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Standardised 5G NR infrastructure: a £17.65 billion opportunity

SNS Research's latest report indicates that mobile operators will spend more than £17.65 billion ($21 billion) on standardised 5G NR (New Radio) infrastructure by the end of 2025.

Despite the lack of sufficient LTE coverage in parts of the world, mobile operators and vendors have already embarked on R&D initiatives to develop 5G, the next evolution in mobile networks. 5G is expected to provide a single network environment to deliver not only existing mobile broadband and IoT services, but also new innovations such as self-driving cars, cloud robotics, 3D holographic telepresence and remote surgery with haptic feedback. 

Although 2020 has conventionally been regarded as the headline date for 5G commercialisation, the very first standardized deployments of the technology are expected to be commercialized as early as 2019 with the 3GPP's initial 5G specifications set to be implementation-ready by March 2018. Between 2019 and 2025, SNS Research expects that the standardised 5G NR infrastructure market will grow at a CAGR of approximately 70 per cent, eventually accounting for more than $21 Billion in annual spending by the end of 2025. The market will be complemented by additional investments of more than $7 Billion on NextGen (next generation) core and transport (fronthaul/backhaul) networking infrastructure. 

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Predicted distribution of standardised 5G infrastructure investments by submarket in 2025 (%) Source: SNS Research

An obvious question and one that Land Mobile put to SNS Research is how MNOs will be able to afford such spending, given their current difficulties (stagnant average revenue per user in some markets and the threat to their traditional business models from over-the-top providers).

The company replied by saying that 5G can potentially reignite growth through new vertical market applications, while enabling a significant reduction in the TCO (Total Cost of Ownership). Unlike LTE and legacy RAN technologies, 5G is expected to provide a single network environment to deliver not only existing mobile broadband and IoT services, but also new innovations such as self-driving cars, cloud robotics, 3D holographic telepresence and remote surgery with haptic feedback. 

While some operators are likely to hold off early investments after heavily spending on LTE infrastructure roll outs, many have already unveiled plans to commit billions of dollars in 5G CAPEX investments as they seek to reverse declining ARPUs. SNS Research adds that to minimise initial investments, most early adaptors are looking at a phased deployment approach where 5G NR (New Radio) nodes be initially deployed in areas with high data traffic demands, to operate in conjunction with LTE sites and the EPC mobile core. Based on market demands, it predicts 5G will be subsequently expanded to other areas, together with an eventual replacement of the EPC mobile core with the 5G NextGen (Next Generation) core network. The company notes that many operators, particularly in Europe, are also evaluating the possibility of infrastructure sharing to minimize the necessary 5G CAPEX investments. 


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