December 1 2018 is a landmark date in South Korea’s telecom history, the date when it became the first nation to launch 5G services for B2B customers. Four months later, South Korea was also the first to launch mobile 5G services on 3 April 3, 2019, just one hour before Verizon’s 5G launch in the US.

Fast forward to today, let’s look at how 5G is faring in South Korea.

Operators launched B2B first because enterprise clearly was a strategic focus for them. Today, we see how that played out.

Examples of 5G supporting various verticals abound, including SK Telecom’s partnership with Samsung Heavy Industries building a 5G based autonomous navigation system to allow ships to move to a set destination on their own. And KT, for its part, claims 150 B2B use cases with 53 business agreements secured by the end of 2019.

On the consumer front, as of September 2020, 5G connections accounted for around 15 per cent of total mobile connections in the country, crossing the 9 million connections mark. This sets the stage for our estimate of more than 40 million 5G customers by 2025, accounting for 66 per cent of the total connections.

And beyond connections?

Today, 30 per cent of total data traffic is already being routed over 5G networks nearly doubling its stake within one year. LG Uplus reported the average data usage per customer on its 5G network was more than double 4G at 26.8 GB per month at the end of Q1. The 5G launch also helped the market to stabilise declining ARPU at around $25, starting 2019.

South Koreans are known to be early technology adopters. Coupled with handset subsidies and high consumer awareness, we arrived at the following figures for 5G adoption (see chart, below, click to enlarge).

[1]

But this is not whole story. The support from the Korean government to provide tax support to domestic operators if they expand nationwide 5G coverage to 70 per cent by 2025 was also a big contributor to rollouts and uptake: capex increased significantly from less than $3 billion from 2015 to 2018, to more than 2015-2018 to more than $4.8 billion in 2019, with a further $4 billion expected in 2020.

This explains the deployment of 115,000 base stations by operators (76 per cent of the total guidance by the government for a complete roll-out) by March.

This is quite Impressive. But what is the result of this investment and impact on consumers?

OpenSignal data on network performance from October shows:

In Q3, the average 5G download speed was only 5.6-times faster than LTE at 336Mb/s, which is far below the typical rate expected for 5G services.
Users are able to connect to a 5G network only 22.4 per cent of the time. The availability of 5G is largely limited to Seoul capital region and six metropolitan cities.

While initial uptake has been impressive, the above challenges could have a clear, negative impact on South Korea’s 5G roadmap. Even if consumers aren’t directly impacted, the reputational damage could paint 5G in a negative light. But what can be done to remedy it?

Commercialisation of mmWave for enterprise use: There is no dearth of narrative on how the full potential of 5G can be realised with the help of enterprise use cases. The demand for 5G capabilities from vertical industries, in turn, could drive wider adoption of mmWave technologies. Unfortunately, the mmWave spectrum (28GHz) acquired by operators in 2018 has not been put to commercial use yet. There is some progress, with all the South Korean operators ordering 5G base stations on this spectrum from Samsung. KT has also started the testing with ultra-reliable low-latency communication (URLLC) technology for latency-sensitive applications including factory automation, autonomous driving and remote surgery. Expediting the progress on 28GHz would help cater to the requirement in various verticals. At the same time, by highlighting the full potential of 5G, enterprise and consumer users will come to see the technology in a better light.
Launch of standalone: Currently, 5G services are offered on non-standalone networks. The ability of standalone (SA) networks to offer network slicing, or support mission-critical applications with ease will allow operators to work with a wide range of enterprises across verticals. On the consumer side, the use case for SA 5G gets less attention. But if low-latency consumer applications (gaming, AR/VR and so on) are improved, then the result should be a net positive.
Improve indoor coverage: Coverage being one of the pain areas for customers, action in this direction will help retain existing customers and attract new users. The government plans to deploy around 2,000 indoor 5G base stations, which hopefully should help improve customer satisfaction levels.
Offer wide range of handsets: Limited availability of compatible devices and high prices can be a deciding factor for consumers to not opt for 5G. Operators should look to partner with multiple manufacturers to offer a wide array of handsets ranging from affordable to premium. These devices, in addition with attractive tariffs, will help maintain strong 5G uptake and set grounds for future.

