Published: April 13, 2020


The COVID-19 outbreak is causing unprecedented disruption in every corner of our lives. It has become clear that no one is beyond the pandemic's impact as we wrestle with social distancing requirements to flatten the curve. Many of the measures we have taken, such as work-from-home, distance learning and transitioning commerce exclusively to digital channels, depend on the availability of a robust broadband connection. In this way, the coronavirus has further cemented broadband as an absolute necessity and, during a crisis like this, our greatest lifeline. For this reason, the broadband service sector should hold up as well as any with broad exposure to the consumer market, but what does it do to 5G? We expect a mixed bag that generally sets up well in the long term after a prolonged period of disruption.

The 451 Take

We've never been more dependent on broadband service, which is concurrently allowing us to work, learn, shop, entertain ourselves and socialize during the COVID-19 pandemic. In this way, the increasing focus on broadband performance at the center of our work and personal lives can be viewed as a long-term driver for 5G, especially where 5G can provide a viable alternative to inferior home broadband service. A couple of years from now, 5G networks will support ultra-low latency and mission-critical communications that enable the applications and processes supporting the digital transformation of industries, some of which will see acceleration due to COVID-19. In the short term, unfortunately, 5G rollouts face unprecedented disruption across builders, buyers, standards organizations and the government entities responsible for critical support functions, such as site licensing and spectrum auctions.


Negative Impacts

The COVID-19 impact on global 5G deployment is a moving target. Subject to many variables that are in a state of flux, we find ourselves recasting the impact often. It's useful to remember that 5G occurring at scale is more than just Apple releasing a 5G phone – it requires the network side, too, which in turn depends on governments making spectrum available and buildouts of new tower sites feasible. The following conspire to slow 5G rollouts down by at least two quarters.

  • 3GPP delays. 3GPP recently announced a three-month delay for the completion of Releases 16 and 17, which we have previously identified as the 'showstopping' bits of 5G. This news does not surprise us, given the group's inability to conduct face-to-face meetings until at least June. This is a major disruption that affects all 5G stakeholders globally; it should be noted, however, that this should not delay Release 15 networks because the standard is already commercialized. This impacts Phase 2 and Phase 3 of 5G rollouts.
    • Delay characterization: Moderate
  • Network and device-level supply chain disruption. COVID-19 has created some supply chain disruptions, but thus far they appear to be well managed by TEMs such as Nokia, Ericsson and Huawei. On the device side, Apple may be facing a short delay on the release of its 5G iPhone (at least partially) due to supply chain disruption. Apple is also weighing uncertainty around demand for its newest, most expensive phone. Prior to the COVID-19 outbreak, consumers indicated that they were wary of spending more money on 5G network services. According to our VoCUL: Communications, Streaming Media and 5G survey conducted in Q4 2019, 43.1% of respondents would not be willing to pay anything extra per month for 5G coverage.
    • Impact: Minor
  • Site licensing/administration. This is an under-the-radar but important area that sits in the critical path of 5G deployment. 5G networks are different in that they take advantage of low-, mid-, and high-band spectrum for coverage and performance. The use of high-band spectrum will require deployment of small cells, which will require cooperation from the municipal government agencies responsible for issuing such siting permitting and licenses. Operators often complain about this process being challenging in normal conditions; with COVID-19 restrictions we can expect even more delays. Many city halls are closed, and a large percentage of municipalities consider site infrastructure licensing a nonessential service, which means it's closed.
    • Impact: Moderate
  • Delays in spectrum auctions. This is the most impactful blow that can be dealt to a country's ability to roll out 5G services at scale. Spain, France and Austria have all made the decision to delay 5G spectrum auctions due to COVID-19. We expect that countries with spectrum delays will impact 5G rollout plans by at least two quarters.
    • Delay characterization: Major.
  • Lowered demand for 5G services. The unprecedented disruption to the global economy is putting people out of work and causing them to reprioritize their spending. 5G was already going to be a difficult selling job for network operators and device builders. The COVID-19 pandemic will drive down demand for anything considered nonessential. While it's true that home broadband and mobile services will hold up well, those are the existing LTE services people pay for, not 5G.
    • Delay characterization: Major.

Positive Impacts

The COVID-19 pandemic has elevated our dependence on broadband, and 5G will be an important next phase of the broadband landscape. According to 451 Research's Voice of the Enterprise: Digital Pulse, Coronavirus Flash Survey 2020, 32% of respondents expect to spend more on bandwidth/network capacity as a result of the coronavirus outbreak, with large enterprises (more than $1bn in revenue) expected to spend even more at 55%. Interestingly, both Verizon and Vodafone have stated that they will increase their network spending in 2020, with Verizon committing about $500m in capex. Globally, operators have also implemented compassionate measures, such as the removal of data caps, late fees and service discontinuation for customers at a time where broadband connectivity is as critical as electricity. These steps should increase brand trustworthiness and goodwill once things get back to normal.

In the telecom sector, COVID-19 has mobilized the telecom industry to focus on bolstering broadband infrastructure capacity and availability to support consumer, work-from-home, government/public safety and enterprise demand. One of the positive outcomes of COVID-19 could be stronger demand for 5G as a replacement for legacy broadband infrastructure such as DSL. The deployment of 5G FWA offers a unique value proposition encompassing high-speed broadband and low latency packaged in a cost-effective solution that doesn't require cable or fiber connectivity, making it an ideal alternative for rural or remote areas with poor network infrastructure.

5G performance is also getting a chance to shine as a result of COVID-19, especially in areas like telehealth, where the long-term impact is expected to be high. In China, 5G networks are already being stood up and used to support telehealth in hospitals throughout the country. Recently, a program was launched at a hospital in Wuhan, China, to test 5G-enabled robots as they carried out tasks typically done by medics, such as taking coronavirus patients' temperatures, delivering meals and cleaning the facility. We expect COVID-19 to accelerate the development of telehealth measures such as remote procedures or consultations – things that might not have been on a fast-track timeline if not for the virus.

Finally, COVID-19 will place a magnifying glass on the use cases that a year ago may have seemed far-fetched, such as remote medical procedures and consultations, 100% automated and robotic plants and warehouse systems, and an increase in the viability and acceptance of AR/VR. Much of this will be driven by our experience with social distancing, since COVID-19 will undoubtedly change the dynamics of social interactions, gaming, travel, learning, business transactions, training and field working, to name a few.

Brian Partridge
Research Vice President

Vice President Brian Partridge leads the Applied Infrastructure & DevOps Channel at 451 Research. In this role, Brian has overall responsibility for the team's syndicated and custom research deliverables. As a researcher he actively contributes to the Internet of Things (IoT) research agenda and has subject matter expertise in connected device, telecom, enterprise mobility and enterprise networking domains.

Raymond Huo
Senior Research Associate

Raymond Huo is a Senior Research Associate who sits on both the Internet of Things (IoT) and Applied Infrastructure & DevOps Channels at 451 Research, where he covers the adoption of 5G as it pertains to connected devices, telecom, enterprise mobility and enterprise networking.

Keith Dawson
Principal Analyst

Keith Dawson is a principal analyst in 451 Research's Customer Experience & Commerce practice, primarily covering marketing technology. Keith has been covering the intersection of communications and enterprise software for 25 years, mainly looking at how to influence and optimize the customer experience.

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