The global 5G services market was evaluated at US$50.285 billion for the year 2020, growing at a CAGR of 45.73%, reaching the market size of US$701.824 billion by the year 2027, according to Research and Markets.
5G is a next-generation cellular technology that will enable high-speed, low-latency connectivity. 5G technology encompasses the entire ecosystem of hardware, software, and services required to deploy 5G networks. Low power, high bandwidth, high speed, and ultra-low latency are all service requirements in industries like healthcare, retail, IT, telecom, media & entertainment, and automotive. As a result, 5G service acceptance is expanding in tandem with the adoption of mobile broadband services, which is likely to drive up market demand for 5G services in the coming years.
The need for high-speed data connectivity due to increasing data mobile traffic is also driving the growth of the global 5G services market. Data traffic is increasing due to the wide usage of broadband and mobile data services by people and commercial applications, accounting for the rise in market demand for high-speed data services like 5G. The necessity for dependable and strong communications during natural catastrophes such as earthquakes, floods, and hurricanes is also expected to drive 5G adoption.
The penetration of automation in the automobile industry makes automobiles more efficient in their performance. The support of 5G services to automobile sectors boosts the safety systems offered by automobiles. The support and policies of governments in augmenting the telecom sectors by welcoming major players and rising investments in the field of data connectivity are fuelling the market growth of 5G services in the global market. The high cost of initiation and drastic infrastructure changes are also on the other side, restraining the growth of the global 5G services market.
Rising demand for high-speed data connectivity
The increasing demand for high-speed data connectivity due to rising data traffic is giving potential to the growth of the global 5G services market. Ericsson is a prominent player in the telecom business. According to Ericsson’s mobility report released in November 2019, mobile data traffic is growing at a 68 percent annual rate.
5G networks offer up to 1 Gbps of increased internet speed and serve as the foundation for cloud and AI-based applications. Various data-intensive applications, both personal and business, are emerging, such as augmented reality (AR), virtual reality (VR), and video applications, requiring 5G’s high-speed data connectivity. These technological developments in the telecom sector are expected to surge the market growth of 5G services in the forecasted years. The government policies and support of certain countries for developing 5G sectors also push the market value of 5G services in the telecom industry. Xplornet, a Canadian telecommunications company, has revealed plans to invest more than USD 500 million in 5G wireless services over the next five years. The investments of private companies are also contributing to the market growth of the 5G services market.
High initial costs are acting as a barrier to the market growth
The switch from traditional to 5G technologies would necessitate significant investment. The needed throughput density, periodic interest rate, and base station pricing all influence the cost of 5G infrastructure. The high cost demanded by the 5G infrastructures that support 5G data connectivity is restraining the market growth of 5G services to a certain extent.
Asia Pacific region expected to show drastic growth
In the coming years, the market size of 5G services in the Asia Pacific area is predicted to skyrocket. Asia Pacific countries are investing in deploying next-generation infrastructure in the media and entertainment, transportation and logistics, healthcare, and manufacturing industries. Over the forecast period, these investments are expected to move the Asia Pacific regional market forward.