To sum it all, while 5G has got off to an incredible start in South Korea, there is still much territory to be explored. The commercialisation of 28GHz and SA 5G networks will unlock a wider range of opportunities in the enterprise sector, while addressing coverage and device demands should help to retain and attract customers on 5G.

It will be interesting to see how it all evolves.

– Ankit Sawhney – research manager, and Mansi Goel – research analyst, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/wp-content/uploads/2020/12/GSMAi_SouthKorea_connectionsbytechnology.jpg

Full confession: I have never been to Qualcomm’s Snapdragon Tech Summit. Sure, I am attending the virtual version this year, but I never made it out to the in-person, real world, on the beach in Hawaii version. I’ve been invited. But something always got in the way.

I’m regretting that, more than ever, this year. In part because any trip beyond my local grocery store now feels like the adventure of a lifetime and, in part because this is the first Snapdragon Summit taking place against the backdrop of full-on 5G commercialisation. While 5G networks were up and running in 2019 and services were being sold, by the end of the year were just shy of 13 million 5G connections, less than 1 per cent the number of 2G connections. (Remember 2G?)

This year, we expect more than 230 million connections [1]. That’s a big number. Combined with the more than 100 operators and in excess of 150 device models supporting the technology, it highlights 5G is now a very real, mass-market technology. So, of course, we were all expecting something big at the 2020 Snapdragon Tech Summit.

And what did we get?

We got the Snapdragon 888 [2], the latest iteration of Qualcomm’s flagship application processor family. The fact there would be a new top-end Snapdragon offer was a given. And, to be completely fair, some of the advancements were (broadly) predictable based on market and technology trends. A new 5nm architecture, for more efficient performance. An upgraded AI processor and capabilities (nearly two-times the operations per second), playing to Qualcomm’s R&D in the space and the importance of AI in an increasing number of everyday applications. Upgraded CPU and GPU components, further boosting performance. A new imaging processor, because all phones are cameras and image quality resonates with consumers. The integration of Qualcomm’s X60 modem, something the vendor has been criticised for not doing in the past.

There’s a lot to dig into here and a whole lot to like. Who doesn’t like faster, better, and more power efficient? But, rather than talk about features (which plenty of other folks will do), I’d like to look at the marketing of the new processor. Why? Because it tells us something about the market, and Qualcomm’s place within it.

Snapdragon 875 versus 888. Snapdragon 845 begat the Snapdragon 855, which begat the Snapdragon 865. You’d be forgiven, then, for expecting a Snapdragon 875 this year. Naturally, the significance of the number 888 in Chinese culture is at play here. Media, analysts and other market pundits have already weighed-in on possible explanations: a geo-political olive branch against the backdrop of painful trade wars, a nod to Qualcomm’s Chinese OEM partners, a hopeful designation. These, largely, ignore one of the biggest 5G dynamics of 2020: Chinese consumers have driven 5G adoption faster than many people expected and lower-cost 5G devices have been a key driver. In 2021, as 5G momentum picks up, Chinese consumers will have access to even more affordable devices, though, all else being equal, Qualcomm and its OEM partners would rather they went premium. How to incentivise that behaviour? Give those premium devices an application processor with massive cultural significance. Make the choice between a 768-powered device and an 888-powered device a truly emotional decision. Qualcomm’s change in Snapdragon naming convention is about more than trade wars or success aspirations. It’s about recognising the role of China in driving global 5G volumes and guarding against the potential erosion in device pricing.
A Careful Balancing Act. Recall the potential erosion in device pricing I mentioned? Like just a few lines ago? Well, Qualcomm knows about it and has enabled it by offering multiple tiers of Snapdragon processors. The flagship 8-series. The 7-series supporting what the vendor calls “in-demand premium features.” The 6-series, “designed for performance efficiency and versatility.”  The 4-series, “designed to support the most popular smartphone and IoT features.” All will support 5G in 2021. Taken as a whole, they allow OEMs and operators to put 5G in the hands of more people, not just those who can afford top-tier devices. That’s a good thing. A very good thing. It also means that Qualcomm and partners need to carefully explain the benefits of going premium, without discounting the value of lower-end chipsets and devices. Every operator and device maker understands this dynamic. And, where the Snapdragon Summit’s opening keynote referenced the importance of “premium experiences” multiple times, this is clearly top of mind for Qualcomm. It might not be a new challenge, but the democratisation of 5G devices combined with operator interests in monetising new 5G use cases makes this a particularly relevant challenge in 2021.

