Despite the continued rise of 5G technology on carrier networks, overall spending on wireless infrastructure is set to dip slightly this year, according to the latest forecast from research firm Gartner.
COVID-19, unsurprisingly, has proved a drag on new construction in most parts of the world, which helped slow the growth of 5G infrastructure deployment. Despite that, the total investment in 5G should still nearly double, to a total of about $8.1 billion.
The issue, however, is spending on older technologies, according to Michael Porowski, Gartner senior research principal analyst.
“As 5G ramps up, it’s becoming a larger piece of the overall wireless infrastructure pie, but it’s not so large yet that the large percentage gains that we see monopolize wireless infrastructure,” he said. “And the macro layer, which includes [legacy tech], is still a $30 billion market.”
Hence, overall spending on wireless infrastructure is expected to decline by 4.4% this year. The researchers expect investment in that area to rebound in 2021, driven primarily by a shift from 4G/LTE technology to 5G. The latter should outstrip the former in total expenditure by 2022, Gartner said. That would require an increase in the pace of 5G spending, and should result in 95% of the population in mature markets having 5G coverage by 2023.
That will offset some of the declines in spending on legacy technology, according to Porowski. Service providers are already cutting back on equipment for 4G/LTE and earlier technologies worldwide, and while those segments have continued to represent the bulk of expenditure over the past several years, that pattern is about to change.
Another factor that will help drive 5G spending even higher in the immediate future is increased competition among wireless carriers to be the first in their markets to have broad 5G coverage deployed. While consumer revenue is still the biggest segment of the market, the race is on to make inroads into the enterprise space, primarily by shifting from a focus on simply providing connectivity to offering managed services, like connectivity platforms for IoT and remote workforce services. That’s still likely to take a back seat to the basic problem of getting 5G deployed ubiquitously, but, once that’s done, the tantalizing possibility of new use cases in industries like healthcare and transportation could be realized, the report said.
Copyright © 2020 IDG Communications, Inc.
