 virus and hoped-for recovery that follows will mean that those markets that suffered the effects earlier may be the ones that recover sooner. Nevertheless, by the end of 2020 it is almost certain that 5G rollouts will have progressed a lot less than was previously anticipated, with progress needing to be re-assessed and forecasts revised.

It must be hoped that this will only be a temporary setback for 5G, but in the current climate, pressing ahead with scheduled deployments would seem impractical, and a reevaluation of 5G timelines is inevitable.


Straight Talk is a weekly briefing from the desk of the Chief Research Officer. To receive this newsletter by email, please contact us.