Chipset shortages to put brake on 5G roll-out in 2022

In 2022, 5G connection numbers will be limited by consumer upgrades to 5G handsets rather than just 5G network deployments, with chipset shortages worsening this limitation, according to Analysys Mason’s annual industry predictions on the major trends it expects to make an impact over the next 12 months.

The predictions not only address the effect of chip shortages on 5G connection numbers, but the potential of the Metaverse to bring augmented reality and virtual reality (AR and VR) to the masses, telecoms gaming strategies, and connected home and network investment.

Looking at the mobile industry, telecoms, media and technology consulting and research firm Analysys Mason believes operators will continue the push for more 5G coverage and more networks will be launched, but subscriber numbers will largely be determined by the pace of consumers acquiring 5G handsets. It expects that reduced 5G handset shipments in the latter half of 2021 and first half of 2022 will result in 105 million fewer 5G handsets in use in 2022 than previously forecast.

Another key mobile trend is that mobile operator strategy will diverge in 2022. Unlike previous generations of mobile networking, said the analyst, 5G is likely to develop on two distinct tracks. Operators that are determined to offer new types of B2B and B2B2C services will press on with 5G standalone (SA) technology and will depend on cloud partnerships to make this work. Other mobile operators will stay with 5G non-standalone (NSA) technology and a business that is tied to consumer services.

Despite the hype it has generated, the Metaverse will not be a killer app for 5G, but will represent a leap forward in bringing AR and VR services to the mass market, said Analysys Mason. The hype around the Metaverse will continue in 2022 with various visions of social, gaming, entertainment and commerce competing for attention.

The analyst believes a major question for telecoms operators will be the degree to which AR and mobility will feature, rather than the VR-heavy vision presented by Meta (formerly known as Facebook). It said some operators will be weighing up potential roles as enablers, but need to qualify the opportunity with potential partners in, for example, the gaming world.

As the world of hybrid working maintains pace next year, Analysys Mason sees fixed broadband operators launching connected home offerings with services that are built on home Wi-Fi connectivity. When faced with competition from the tech giants, operators’ smart home automation services and smart speaker offers have struggled, the analyst noted, but the connected home is a promising area for operators.

It said the early trailblazers of the “customer premises equipment (CPE) as app store” approach, such as Comcast, show that operators have an opportunity in this segment. It predicted that operators will launch value-added services such as connected home cyber security and Wi-Fi motion detection with the aim of boosting subscriber numbers and ARPU.

Looking at enterprise connectivity, Analysys Mason expects private networks to continue to increase in number, and most of the new networks will be 5G, but the adoption of edge computing will lag behind. At least 75% of new private networks in 2022 will be 5G, up from 31% at the end of 2020, it said.

But take-up of edge computing – regarded as a natural complement to 5G private networks – will continue to lag, with the analyst expecting only one-fifth of private networks to be using edge computing. It also strongly believes that edge computing will be deployed more widely and more than half of private networks will be combined with edge computing by 2025. Operators and suppliers need to prepare themselves for this shift, it added.

The study sees 2022 as the starting point of a two-year spike in 5G SA investment. It calculated that between 2020 and 2027, a cumulative $990bn in capex will be allocated to 5G-related investments, including the radio access network (RAN), core, cloud and transport, and will account for 65% of total capex for mobile operators in the same period.

This will include a big push for cloud- and edge-native technology, said Analysys Mason. It is also likely to involve far higher levels of automation and orchestration, built on artificial intelligence development capabilities. Most of this investment will probably be predicated on new revenue streams for 5G, mainly in advanced B2B services, it said.

Overall, though, Analysys Mason sees many pilots and trials of new 5G-related business services being announced in 2022, but with few services launched commercially. While observing that the features of 5G are well understood and, especially with the introduction of standalone networks, operators will have more capabilities to offer enterprises – for example, low-latency services and service-level guarantees – much more thinking was needed on how to price and package these services, said the analyst.

An example it cited was how to price connectivity with guaranteed throughput or latency. But even though operators will work through these issues in 2022, few products are thought to be on the point of launch.

The business divisions of many operators will see connectivity return to revenue growth, but most attention will be on IT services, said Analysys Mason. It expects operators to strike more partnerships with suppliers for security, SD-WAN, edge and cloud in 2022 than they did in 2021. Operators will also be active in developing vertical solutions, for example in health and education, digital services for small businesses and even some niche cloud services, such as sovereign clouds, it said.

Another key trends indicated was the expansion of fibre and 5G in developed markets, driven by shared and wholesale models. Analysys Mason predicted that these models will account for an unprecedented 20% of new investment in 2022–2023 and that, increasingly, this new investment will come from non-telco businesses.