Hundreds of billions of dollars have been invested worldwide on 5G deployments. https://www.wsj.com/business/telecom/how-5g-changed-world-752b13ee?st=n105ic9t76820d5&reflink=desktopwebshare_permalink . Per the WSJ, here’s what you need to know about how much the technology has, and hasn’t, changed things. Drew FitzGerald, Alexandra Wexler in Johannesburg and Yang Jie in Tokyo contributed to this article.
Question 1 – Where are people using 5G?
In the U.S., about 43% of people had 5G mobile subscriptions as of June, ranking 10th worldwide, according to estimates from research firm Omdia. Hong Kong had the world’s highest 5G penetration rate, with 74% of its population subscribed to the mobile service. Ranked second and third-highest in the world were mainland China and South Korea, which registered 5G mobile subscription rates of 60% and 59%, respectively.
The high uptake in China and its neighbors is no accident. Smartphone users in several Asian countries have benefited from affordable next-generation devices, strong fiber-optic infrastructure and government policies that encouraged broad 5G cellular coverage. China and South Korea also host technology giants like Huawei and Samsung that are spearheading the wireless technology’s advancement. Finland—home to telecom-equipment maker Nokia had the highest 5G penetration rate in Europe, at 58%, while the United Arab Emirates led the Middle East, also with 58%.
Question 2 – Where aren’t people using 5G?
In countries that could afford it, business leaders have treated the switch to 5G like a foregone conclusion. In many of the world’s poorer economies—where a latest-generation 5G-capable smartphone is out of reach to all but the very rich—a next-generation network is seen as a luxury rather than a mandate. Several African, Asian and South American countries had penetration rates under 1% as of June, according to Omdia.
Getting “4G for all, not 5G for few,” has been the mantra for the past two years at Veon, a network operator that serves cash-strapped markets from Ukraine to Bangladesh.
The Amsterdam-based company has already covered 90% of the six countries it serves with 4G signals. Some areas lack the fiber-optic-cable infrastructure to support 5G-capable cellphone towers, and roughly half of the population in those markets lacks even a smartphone, let alone one capable of picking up 5G connections. Some countries also impose high taxes on smartphones, which puts the devices out of reach for many consumers, says Veon Chief Executive Kaan Terzioğlu.
“This is really matching the needs of the markets with the technologies that are available,” Terzioğlu says. Spending money on 5G infrastructure before the people it covers are ready to tap it “would be irresponsible,” he adds.
Likewise, business owners and executives in many poorer countries say they wouldn’t plan around ultrafast wireless connections in places where 2010 technology is still the norm.
“There’s not enough coverage or towers here,” says Nicholas Lutchmiah, retail manager at Topbet, a licensed gambling bookmaker and sports-betting company in South Africa, which has most of its shops in poorer townships and rural areas. “That’s the biggest problem that we face. In rural areas and townships, we get 3G, which is rather slow.”
Despite the limitations, some developing countries have invested heavily in 5G technology. Indian telecom companies have committed tens of billions of dollars to the latest network technology and making a push for ultracheap smartphones, for instance. Domestic conglomerate Reliance Industries has led much of its country’s aggressive telecom investments through its Jio brand, the spearhead of leader Mukesh Ambani’s ambition “to connect everyone and everything, everywhere.”
Question 3 – How much has 5G cost?
The wireless companies that invested in 5G technology early paid handsomely to refresh their networks. and they have the balance sheets to prove it. The world’s biggest wireless companies—excluding China’s state-backed operators—carried $1.211 trillion of corporate debt at the end of 2022, up from $1.072 trillion four years earlier, according to Moody’s Investors Service.
The credit-rating service said that those companies spent more than in past years building up their wireless networks and issued more debt to finance big spectrum purchases. The price of that spectrum has varied but generally risen. One auction raised $19 billion in India while another group of licenses fetched $81 billion in the U.S.
Debt is nothing new to big telephone networks. The capital-intensive companies have historically run through cycles of heavy upfront spending on new equipment and installation before paying down the tab over time through reliable subscription fees; phone and internet service is a modern necessity, after all.
But securing airwaves for new 5G signals has forced companies to speed up their borrowing. “There’s a lot of debt on these companies,” Moody’s analyst Emile El Nems says. “We’re not ringing the alarm bells, but we’re saying there’s limited flexibility for an accident.”
Executives at telecom companies that borrowed the most to amass 5G-friendly spectrum licenses have said that they made prudent investments to meet customers’ demand for mobile bandwidth, and that their biggest spending is behind them, at least in the near term.
AT&T CEO John Stankey said at a recent investor conference that his company will end this year by paying down debt “first and foremost.” Verizon’s finance chief said at another conference that trimming debt is “extremely important to us.”
The high cost of airwaves is also convincing some government policymakers to tweak their rules to ease the private-sector burden. Soaring demand for spectrum licenses in India prompted the government to take payments in installments so that companies wouldn’t need to rely too much on capital markets. Governments in Malaysia, Mexico and Israel have tried out different models that let private companies share or lease the airwaves they need, rather than paying large sums for exclusive rights.
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