5G will account for 21% of mobile internet connections by 2025, up from less than 10% last year, according to the latest forecast by the GSMA. This adoption will be driven by significant investment by mobile operators, which will dedicate more than 80% of their capital expenditure on building 5G infrastructure between now and 2025, the telco industry body predicts.
In its The Mobile Economy 2021 report, published at the Mobile World Congress exhibition in Barcelona this week, the GSMA predicts that more than two-fifths of the world’s population will live in areas covered by 5G connections by the end of 2025. 4G services will reach their peak of just under 60% of total connections in 2023.
Meanwhile, an additional 1 billion people will be using the mobile internet in 2025 compared to last year, the GSMA predicts, with the total number of mobile internet subscribers reaching 5 billion, or 60% of the global population.
What is the economic impact of 5G?
The GSMA claims that 5G will contribute an additional $700bn in value to the global economy by 2030. This growth will be driven primarily by contributions to the services sector (healthcare, education etc.) and manufacturing, due to their ability to incorporate 5G use cases.
This optimism is also evident in a recent EY survey of more than 1,000 executives across eight industries, which found that 74% of companies expect to incorporate 5G in the fabric of their business processes by 2025.
The 5G applications driving the majority of this growth will be enhanced mobile broadband (eMBB) and fixed wireless access (FWA), the GSMA says, each of which will account for a third of the value created.
Global adoption of 5G
Commercial 5G networks are now operational in every region of the world, making 5G a truly global technology, but roll-out is proceeding at different speeds.
Asia Pacific and Sub-Saharan Africa, the two regions with the largest unconnected populations, will witness the fastest growth in 5G connections, the GSMA predicts. Nearly two-thirds of all new subscriptions by 2025 will come from these two regions, with about 188 million from Asia Pacific and about 120 million from Sub-Saharan Africa.
Elsewhere, increasing the number of mobile subscriptions will prove a more difficult task as the market has reached a high level of saturation and expanding infrastructure to reach rural populations across vast territories can put an enormous financial burden on operators. This is a major reason for the delayed 5G rollout in India.
In absolute number of 5G connections, Greater China will far outstrip the rest of the world by 2025, the GSMA predicts. With 828 million connections, China and Taiwan will account for more than half the connections in the world. This is, in part, a reflection of the size of its population, but also the speed with which it is building its 5G infrastructure: while some regions such as Europe and India had to delay the roll-out of 5G technology during the pandemic, China gave a major boost to its mobile operators in their efforts to build the country's 5G infrastructure.
However, 5G will represent the largest proportion of total mobile connections in what GSMA defines as Developed Asia Pacific (Japan, South Korea, Singapore and Australia), with 53%. This will be followed by North America at 51% and Greater China at 48%.
Europe will rank second in the total number of 5G connections by 2025, with 236 million, but it will lag behind North America and Greater China in the proportion of connections using the standards, with just 35% of total subscriptions. This reflects the fact that Europe already has a high level of internet subscriptions (86% of the population in 2020) and smartphone adoption (78% in 2020).
There is at least one area, however, where Europe leads the pack: the adoption of embedded SIM (eSIM) technology. This allows users to download, switch and delete profiles without the need for physical SIM cards. In Europe, 41% of operators now offer sSIM services. Mobile operators are enthusiastic about the benefits of eSIMS with most agreeing that their biggest advantage is the opportunity to sell more non-smartphone mobile devices by linking them to existing subscription plans.
An alternative forecast
Though GSMA's projections paint Europe as somewhat of a laggard in 5G adoption, nothing is written in stone. In a more optimistic forecast, analysis by GlobalData predicts that by 2025, Europe might overtake Asia Pacific as the world's second region in 5G penetration as a percentage of the population at 50%, with North America as the leader at 86%.
The European Investment Bank has funded a number of 5G infrastructure projects across the continent and the European Commission has made a commitment to have all populated areas in the European Union covered by 5G networks by 2030. The Commission has earmarked €150bn from its Covid-19 Recovery Plan for digital investments, and according to its Digital Decade strategy document, a 'significant' part of these funds will be used to finance 5G infrastructure.