The State Of 5G In Early 2021, Pt. 2

Note: In part 1 of the series, we covered the state of 5G networks, modems and RF. In this second part, we will cover the state of devices and standards, and what to expect in 2021 and beyond.

The GSA does a great job of keeping track of what kinds of 5G devices are available in market. The organization just released its 5G devices summary for February 2021. In that report, the GSA reports that there are 588 announced 5G devices, out of which 365 are already commercially available (which amounts to 62% of the total). The 365 devices represent a 46.6% increase of available devices in the last three months, a considerable ramping of 5G devices. In the full report, the GSA states that 251 of the commercially available devices are smartphones, an increase of 18 in just the last month. 42 of those devices are fixed wireless CPE devices (both indoor and outdoor), 74 are modules, 31 routers/gateways/modems, 28 hotspots, 11 laptops, 8 tablets and 29 ‘other’ devices. Below is a GSA graph of announced and commercially available devices.

Virtually every single major smartphone vendor claims that 5G devices are driving a lot of their growth and profitability. What’s interesting about the current state of 5G devices is that the prices of devices are coming down from last year. With suppliers like MediaTek and Qualcomm supplying SoCs and modems for the mainstream and even entry-level, we’re already starting to see 5G phones selling for as low as $199 (the LG K92 5G).  A little pricier, but still dirt cheap, the Motorola One 5G and OnePlus Nord N10 5G are both selling for $299. Even mmWave has come down in price—TCL’s 10 5G UW for Verizon starts at $399.  In my personal experience with the phone, the TCL 10 5G UW received 5G mmWave signal just as well as any other device.

There are also plenty of flagship phones with 5G, which is a change from the beginning of 2020 when 5G was an ultra-premium feature generally found in specific 5G models. Nowadays, Apple’s flagship iPhone 12 ships with 5G across the iPhone 12 Mini, iPhone 12, iPhone 12 Pro and the iPhone 12 Pro Max (with mmWave 5G support in all models inside of the US). Samsung has supported 5G across all its flagship products since the Galaxy S20, continuing with this year’s Galaxy S21. What is different this year is that Samsung is supporting mmWave 5G across all three models of the S21. In 2020, only the S20+ and S20 Ultra had mmWave support on certain Snapdragon variants. In addition to Apple and Samsung, Huawei, Oppo, Vivo, OnePlus, Xiaomi and many others have a plethora of 5G devices in market across the globe, most with support for Sub-6GHz 5G bands. However, do keep in mind that Oppo, Vivo and OnePlus are all under the BBK family of companies and the line between these 5G devices continues to blur.

5G is now a standard feature across most smartphone categories and I believe with more chip vendors offering increasingly attractive SoCs for low-cost 5G devices, 5G device ASPs (average sale price) will likely to continue their downward trend. In short, 2020 was the year when 5G became much more accessible to consumers.

State of 3GPP and standards

In 2020, 3GPP Release 16 was finalized and adopted. Most of the industry is building its 5G upon the 3GPP specification. While the 3GPP spec is not a standard, it effectively operates as one to ensure interoperability. For example, the IMT-2020 5G standard depends on the 3GPP’s submissions and Release 16 finalizes those submissions into the IMT-2020 global standard. Release 16 is phase two of the 3GPP spec and overall 5G standard. It enables many new capabilities and broadens the reach of 5G into new industries. Release 16 also integrates the third phase of V2X for automotive with the addition of features like platooning, automated driving, extended sensors and remote driving. Additionally, Release 16 includes industrial IoT and enhancements to URLLC (ultra-reliable low latency communication)—both of which are big opportunities for 5G.

There are additional features that will help broaden the reach of 5G, such as the support for 5G satellite access and mobile communications for railways. There are also many 5G efficiency improvements, including interference mitigation, self-organizing networks, eMIMO, location and positioning, mobility enhancements and many more. Additionally, there is support for 5G NR in unlicensed spectrum which expands the enterprise applications of 5G and gives operators opportunities to shore up capacity where it’s needed.