If you are still considering the titular question (whether or not the Snapdragon 888 is a marketing exercise), the answer is yes: it was always going to be. Any new commercial effort (from any company), will be one part marketing and one part product.

The distinction here is we are not talking about any old product. We are talking about a product which will power some of the most powerful 5G smartphones in 2021. It is also a product from one of the market’s most adept marketers: Qualcomm has mastered the art of tying the progress of the mobile industry (and standards) to its own R&D while weaving in a broader context around consumer demand, supply chain, and political evolutions. Think one part pragmatism, one part tight-rope walk, or a game of four-dimensional chess for those of us who perennially lose at checkers/draughts.

What we get, then, with the Snapdragon 888 launch is more than just marketing or product innovation. We get an encapsulation of myriad market drivers, demands and dynamics, a miniature (5nm to be exact) representation of the mobile ecosystem circa 2021 and a reminder of why I need to find the time to get to Hawaii next year.

– Peter Jarich – head of GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://data.gsmaintelligence.com/research/research/research-2020/global-5g-landscape-q3-2020
[2] https://www.mobileworldlive.com/featured-content/top-three/qualcomm-specs-up-snapdragon

The international community has set several ambitious targets when it comes to internet connectivity. The Broadband Commission for Sustainable Development aims to reach 75 per cent broadband internet user penetration by 2025 (or 65 per cent in developing countries), while the World Bank’s Digital Economy for Africa initiative seeks to ensure that every individual, business and government in Africa will be digitally enabled by 2030.

While such targets are welcome, achieving them remains a significant challenge, particularly in Africa where almost 75 per cent of the population, or 950 million people, do not access internet services. By 2025, almost 60 per cent of the population are still expected to remain offline.

To close this digital gap, it will be necessary to address a number of barriers to adoption, as well as the coverage gap, those living outside of areas covered by mobile broadband networks. Of the 600 million people which do not have broadband coverage, half live in Africa and one of the key barriers to expanding coverage is spectrum policy. The scale of the challenge is highlighted in a new study by GSMA Intelligence, Effective Spectrum Pricing in Africa [1]. This report, which is unprecedented in scope and depth, tracks spectrum assignments across nearly 50 African countries during the 2010 to 2019 period. The key findings are:

Governments in Africa have assigned approximately half the amount of mobile spectrum compared with the global average. This gap in spectrum assignments has emerged and expanded over the last decade, making it difficult for many African operators to offer fast mobile broadband speeds. African governments have also, on average, licensed 3G and 4G spectrum around three years later than other regions.
Countries in western and northern Africa account for a large proportion of the highest spectrum prices globally. Adjusting spectrum prices by income, Africa accounts for about half of all the extremely high spectrum prices worldwide, with most of these concentrated in western and northern Africa. Spectrum prices in the continent are twice as high as the global average and four times higher than in the developed world. Niger, for example, has seen some of the highest spectrum prices in the region during the last decade and some of the lowest levels of mobile broadband coverage, network speeds and mobile adoption.
Licensing more spectrum earlier and at affordable prices can pay dividends for African consumers. Higher amounts of spectrum and lower prices are strongly linked to higher population coverage, download speeds and adoption. Countries which have assigned spectrum earlier have also achieved higher coverage levels. This is consistent with previous research [2] on the topic. For example, Kenya released mobile broadband spectrum earlier than most other countries in Africa and it has assigned one of the highest amounts of coverage spectrum per operator. Partly as a result, mobile broadband has now reached more than 95 per cent population coverage.

