The global pandemic of the coronavirus has had a major impact on every aspect of life from the economy to how we work and play. This year, the deployment of 5G technology, the next generation of wireless communication, was expected to reach new heights after initial deployment took place in 2019. However, due to the outbreak of COVID-19, growth in 5G smartphone sales and network deployment will likely be slowed.
Uncertainty over the impact that the coronavirus will have on 5G deployments and 5G smartphone adoption abounds. While no one has full visibility to the extent of the virus spread, most experts can only speculate.
If the virus follows what has been happening in Asia — where business schedules and social life are beginning to resume — 5G deployment plans could only be delayed by a few weeks or months, according to Dimitris Mavrakis, research director for mobile and networking at ABI Research.
“In fact, the telecoms supply chain is quite robust, and most infrastructure vendors are well equipped to handle potential shortages in components, in case these happen,” Mavrakis said. “So far they have not happened and there are no equipment shortages, nor are they likely to happen in the foreseeable future.”
But if “shelter in place” continues and businesses remain closed, the impact is likely to be far greater.
“Whether consumers are going to go out and upgrade phones in this environment is another question all together,” Jason Leigh, research manager for mobility at International Data Corp. (IDC), told Electronics360. “Conversely news that the mobile network operators (MNOs) are closing retail stores, which tends to be their primary driver of device upgrades and subscriptions will have implications for the overall market in Q1 and likely a good part of Q2.”
IDC did most of its analysis in February before things really worsened and focused more on end-user equipment markets and the manufacturers of those devices.
Impact on 5G network deployment
SK Telecom has replaced in-person meetings with virtual ones and implemented preventive measures against the virus such as on-site disinfection, however, deployment continues.
“SK Telecom is carrying out 5G deployment and operations business while keeping a close eye on the situation concerning COVID-19,” said Lee Jong-hun, team leader of 5GX Infra Innovation at SK Telecom.
Simultaneously, the company is attempting to keep current operations running by using essential personnel for network functions and by providing remote support, Jong-hun said.
IDC’s Leigh said that 5G radio access networks and network equipment could proceed under a social distancing scenario, allowing infrastructure deployment to continue, but it would certainly be at a slower pace. For example, AT&T continues to announce the launch of 5G services in new markets including an additional 20 markets and a new 5G device in the last week, the LG V60 ThinQ 5G.
One of the biggest challenges will be the availability of manual labor and technicians, which could result in a bottleneck. If quarantine continues and people are in lockdown, 5G network deployments will likely suffer delays regardless of how much social distancing can be done. But with more people working from home or other locations that are not the norm, companies will rely on telecom networks for business, and governments will allow operators to deploy networks to cope with added demand.
“While operators will aspire to continue their rollouts, the reality is there is a significant distraction right now as companies, including the operators struggle to figure out how they’re going to manage business processes with large swaths of their employees in new working arrangements,” Leigh said.
Additionally, telecoms are focusing on expanding network capacity and developing new programs to support rollout of nationwide virtual learning. Because of this, 5G may take a backseat in the near term, but things won’t come to a standstill. Leigh expects to see greater clarity on the situation in the next two to three weeks as to what the new normal will mean and how those impacts translate specifically to 5G.
Impact on 5G smartphone adoption
The outbreak of COVID-19 may have a huge impact on smartphone sales because if there are no shops open and no consumers going out to purchase new phones, the market potentially could fall by as much as 30% in the first half of 2020, according to ABI Research.
In the short term, the impact of COVID-19 has been disastrous for the global mobile device market as the supply chains have been disrupted by labor shortages and inactive logistics. As China is the world’s manufacturing center for most of these mobile devices, the sector has been hit hardest by delayed shipments, ABI said.
As far as 5G devices, there will be an adverse effect on adoption.
“No sooner had 5G smartphones started to gain some traction and break into the market in significant numbers, than the outbreak will now trigger a suppression of its near-term growth, pushing out the development and introduction of affordable 5G phones," said David McQueen, 5G devices research director at ABI Research.
As a result, shipment volumes for 5G smartphones in 2020 will be much lower than previously expected, slowed by a stagnant supply chain and crippled demand.
"Undoubtedly, the market will also be faced with numerous disruptions and delays, most notably the launch of Apple's first 5G iPhones that are due to appear in September 2020,” McQueen said.
ABI said with expectations that the outbreak will come under control by the end of Q2, it will take some time and consumer confidence, as well as the supply chain to get back up and running, before things return to normal.
"Aside from taking its toll on both demand and the supply chain, it will particularly affect the industry's eagerness to drive 5G to lower price points in 2020, seriously blunting its growth potential," McQueen said.