No one can say for sure what impact the Covid-19 pandemic will have on the progress of 5G globally. However, 5G is the revenue opportunity for the next decade, and carriers with aggressive plans are loath to slow down. The faster data speeds and lower latency promises of 5G promise to unleash new business opportunities and revenue streams.
High stakes for 5G carriers
Right now, most major carriers have the economic wherewithal to continue with 5G deployments. However, outside factors may derail plans, the severity of which will depend on how long stay-at-home orders are in effect. Outside factors, including delays in 5G spectrum auctions in Europe, slower permitting processes at local governments, components shortages, and stay-at-home orders for telecom workers could present deployment delays.
On 12 March, Verizon announced a planned increase of its 2020 capital expenditure levels to $17.5 – $18.5 billion, with much of this increase allocated toward 5G infrastructure spending. Following its merger announcement with Sprint on 1 April, T-Mobile announced it will immediately put Sprint’s 2.5 GHz spectrum into commission for 5G, with service in the Philadelphia market coming soon. In general, financial analysts believe carriers will choose to reduce operating expenses and non-strategic capital expenditures rather than reduce investment in 5G network buildouts. The stakes are too high in the race to 5G.
Social distancing could put 5G plans on hold
But factors outside of their control may slow down the progress of 5G deployments. Social distancing also means the world economy is effectively put on hold for at least three months and possibly longer. Labor shortages and restrictions on public gatherings translate to the inability for workers to install and activate equipment, although telecom workers are viewed as essential during the pandemic.
In both the US and Europe, there are reports of local government approvals for 5G installations slowing down amid work-from-home orders and government attention being focused elsewhere. In Europe, several countries have delayed spectrum auctions and may experience more delays the longer countries stay in lock-down. While some carriers can forge ahead with the 5G spectrum they have, other carriers are banking on auctions to allow them to roll out 5G.
Consumer spending likely to be an issue for carriers
Even if 5G deployments aren’t heavily impacted by protracted shut downs, consumer spending will likely be. Consumers, many of whom are out of work, could very well put off upgrading to new smartphones in 2020. Carriers may have to demonstrate that they are willing to heavily discount 5G services and pricing to get subscriber growth back up to levels they are accustomed to and jumpstart usage on these new networks. As such, the second half of 2020 could see high levels of smartphone and service promotions to help consumers feel comfortable spending again.
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