These findings have important policy implications. Operators can only invest in networks and deliver high-speed services to businesses and consumers if governments award enough spectrum at affordable prices, especially when the impacts of Covid-19 (coronavirus) are constraining growth in the private sector and the economy more widely. Furthermore, the longer-term economic benefits of doing so far outweigh any short-term public revenue gains. Connecting all of Africa to mobile internet by 2030 would add 5.5 per cent to projected economic growth over the next decade and it also help reduce poverty.

So what should governments do?
First, they should release more spectrum to expand coverage, improve network quality and encourage mobile adoption. This includes any spectrum left over for use in the 900MHz, 1800MHz and 2100MHz bands as well as spectrum to enable coverage (700MHz and 800MHz bands) and capacity requirements (2300MHz and 2600MHz bands). To realise the full potential of mobile services, authorities should licence spectrum in a timely manner, which enables faster and wider network deployments. Going forward, this will include the spectrum required for new 5G services.

It is also important spectrum policy supports affordable pricing, with well-designed auctions which have clear rules and guidelines. Such auctions should avoid creating artificial scarcity, allow price discovery and they should set modest reserve prices and annual fees. Otherwise, operators may have less ability to invest or, at worst, it will result in vital spectrum not being sold (as happened in Ghana and Mozambique).

Lastly, governments should provide long-term licences and give operators the flexibility to manage spectrum with technology–neutral licences, in order for them to optimise the use of each band. Many countries have now issued technology-neutral licences, some in response to Covid-19 (for example in Tunisia). Indeed, there have been a number of examples of regulators taking measures [3] to mitigate the impacts of the pandemic and enabling operators to maintain quality and resilience in existing networks, as well as rolling out new 5G networks [4]. Such measures, which could be made permanent, offer lessons on how regulators and policymakers in Africa can support operators to continue expanding networks in the coming years, especially given the continued economic uncertainty.

– Kalvin Bahia – economist, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.gsma.com/spectrum/resources/effective-spectrum-pricing-africa/
[2] https://www.gsma.com/spectrum/wp-content/uploads/2019/09/Impact-of-spectrum-prices-on-consumers.pdf
[3] https://www.gsma.com/newsroom/blog/keeping-everyone-and-everything-connected-how-temporary-access-to-spectrum-can-ease-congestion-during-the-covid-19-crisis/
[4] https://www.gsma.com/spectrum/new-zealand-leads-the-way-with-direct-approach-to-5g-spectrum-access/

By the end of this week, both Microsoft and Sony will have released their latest gaming machines, the Xbox Series X (or S) and the PlayStation 5 (PS5).

The launch of a new generation of consoles would normally signal the start of a new console war like the one which raged throughout the 2010’s between Sony and Microsoft. But as the gaming world prepares for the arrival of the new consoles, what is most striking about this generation is how unlike it is to the previous generation.

Although Sony has stayed largely in its comfort zone with the PS5, producing a console whose primary appeal will be its library of marquee exclusives, Microsoft has instead embraced an emerging and increasingly popular subscription-based model for its gaming business. This move leverages its extensive institutional expertise in cloud infrastructure, and has the potential to permanently reshape both the console world and the wider gaming market, with immediate and direct consequences for mobile operators and smartphone OEMs.

How to build a Netflix for games
Our recent Consumers in Focus survey suggests that the PS5 will once again outsell the new Xbox, with 14 per cent of consumers intending to buy it compared with 9 per cent for the Series X and S. But from Microsoft’s perspective, raw unit sales will be much less important than they once were, as its strategy is now built around its Game Pass subscription which allows users to pay a monthly fee to access a library of titles to play on any device including Xbox, PC, or smartphone. As Microsoft CEO Satya Nadella put it, the company’s aim is to become the “Netflix for games.” To achieve this, the Xbox maker has not been shy about investing, spending billions to acquire high-profile game developers to bring high quality, premium titles to its platform. So central is the subscription model to Microsoft’s new strategy, it is even offering the new Xbox bundled in with its All Access Game Pass subscription, for about $10 extra per month.