Ultimately, the 3GPP Release 16 stands to set up the 5G specification and standards for success now and into the future. Release 17 is already in-flight, though it is hurting from what could be a 6-month delay, at least, in the progress of the standard and features within it. I don’t believe this will significantly affect the progress of 5G, though, since few operators have even caught up with Release 15 at this point. Very few operators globally have standalone 5G networks in place, let alone nationwide like T-Mobile. Enabling these networks will be the first real big standardization hurdle. Most devices already support standalone 5G, and have for quite some time now. They’re only waiting on the operators.

What to expect in 5G in 2021 and beyond

Overall, 2021 looks to be a good year for 5G for many reasons. More operators will transition their networks to standalone and build out improved coverage and capacity. Some countries will begin their 5G journeys, like India, where Reliance Jio plans to launch its 5G network in the second half of 2021. India’s 5G launch will likely provide an opportunity for 5G infrastructure vendors and 5G smartphone OEMs to gain share with cost-conscious offerings that utilize technologies like Open RAN. One of India’s hang-ups has been the government’s slow response to spectrum auctions, which was also the case with its transition to 3G and 4G. Many big tech companies have already bet on India’s 5G growth, investing over $20 billion in Reliance Jio in 2020.

2021 is going to be all about operators and OEMs working to improve the 5G experience. We’re seeing that in the latest chipsets from MediaTek and Qualcomm and from operators like AT&T, T-Mobile and Verizon. While I am not entirely sure why Verizon continues to market mmWave 5G like it has, I believe that the company is hoping that the fantastic potential of mmWave will eventually be realized (probably well after the company rolls out its mid-band network). That said, Verizon downplayed the mmWave 5G network, dubbed “Ultra-Wideband,” at its own investor day, combining the nomenclature to also include the company’s CBAND spectrum. (60 MHz of which will come at the end of 2021, with the remainder rolling out through 2023.

I believe that Verizon’s significant push will be in the mid-band spectrum, as the company’s messaging does not realistically make sense for a network whose highest band operates at 2 GHz. While I expect that Verizon will use Open RAN to reduce mid-band deployment capex, I do not understand how the company will be able to achieve enough network density at 3.7 GHz and above to properly take advantage of the bandwidth and speeds in all the places it is needed. T-Mobile’s network is already highly densified to operate at 2.5 GHz and will only deploy CBAND spectrum in areas where it already has enough density. It is clear that Verizon will have to densify and utilize some low-band spectrum to improve coverage on the uplink, but the company even shunned that notion during its investor day.

While I believe that mid-band will be the primary band that most operators rely on for bandwidth and capacity, we’re already seeing some issues that come with 3.5 GHz—especially in regard to indoor coverage. Operators like Verizon and AT&T that are buying 3.7 GHz C-Band spectrum will have to spend billions of dollars to create dense enough networks to accommodate the higher frequency spectrum’s characteristics. Verizon already stated that it will be spending an additional $10 billion over the next three years to deploy its $45 billion in spectrum. Infrastructure vendors like Nokia are beginning to worry about the $95 billion (after clearing costs) that the carriers spent on C-Band. Even Google’s former CEO, Eric Schmidt, penned an opinion piece in the FT on the topic. While AT&T, Verizon and other operators around the world have already begun the groundwork in densifying their networks, they will need to densify even further. This means cooperating with local municipalities to get approvals on new sites, which may prove to be a challenge for operators considering the widespread misinformation concerning the unfounded health risks of 5G.

I believe that the cost of deployment and the need to work around uncooperative municipalities will slow the rollout of the C-Band spectrum AT&T and Verizon so desperately need. I think it will probably be two to three years until Verizon and AT&T start to catch up to T-Mobile on mid-band spectrum. While Verizon did win the majority of the CBand A-Block, which should clear at the end of this year, T-Mobile’s mid-band will probably be almost fully rolled out at that point. T-Mobile effectively has a one-to-two year head start, and with AT&T and Verizon’s combined $70 billion spent on C-Band spectrum, there won’t be much capital left for them to aggressively roll that new spectrum out. We’ve already seen Verizon and AT&T take out financing to pay for the new spectrum and added roll-out costs.

