Ericsson’s annual Mobility Report provides a detailed update on the health and status of the mobile industry, alongside a detailed forecast of how changes in mobile application, media and service delivery are driving changes in network data consumption. And interestingly, it comes around the time of this year’s much-awaited Mobile World Congress underway in Barcelona.
The 2021 edition of this flagship publication[i] now suggests that fifth-generation (5G) services are well on the road to mass-market adoption. The telecommunications equipment manufacturer estimates that over 160 communications providers already deliver 5G services in one form or another, with over 300 5G handset models either announced or launched commercially. We expect global 5G handset shipments to grow 7% year on year in 2021, despite the current shortage of semiconductors caused by the Coronavirus pandemic. The cost of 5G handsets is also falling to US$250 outside China and US$400 for devices with support for high band Millimeter Wave (mmWave) connectivity favoured by telcos in the US.
While there will be around 580m mobile subscriptions with a 5G capable device in use worldwide by the end of this year , the global statistic masks significant variances in regional progress. North-East Asia (predominantly China, Japan and Korea) hosts the most extensive penetration of 5G connections, followed by North America, the Gulf Co-operation Council (GCC) countries, and Western Europe. Adoption rates in North America will accelerate over the next five years to the point where, by 2026, the report projects that the region will have the highest share (84%) of 5G subscriptions at 84%.
At that point, there will be 3.5bn 5G subscriptions globally, accounting for around 40% of all mobile subscriptions. Fourth generation (4G) connections currently makeup approximately 58% of those subscriptions but will peak this year at 4.8bn before declining to 3.9bn by 2026 as 5G gains momentum.
Operators are exploring multiple ways to differentiate their 5G services, both from rivals providing and encouraging consumers to upgrade from their existing 4G subscriptions. These most commonly include offering larger buckets of, and sometimes unlimited, data designed to drive up usage. Serviced-based packages optimised for access to video and music streaming platforms (and one-off content downloads) are also growing in number. A relatively new addition to that proposition is gaming passes, sold as add-ons to standard subscriptions with performance guarantees around low latencies, capacity and bandwidth.
Smartphones at the epicentre of mobile traffic growth
Smartphones are at the core of mobile network traffic growth, generating around 95% of all data transmitted in 2020 – and that proportion is expected to increase over the next five years. An estimated six bn smartphones currently account for around 76% of all mobile subscriptions and will grow to 88% of the share (7.7bn devices) by 2026.
Whereas the average data usage per smartphone on a global basis now is around 10GB, which will increase to 35GB by the end of 2026, predicts Ericsson, which notes that people in some countries consume much more smartphone data than those in others. India, for example, had the second-highest average monthly mobile data usage per smartphone rates at the end of 2020 (14.6GB, forecast to hit 40GB by 2026).
Consumption trends are accelerating fastest in South East Asia and Oceania, including Australia and New Zealand. By 2026 however, the increased availability of 5G capacity will have helped push North America and Western Europe to deliver the highest rate of mobile data traffic per smartphone at around 48GB.
The volume of data consumption tends to depend on three factors: improved smartphone capabilities such as higher definition screens and speakers; the availability of data-intensive content; and greater capacity delivered by 4G/5G infrastructure upgrades. Increased digitisation of services too can have an impact, as can be seen in India as more of the country’s population adopt things like digital payments, remote health consultations, eCommerce/online shopping and video conferencing and collaboration.
Data-intensive applications lead the way
Data-intensive applications, predominantly video, will drive much of that expansion as smartphone users watch increasing amounts of films, TV shows and video clips in high definition and even 4K resolutions. These often stream through subscriptions to over the top (OTT) video streaming services like Netflix, Disney+ and Amazon Prime Video. Video accounted for 66% of mobile data traffic in 2020 and is expected to generate 77% by 2026.
Multiple industries – including retail, healthcare and law enforcement – also see the increased capacity, coverage and reliability of 5G networks as an opportunity to deliver new services. Ericsson cites a report published by its subsidiary Cradlepoint and IDG last year – The State of Wireless WAN 2020 – indicating 72% of organisations are confident that 5G will prove an enabler for innovative services that utilise artificial intelligence (AI), virtual (VR) and augmented reality (AR) technology.
One 5G use case is evident from plans within the retail industry to introduce beacon-based systems that track shoppers visits to deliver personalised marketing campaigns to their smartphones, such as remote shopper engagements and fittings using virtual assistants.
The volume of the diversity of smartphone-centric applications and services that 5G will enable for the first time is impossible to predict, but what we do know is that the next five years are likely to see mobile innovation on a mass scale.