Breakingviews – 5G will zoom from myth to mass-market reality

LONDON (Reuters Breakingviews) – 5G has had an inauspicious start to life. Though politicians have spent years debating security risks associated with suppliers of the high-speed mobile technology, few people have used it. Conspiracy theorists blamed it for Covid-19. And with mass gatherings like concerts and sports events cancelled, telecommunication bosses had few chances to show off their latest toy. The stage is set for a dramatic coming-out party.

The biggest factor in 5G’s favour is the availability of cheaper handsets. Apple’s new iPhone 12 retails at $799 in the United States, only marginally more than the company’s closest non-5G models. Handsets from rivals like Samsung Electronics or Huawei Technologies can cost as little as $250. Except for the most obdurate Luddites, anybody who upgrades their phone in 2021 will get one that works on new 5G networks.

For telecom companies which have spent billions of dollars buying wireless spectrum and installing kit, having consumers using the service rather than just hearing about it is a relief. In South Korea, historically an early tech adopter, the rollout of 5G since April 2019 has helped arrest a steady decline in the revenue operators extract from each user. SK Telecom, which claimed nearly half of South Korea’s 9.25 million 5G subscribers as of September, reported a nearly 4% year-on-year rise in quarterly sales in November. UK rival Vodafone, whose revenue is likely to fall 3% in its financial year ending March 2021, is watching with interest.

The pandemic offers further cause for optimism. In late 2018, research by consultancy PwC suggested consumers might pay $5 a month more for 5G networks’ improved reliability and ultra-high-speed downloads. After months in which housebound users have been forced to rely on intermittent home broadband connections, that premium will only have gone up. And word of 5G’s superior performance will spread quickly as users return to socialising and comparing gadgets.

The real benefits of 5G lie in commercial applications like smart factories, real-time voice translation, and enhanced-reality gaming. Promised applications such as enabling driverless cars or remote surgery in hard-to-reach locations remain distant prospects. Even so, the power of phone envy means 5G will finally make its mark in 2021.

This is a Breakingviews prediction for 2021. To see more of our predictions, click here.

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