Abu Dhabi, UAEMonday 21 October 2019

Only 3% of region's mobile users will adopt 5G by 2024, report says

Availability of cheaper 5G smartphones could propel growth in subscriber numbers

Swedish telecommunications firm Ericsson, which has signed 47 5G agreements with service providers globally, expects an uptick in the usage of 5G in MEA. Reuters
Swedish telecommunications firm Ericsson, which has signed 47 5G agreements with service providers globally, expects an uptick in the usage of 5G in MEA. Reuters

The Middle East and Africa will have 60 million mobile subscribers to fifth-generation (5G) cellular wireless networks within the next five years, according to a study by Swedish telecoms firm Ericsson.

However, the number of users will represent only 3 per cent of all mobile subscriptions in the region, Ericsson said in its latest mobility forecast on Tuesday.

“It is the purchasing power [of consumers] that is dictating this," Chafic Tarboulsi, regional vice-president and head of networks for Ericsson, told The National. The "main barrier in mobile broadband technology will be the high price of 5G-enabled smartphones”.

The majority of regional subscribers will be in the more economically-advanced markets in the Gulf, Mr Tarboulsi added.

“MEA is a diverse market and, especially, Africa is far behind … where 60 per cent of devices are still 2G-enabled,” he said.

A 5G network promises an internet speed of up to 1.2 gigabits per second which will gradually evolve to reach 10Gbps — more than 100 times faster than 4G. Moreover, 5G has a latency of less than one millisecond, compared to 20 milliseconds for the 4G network.

In May, Etisalat — the UAE’s biggest telecom operator — became the first service provider in the region to announce the availability of a 5G network, supporting smartphones for commercial use. It was soon followed by UAE’s second-biggest operator, du, and Bahrain's Batelco.

Manufacturers such as Huawei, ZTE and Oppo are currently selling 5G handsets in the region, with the devices typically priced at above Dh5,500.

Prices will come down once "more brands will start manufacturing" and it will also "propel the growth of subscribers", said Mr Tarboulsi.

“We have seen this with LTE (4G), initial devices were priced very high. It came down when little-known brands started making economical devices … same will happen with 5G.”

The growth of 5G traffic is set to be more rapid in the Middle East and Africa than in other parts of the world — around eight-fold by 2024, compared to five-fold globally, Ericsson said.

This is largely due to the high appetite for video consumption in the region — the Middle East and North Africa has among the highest YouTube penetration rates in the world — as well as moves by traditional industries to hold more data in the cloud that will be retrieved by 5G-enabled devices.

Ericsson said local operators must act quickly and provide a competitive service to capture potential gains from 5G.

“By 2030, estimated potential revenue increase is predicted to range from $15.18 billion to $45.91bn (Dh55.75bn-Dh188.6bn) should operators in the MEA adapt their business model to become a service enabler and creator,” said Mr Tarboulsi.

The study said the 10 industries that stand to make the greatest gains from 5G adoption are: agriculture, manufacturing, energy and utilities, public safety, healthcare, transport, media and entertainment, automotive, financial services and retail.

“Transport represents the most prominent use case for 5G in the UAE … connected vehicles will be the key growth accelerators,” added Mr Tarboulsi.

There is a strong backing for futuristic transport systems in the UAE. For example, Dubai has set a target that autonomous vehicles should account for 25 per cent of journeys within the emirate by 2030.

Updated: October 8, 2019 05:29 PM

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