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Half of all mobile connections running on 3G/4G networks by 2017

Operator migration to HSPA and LTE driving economic benefits

3G and 4G technologies will account for half of all global mobile connections in five years, according to GSMA Intelligence forecasts.

We calculate that 3G/4G connections combined will account for about 4.25 billion of the 8.5 billion connections forecast by 2017, or 50 percent (40 percent 3G + 10 percent 4G). This is up from a combined 1.7 billion of the 6.5 billion total this year (26 percent).

2G connections are forecast to decline by over half a million over the next five years (down from 4.8 billion) as users migrate to next-generation 3G/4G networks and devices.

In the 3G space, HSPA will continue to account for the vast majority of connections; the technology is forecast to make-up over 30 percent of the global total by 2017, almost double the 16 percent share today. The share of 3G CDMA technologies (EV-DO) will remain flat over the period at about 4 percent, but will grow in absolute terms.

Most WCDMA operators have now upgraded their networks to HSPA and many have deployed dual-carrier HSPA+ in order to offer download speeds on a par with 4G. Our data shows there are currently 260 HSPA+ networks live in 123 countries.

In a report earlier this year, we identified a significant decline in the number of WCDMA-only devices in operator portfolios over the last two years as these were replaced by HSPA-enabled devices. Moreover, almost all data devices (dongles, tablets, mobile hotspots, laptops) are now 3G compatible, with nine out of ten HSPA-enabled.

4G technologies such as LTE, TD-LTE and WiMAX currently account for just 1 percent of the global total but are forecast to account for 10 percent by 2017. The most common implementation of LTE (FDD) is expected to account for about 85 percent of all 4G connections by this point, with TD-LTE at 14 percent.

To date there are currently 117 live LTE networks across 56 countries. An increasing number of attractive LTE-enabled devices are now available, notably Samsung’s flagship Galaxy S3 and Apple’s new iPhone 5.

The migration away from 2G networks is most evident in mature regions such as Western Europe where the split between 2G and 3G/4G connections is already roughly equal.

2G technologies still account for over 80 percent of connections in China and more than 90 percent in India, the world’s two largest mobile markets. However, in highly advanced markets such as Japan and South Korea, migration to 3G/4G has reached a stage where the 2G networks are now being switched off. 2G connections make up less than a quarter of the respective totals in mature markets such as the US and Australia.

A recent study by the GSMA and Deloitte has attempted to ascertain the economic value of network technology migrations.

It calculates that a 10 percent shift from 2G to 3G penetration increases GDP per capita growth by 0.15 percentage points; while a doubling of mobile data use leads to an increase of 0.5 percentage points in the GDP growth rate.

Countries characterised by a higher level of data usage per 3G connection – such as Russia, the UK and South Korea - have seen an increase in their GDP growth of up to 1.4 percentage points. Meanwhile, in developing markets, a 10 percent expansion in mobile penetration is said to increase productivity by 4.2 percentage points.

Calum Dewar, Analyst, GSMA Intelligence:

As of Q4 2012, 3G networks have been deployed by more than 500 operators across 185 countries, meaning that mobile users in more than three quarters of the world’s markets now have access to 3G services. The number of 3G networks worldwide has doubled over the past five years, driving the corresponding increase in 3G market share from 8 percent to 25 percent during the same period, supported by the proliferation of smartphones, tablets and mobile broadband devices. The rapid adoption of 3G networks is a driver of economic growth as identified by the GSMA/Deloitte study and is also playing a critical role in developing countries where fixed internet penetration is low. For instance, China Unicom's 3G customer base overtook its fixed broadband base in August this year - and the operator's 3G base is growing more than four times faster than fixed broadband.
Operators in the developed world have achieved the fastest migration from 2G to 3G/4G networks, especially in Eastern Asia where more than 90 percent of connections in Macao, Japan and South Korea are on 3G/4G networks (some 27 percent of South Korean connections are now LTE). The rate of migration has been such that operators including NTT Docomo in Japan and SK Telecom and KT in South Korea have now switched off their 2G networks to free up spectrum for more 4G capacity. In the developing world, just 16 percent of total connections are currently on 3G/4G networks, compared to 61 percent in the developed world. However, we expect 3G/4G penetration in the developing world to rise to 42 percent in 2017, driven by increasing mobile broadband demand in large countries such as Mexico, Brazil, Indonesia, Russia and China, which will all have more 3G/4G connections than 2G connections by that time.

Global connections by technology generation, 2000-2017

Global connections by technology generation, 2000-2017 1
Source: GSMA Intelligence

1 View a full list of technology classifications used by GSMA Intelligence

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