The implementation of 5G technology will deliver an additional EUR 210 billion across Europe, according to a study by Analysys Mason. The 5G-driven transformation of factories, agriculture, and suburban and rural areas will have the largest impact on GDP. More than EUR 50 billion in 5G-related benefit can be delivered for less than EUR 20 billion in public funding.
By Aurel Constantin
The potential economic value of full 5G as an “open innovation platform” could bring EUR 210 billion worth of benefits to Europe. The study “5G action plan review for Europe” conducted by Analysys Mason with input and funding from Qualcomm Technologies and Ericsson provides a cost-benefit analysis by region and by market segment, and recommends targeted public sector investment and policy change to drive the most value.
In Romania, a digital transformation exclusively enabled by 5G across multiple sectors is expected to have present value economic benefits of EUR 6.8 billion and costs of EUR 1.9 billion, resulting in a cost-benefit ratio of 3.6, with a net benefit of EUR 4.9 billion. The report also finds that Germany is forecast to see the highest overall net benefit of EUR 38.5 billion, with an investment of EUR 6 billion giving a cost-benefit-ratio (CBR) of 7.5. Switzerland is set to see the highest CBR of 14.7, with roughly a EUR 10 billion net benefit on just a EUR 700 million investment.
“5G can provide the economic stimulus Europe needs,” said Wassim Chourbaji, Senior Vice President for Government Affairs at Qualcomm Communications SARL. “5G connectivity extends so much further than the smartphone and has the potential to transform entire industries at the macro level. Qualcomm is committed to work with businesses, organisations, and governments across Europe to seize the potential growth and innovation opportunity this technology presents.”
At the use case level, the largest economic benefits in terms of European GDP impact come from smart factories, agriculture and FWA (suburban and rural areas), providing net benefits of EUR 58 billion, EUR 37 billion, and EUR 18 billion respectively.
“As an open innovation platform, 5G provides the critical infrastructure needed to help Europe achieve a sustainable, resilient, and inclusive economic recovery. While the EU sets out its ambition for the Digital Decade and implements the Green Deal, it should ensure 5G plays a leading role in driving the digital transformation and decarbonisation of its economy. Ericsson is a technology leader in 5G and it is committed to bringing the next generation of connectivity to every part of society,” said Gabriel Solomon, Head of Government and Industry Relations at Ericsson Europe and Latin America.
The study clusters market segments within four key areas: Smart Production and Logistics, Smart Rural, Smart Urban, and Smart Public Services. The Smart Production and Smart Rural clusters have the largest net benefit of EUR 70 billion and EUR 55 billion respectively, although their CBRs are lower than those of the Smart Urban and Smart Public Services clusters.
In Romania, the Smart Rural and Smart Production and Logistics clusters are also associated with the largest net benefit of EUR 2 billion and EUR 1.5 billion respectively, although their CBRs are lower than that of the Smart Urban cluster (6.7).
The study also identifies key areas that would require partial or full public funding in order to harness the benefits. These span across healthcare and hospitals, municipal buildings, education, tourism, agriculture, and urban hotspots, including public transport. Over EUR 50 billion of benefit can be delivered for less than EUR 20 billion of public funding, according to the study.
Besides the economic benefits generated by investments, the study also outlines many important environmental and social benefits of 5G connectivity. Worker safety, upskilled workforces, reduced carbon emissions and energy usage, less resource-intensive production, social inclusivity, and even import/export security are all highlighted as supplementary benefits.
“It is clear that 5G will become one of the core technological foundations on which our economies and societies will be built,” Chourbaji continued. “The benefits and returns are now evident, and we must rise to meet the challenges and opportunities ahead of us. Only together, through strategic collaboration and consultation, will these benefits be fully realised.”
Coverage to grow exponentially
Ericsson (NASDAQ: ERIC) projects that four out of every ten mobile subscriptions in 2026 will be 5G. This forecast is included in the latest edition of the Ericsson Mobility Report. Current 5G uptake in subscriptions and population coverage confirms the technology as having the fastest deployment of any generation of mobile connectivity so far.
The November 2020 Ericsson Mobility Report estimates that by the end of this year, more than 1 billion people – 15 percent of the world’s population – will live in an area that has rolled out 5G coverage. In 2026, 60 percent of the world’s population will have access to 5G coverage, with 5G subscriptions forecast to reach 3.5 billion.
Ericsson has raised its year-end 2020 estimate for global 5G subscriptions to 220 million, as service providers continue to build out their networks. The increase is largely due to rapid uptake in China, reaching 11 percent of its mobile subscription base. This is driven by a national strategic focus, intense competition between service providers, as well as increasingly affordable 5G smartphones from several vendors.
North America is expected to end the year with about 4 percent of its mobile subscriptions being 5G. Commercialisation is now moving at a rapid pace and by 2026, Ericsson forecasts that 80 percent of North American mobile subscriptions will be 5G, the highest level of any region in the world.
Europe will end the year with about 1 percent 5G subscriptions. During the year, some countries delayed their radio spectrum auctions, which are needed to support 5G deployment.
“This year has seen society take a big leap towards digitalization. The pandemic has highlighted the impact connectivity has on our lives and has acted as a catalyst for rapid change, which is also clearly visible in this latest edition of the Ericsson Mobility Report. 5G is entering the next phase, when new devices and applications make the most out of the benefits it provides, while service providers continue to build out 5G. Mobile networks are a critical infrastructure for many aspects of everyday life and 5G will be key to future economic prosperity,” said Fredrik Jejdling, Executive Vice President and Head of Networks at Ericsson.
The report also highlights why 5G success will not be limited to coverage or subscription numbers. Its value will also be determined by new use cases and applications, the first of which have already started to emerge.
Critical IoT, intended for time-critical applications that demand data delivery within a specified time duration, will be introduced in 5G networks. This will enable a wide range of time-critical services for consumers, enterprises, and public institutions across various sectors, with 5G public and dedicated networks.
Cloud gaming is another emerging category of applications. The combined capabilities provided by 5G networks and edge computing technologies will enable game streaming services on smartphones to compete with a quality of experience (QoE) on par with PC or console counterparts, making room for innovative, immersive games based on mobility.
5G functionality growing for both networks and devices
The introduction rate of 5G New Radio (NR) functionality is increasing, with more than 150 5G device models launched commercially so far. Many devices support 5G Frequency Division Duplex (FDD) and dynamic spectrum sharing (DSS). The first 5G standalone (SA) networks have been launched in Asia and North America, together with the first devices capable of NR carrier aggregation.
With the COVID-19 pandemic accelerating digitalization as well as increasing the importance and need for fast and reliable home broadband connectivity, the number of service providers offering fixed wireless access (FWA) is on the rise. Almost two-thirds of service providers now have an FWA offering. These types of connections are forecast to grow more than threefold and exceed 180 million by the end of 2026, accounting for about a quarter of total mobile network data traffic.