Necessity and opportunity both are lining up to drive aggressive 5G adoption in the U.S. market. All four leading U.S. mobile operators will be offering 5G mobile services in 2019, with AT&T and Verizon launching mobile 5G services in selected markets in 2018.
According to GSMA Intelligence forecasts, the United States will experience one of the fastest customer migrations to 5G in the world, with 5G will reach 100 million mobile connections in early 2023. That will make 5G the leading mobile network technology in the country by 2025, with more than 190 million 5G connections (accounting for around half of total mobile connections), excluding use of 5G to support fixed operations.
But more than supply will drive that deployment speed. Aggressive millimeter wave spectrum allocations will be key enablers, especially for AT&T and Verizon.
There are other fundamental reasons for the push into 5G. Simply put, the U.S. mobile market has exhausted its growth model, based on 4G. If one extrapolates from steadily declining revenue growth since 2010, it is possible revenue growth in the core mobile business might actually go negative in 2019. Since revenue growth is a virtual necessity for firms that are publicly owned, that represents a crisis.
Though new revenue sources will have to be created, 5G offers some opportunity for services that actually have not existed on earlier platforms, including 4G. Though everyone expects early revenue upside to come in the area of “enhanced” (much faster) internet access, that expectation must be qualified.
Since 4G adoption is virtually ubiquitous in the U.S. mobile business, customers who adopt 5G access will, by definition, be replacing primary reliance on 4G. So there is substitution going on, replacing 4G accounts with 5G.
There may or may not be incremental upside from such substitution. In the early days, some incremental upside is likely.
Longer term, the hope is that brand new revenue streams can be created in the internet of things (sensor communications) area. There also is hope some new classes of apps can be created in the ultra-low-latency area. Connected cars or 4K and 8K video, plus other latency-dependent apps such as remote surgery come to mind.
The important point is that U.S. mobile operators are going to be aggressive about 5G because the 4G business model has become exhausted.
