• Research indicates that the apparent telco dither over 5G strategy could be ending
• China and Korea are both showing really positive signs of 5G take-up, despite (or perhaps because of) the pandemic 
• Is a 10% penetration rate the magic moment?

Two research reports taken together make interesting reading for the European 5G industry. One study finds that only one third of European telcos have a clear strategy for 5G. Hardly surprisingly, the study, based on interviews of senior European business leaders, found that around two thirds of  enterprises didn’t have  a 5G plan in place either. 

After all, if telcos don’t have a clear services strategy, it’s hardly surprising to find that many potential enterprise customers don’t have a cut and dried adoption strategy.

The telco position of unpreparedness is all the more perplexing, say the researchers - in this case from NTT DATA UK and research firm teknowlogy Group - since the telcos apparently recognise the “transformative potential” of 5G, but still haven’t nailed down an approach to take advantage of it. 

It’s always possible that this entire “we can’t work out what we’re doing yet” situation may simply be a reasonable position at this point, since the data against which to base that ‘clear strategy’ is probably incomplete in some important respects. Omdia Research may hold the key here.

It reports that only 14 per cent of the world’s 5G networks have reached 10 per cent subscriber penetration so far,  a proportion Omnia’s researchers say almost certainly represents a positive tipping point. After the 10 percent penetration point is passed adoption accelerates and some of the missing telco and enterprise experience data might hove into view making decisions around the adoption easier for both sides. Certainly an accelerating adoption rate by peers in any industry must be a spur to setting out an action plan. 

Omdia says that while 147 operators had launched 5G by the end of June 2021, the data shows that only 14% (21 operators) had now reached 10% subscriber penetration on their networks. However the early signs of what happens after the magic 10% mark are encouraging.

Telcos can take heart from the experience of the leading 5G market in South Korea which showed a clear revenue uplift once the 10% market penetration mark had been passed about a year ago. 

In China, Omdia claims, 5G subscriptions nearly doubled in the first half of 2021 to reach 318 million by June. That’s equivalent to 11% of total mobile connections. Meanwhile, mobile services revenues grew 4.7% and 3.7% year on year in Q1 and Q2 – a level that hasn’t been seen since early 2018.

“We can only speculate about the impact of 5G on service providers until the technology reaches a certain critical mass beyond early adopters. Only South Korea has reached this point and the story there is a positive one,” said Ronan De Renesse, senior research director at Omdia. “Another 24 markets are due to reach 10% 5G population penetration by the end of 2021, 37 in 2022 and over 100 in 2026.

“5G is still in its infancy and we have yet to see its full potential from a technology and commercial perspective,” continued De Renesse. “Similar to 4G when it launched, 5G adoption is mostly supply-led which means that demand for 5G needs to be created by the industry. Operators in China and South Korea have shown that if you put 5G in the hands of consumers then revenues are likely to follow.”