5G is hitting the headlines again. Recent incidents in the UK were allegedly spurred by social media posts, branded “the worst kind of fake news” by National Health Services (NHS) England’s national medical director, Stephen Powis. Unsubstantiated and viral posts linking the spread of COVID-19 to 5G tower rollouts, fueled online by celebrity endorsements, appear to have triggered drastic actions. Mobile towers (masts) burned in the UK (Birmingham, Liverpool, Belfast), and authorities suspect arson. These acts drew immediate and widespread criticism.

Recent HFS research on spending plans for emerging technology change agents shows that plans to invest in 5G infrastructure, applications, services, and related products stand strong in the face of COVID-19. This strength needs to hold fast consistently across all players for the entire 5G ecosystem to thrive.

2020 is 5G’s big year—when people and things will be connected at scale

Despite questions surrounding the business case that supports investing in this new generation of mobile telecommunications infrastructure, 2020 was expected to be the year that we would start to see 5G taking effect. All the things in the internet of things (IoT) and all the people will be connected in a new generation of small-celled networks. China and the US forged forward with aggressive rollout plans; each powerhouse likes to think the other is behind. This scramble to lead in 5G deployment goes beyond usual technology races, often described as a modern-day arms race among global powers. Governments have vested interests to have the most powerful communications networks in place. Huawei got caught up in the crosshairs of very modern technology- and connectivity-based national security concerns.

In recent months, Ericsson gathered analysts in London in lieu of 2020’s Mobile World Congress (MWC), reporting strong uptake in 5G infrastructure sales. Ericsson predicted that we would see 100 million subscribers on 5G in 2020. Network rollout aside, a sub-$300 price point on devices (Xiaomi announced one in late 2019) is expected to enable this penetration level. One of Europe’s early adopters, Swisscom, has 90% coverage of 5G supported by Ericsson’s dynamic spectrum sharing, which allows deployment of both 4G and 5G in the same band and on the same radio through a software upgrade.

But we can reasonably anticipate some delays to 5G rollouts

While social distancing does not impact key workers like network engineers, who keep the communications infrastructure running, other fallout (illness, supply chain interruptions, etc.) will likely impact the logistics of physically rolling out new network infrastructure over the coming months. A real and present threat to infrastructure and network engineers being abused will not likely make for the smooth and speedy rollout of new infrastructure.

5G spending looks strong in the face of COVID-19

HFS is conducting ongoing research into the decisions and adjustments that enterprises face as the COVID-19 lockdowns batter the way we usually do things. We engaged with four stakeholder groups (enterprises, advisors, providers, and software houses). While this research suggests blockchain and augmented reality and virtual reality (AR/VR) spending are likely to take a hit when investment plans are revisited, there is no indication that enterprises will scale back 5G spending directly, according to the enterprises we surveyed. In fact, preliminary findings (Exhibit 1) show that we should expect increases in 5G spending: 1.3% from software company respondents, 1.9% from enterprises, 3.1% from IT and business process services providers, and 3.7% from advisors and consultants; advisors, providers, and software respondents answered in relation to their clients’ and customers’ spending.

Exhibit 1: Spending on 5G is expected to increase as COVID-19 impacts investment priorities

However, this data does present a potential problem—one of the glimmers of hope for making 5G an attractive investment to drive mobile operators’ flagging average revenue per user (ARPU) is AR/VR. If software companies don’t invest in creating killer applications, there will be less incentive for consumers to upgrade. Furthermore, everyone anticipates additional spending on security as the world scrambles to keep businesses and organizations successfully working from home through teleconferences; when there’s a choice, companies might prioritize resources on security.

The Bottom Line: 5G will happen, but it will most likely face delays as maintenance of current infrastructure and applications takes priority over new rollouts. There were rumblings of delays to 5G before COVID-19. All players must forge ahead in tandem for the whole 5G ecosystem to thrive.

What seems likely is that the current status of a carrier’s rollout will dictate acceleration or deceleration, meaning those that are well advanced might accelerate, and those lagging will postpone. Some delays are taking effect at a national level; for example, in Spain and Brazil. Plans for private 5G will have to be revisited if lockdowns persist and sites are empty. Interestingly, a Sichuan University hospital is home to the first 5G private medical network, supported by China Mobile and Huawei; we may well see more private 5G activity around hospitals.

If some players push forward, but others hold back, there will be an uneven and incomplete ecosystem. Some networks will run faster and stronger, but many will be playing catch-up on security or not focusing resources on creating new and compelling applications to run on them. Sentiment is a powerful influence, and it has a nasty habit of underpinning self-fulfilling prophecies. If software companies hold back because they believe there will be less spending to their benefit, such as on AR/VR, there could be a domino effect that makes it harder for other 5G players. COVID-19 will also directly impact device supply chains, and consumer spending will inevitably take a hit.

5G is a long game, and it was always going to be a long game. Enterprises never expected it to deliver a return on investment quickly. COVID-19 makes all long games longer still as the broader economic fallout impacts enterprises and consumers alike.