As mentioned earlier, 2021 will likely to be the year when many operators finally transition their 5G infrastructure to SA (standalone) networks rather than NSA (non-standalone). NSA 5G networks still mostly depend on 4G infrastructure, which means that latencies and speeds are not up to par with people’s expectations for 5G. Additionally, features like network slicing are not possible without an SA 5G network—if operators want to make the most of their 5G networks and maximize the user experience, they need to transition to SA 5G networks as soon as possible. Some operators have already made the jump to SA 5G—most notably T-Mobile, who was the first in the world to go SA nationwide. Eventually, SA will become the norm, much like using multiple bands of spectrum. Like it is today with 4G, I just want to reiterate that in the long term, most consumers will be completely unaware of which bands—low, middle or high—they’re using. Carrier aggregation for 5G will be as common as it is with 4G today. I believe that operators, especially Verizon and AT&T will need to be more creative with what 5G services they provide, especially considering the ballpark $100 billion in costs associated with buying and deploying mid band spectrum. I believe that Verizon’s willingness to spend $45 billion really shows the operator’s confidence in the mmWave+DSS 5G network it has today.

Since big events like the Olympics are not be happening in the capacity they normally do, there will likely be delayed demand for mmWave 5G infrastructure. Still, mmWave 5G has other applications, such as fixed wireless access (FWA) for competitive home broadband, which could bring new competition and coverage to markets that desperately need it. That may take longer than many anticipate, but by then mmWave 5G will likely be required for densely populated places like airports, malls and stadiums.

I also believe that mmWave fixed wireless for home broadband will be a big opportunity for Verizon and T-Mobile. While AT&T already has a sizeable broadband business, fixed wireless could still be a valuable opportunity in new markets where Comcast and Charter are incumbents. That said, AT&T previously had such opportunities in its existing broadband business but did not offer competitive solutions in terms of pricing or bandwidth. AT&T does seem to be leaning further into its fiber business rather than talking about fixed wireless broadband, but I believe that if it wants to be competitive it will need to deliver competitive speeds at competitive prices.

With the new features and capabilities that come with Release 16, 5G’s potential is expanding far beyond anything we can yet comprehend. I believe that satellite’s role in 5G could potentially help narrow the connectivity gap and bring rural areas into the broadband age. It should also present more opportunities in the realm of autonomous vehicles.

Everyone is desperate to find the killer application for 5G and, of course, if we already knew what it was, we would be building it. I personally believe that we will not find that killer app until coverage and latencies reach a point where consumers are no longer comparing 5G coverage between carriers. While most consumers will not be aware of latencies, they will definitely pay attention to speeds. The developers of the applications that will make the most use of the 5G networks will care about latency and edge compute. CSPs and operators will need to continue investing in edge compute infrastructure and furthering efforts to reduce overall latency.

Infrastructure and devices will also have to evolve, which Apple clearly understands judging by its plans to integrate 5G modems into its SoCs. I expect that we will see 5G modems inside of every mobile product from Apple and the other major players. This will bring about a new era of services that were previously impossible, and help further platforms like AR and VR. I believe that technologies like network slicing will enable companies to innovate in ways that allow for devices, connectivity and services to all be offered as a single product. We are close to that today, but the cost of connectivity is still too high (at least in the US). Where I believe we will see this model succeed the most in the future is in the realm of IoT. Imagine a free Spotify or Apple branded pair of headphones that do not need to connect to a phone or require anything beyond a subscription to a top-tier premium service. This is obviously only a simple example of what’s possible in the future, but it isn’t that far beyond reality. We already have 4G LTE connected watches capable of taking phone calls and streaming music.

Wrapping up

2020 was a very busy year for 5G, with huge growth across all metrics. Still, it has not quite reached a point where most consumers and businesses can rely on it. Many companies are leading the charge and helping narrow the gap between people’s expectations and reality, but the reality is that 5G, like 4G, will undergo a long-term evolution. Right now we’re in the toddler phase of 5G—things no longer feel brand new, but there is still lots of room for growth and improvement. I believe that 5G’s big payoff will come once operators fully adopt 5G SA and network slicing. Operators can and should make the most of their networks and I believe that as 5G expands outside of traditional devices, usage will be on a scale never before seen on a cellular network.

Disclosure: Moor Insights & Strategy, like all research and analyst firms, provides or has provided paid research, analysis, advising, or consulting to many high-tech companies in the industry, including NOKIA (Alcatel Lucent),  Qualcomm, Samsung Technologies, Sprint, Verizon Communications and others. The author holds no investment positions with any of the companies cited in this article.