There are several reasons for Microsoft to be optimistic about its odds of success.

While the console gaming market is relatively small (earlier this year we estimated there are about 778 million console gamers globally), the broader gaming ecosystem is massive, with some 2.5 billion people playing on either a smartphone, a PC, a console, or a tablet. Despite being a nascent business model, gaming subscription services already enjoy reasonably high adoption figures in the gaming community, as 28 per cent of console gamers already have one. [1]And, our survey showed, the top feature drawing current users to gaming subscriptions in the first place also happens to be the one that Microsoft is investing the most heavily in: a large library of high quality titles (see chart, right, click to enlarge).

Our survey shows there is certainly latent consumer demand for a “Netflix for games”, but there are other signs out there that gaming subscriptions are poised for growth. Most notably, there has been an enormous influx of new entrants into the subscription gaming market of late. Beyond Microsoft’s manoeuvring in the console space, Apple recently reshuffled Apple Arcade to fit within its combined Apple One subscription, which will bring the service to far more customers, and now Amazon and Facebook have announced new gaming services. This doesn’t, in itself, mean gaming subscriptions are guaranteed to take off (the industry has been wrong before), but the sheer volume of activity in the space makes it hard to ignore.

What is unique about Microsoft’s strategy is it was first big name in gaming to pursue a largely device agnostic approach to gaming subscriptions. That a legacy player should want gamers to be able to access their games no matter what device they are using is genuinely innovative, and is only possible because of Microsoft’s position as a both a gaming company and a cloud infrastructure heavyweight. The reason this strategy signals a shift not just for Microsoft, but for the gaming industry as a whole, is the move brings a radically different style and calibre of game to the mobile gaming ecosystem. And in terms of competitive landscape, Microsoft has gone from competing head-to-head with Sony (and to some extent Nintendo) in the 2010’s to competing with any company with a presence in gaming, on any platform. Deliberately increasing the number of direct competitors you face may not seem wise, but in so doing, Microsoft has more than tripled its addressable market, mostly by tapping into the massive and under-monetised world of smartphone gaming.

New opportunities in a changed gaming landscape
For the smartphone and telecom sectors, the impact of moving large numbers of console gamers onto mobile platforms is likely to be both immediate and profound. Operators, in particular, should be paying attention to the ways Microsoft is redefining its position in the gaming market, as the ability to stream games over operator networks is central to its approach. This move dovetails with the operator push to roll out 5G, as mobile gaming has been one the key use cases for operators to highlight their new network’s capabilities. Our survey showed console gamers are more interested than average in upgrading to 5G (66 per cent intend to, compared with 45 per cent among non-console gamers), so operators should take this opportunity to convert as many of them as possible, whether that be through a partnership with an established cloud gaming provider, cross-promotion, or some other arrangement. Smartphone OEMs can similarly benefit, as Samsung is doing by offering a trial of Microsoft’s new service bundled with its devices.

As Microsoft moves into new competitive terrain, it leaves a reconfigured gaming industry in its wake. What is certain is that the Microsoft/Sony console wars of the 2010’s are over and a new era has begun. The most likely effect of Microsoft’s moves to bring console gaming to new devices is the collapse of the silos that have traditionally separated different segments of the gaming world. Where hardware was once the crucial factor that decided the games you could play, Microsoft’s manoeuvres could signal the start of new paradigm where games are accessible at any time, from anywhere, on any device. Even a few years ago the idea that Microsoft could pivot to become the Netflix of gaming would have been met with scepticism. But it’s often forgotten that before Netflix grew into the streaming giant we know today, it spent years as a mail-order DVD service, struggling to compete against firmly entrenched legacy players in video rental and pay-TV. Only when it embraced nascent digital streaming technology did it succeed, and in the process it ushered in a new paradigm for online video. It’s possible that in the not-too-distant future, we might recall Microsoft’s pivot to subscription gaming as a bit of history playing out again.

Jason Reed – lead analyst, Digital Consumer, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/wp-content/uploads/2020/11/GSMAI_game_subscription_adoption.jpg