Asia set to lead development of mobile 5G

South Korea, Japan and China are driving the development of 5G mobile technologies in a similar way to how Europe pioneered 3G and North America led 4G, due to a combination of high or rapidly growing levels of 4G adoption, supportive governments and ambitious launch targets linked to flagship sporting events. We expect commercial 5G launches in all three countries by 2020, even though 5G standardisation is not scheduled to be completed until then.

Source: GSMA Intelligence

In South Korea, the high level of 4G maturity means operators see the early launch of 5G as necessary for future revenue growth. SK Telecom expects to deploy a pilot 5G network in the second half of 2016, and KT plans to follow in 2017, both using 28 GHz spectrum. KT aims to use the 2018 Winter Olympics in PyeongChang to showcase its 5G technologies. Any 5G applications offered at the games are unlikely to be paid services, but we expect all three Korean operators to commercially launch 5G by 2020. Given the country’s relatively small geography, the rate of 5G adoption will likely be faster than anywhere else.

In Japan, NTT DoCoMo expects to launch 5G in time for the summer Olympics in 2020, though probably only in host city, Tokyo. While 4G adoption is not as high as in South Korea, the desire to not be left behind neighbouring countries will help drive development of 5G in the country. Japan has been home to some of the most pioneering 5G studies so far; NTT DoCoMo has partnered with 13 vendors to test in frequency bands ranging from 15 GHz to 70 GHz, and achieved a 2 Gbps throughput in ‘real-world’ field trials in the latter range in February 2016.

China lagged both countries in launching 3G and 4G-LTE, but this will not be the case for 5G, with China Mobile planning to start commercial 5G trials in 2018, followed by a commercial launch in 2020. The 2022 Winter Olympics in Beijing is likely to be a showcase of new 5G technologies for Chinese operators. No longer reliant on foreign vendors, China now has some of the world’s largest telecoms equipment manufacturers and has witnessed phenomenal 4G growth. China Mobile had more than 375 million connections on its home-grown TD-LTE network as of March 2016, accounting for almost three quarters of 4G-LTE connections in the market.

However, we forecast TD-LTE as a share of 4G-LTE connections globally to decline from around a third now to a quarter by 2020 as more operators in the developing world launch 4G using the more common FD-LTE standard. Despite room for growth in the domestic 4G market, Chinese vendors will therefore be keen to play a leading role in the development of the next generation so that they can establish patents in 5G technologies. In a market that we expect to exceed 1.5 billion mobile connections (excluding cellular M2M) by 2020, any reduction in patent royalty payments to overseas vendors at the individual device/connection level will be significant.