5G supply market trends

An in-depth analysis of plausible developments of the 5G equipment and services supply market looking out to 2030 identified four potential trend scenarios and analysed economic, technological, environmental, and societal impacts for each.

What is the issue?

As part of the ‘5G Action Plan for Europe’ and ‘Secure 5G deployment in the EU: Implementing the EU toolbox’, the European Commission has been emphasising the importance of 5G infrastructure, its fast roll-out, technological capabilities, and supply.

However, although the European Union has been at the forefront of trial investments in 5G, Europe lags behind overall infrastructure investments in 5G when compared to other high-income regions. Europe’s vertical industries have only recently begun to identify valuable 5G business cases, and European equipment providers are facing increased competition from Chinese, South Korean, and US-based manufacturers.

How did we help?

In the context of an increasingly competitive 5G landscape, the study team was commissioned by European Commission’s Directorate‑General for Communications Networks, Content and Technology (DG CONNECT) to conduct an in-depth analysis of plausible developments of the 5G equipment and services supply market looking out to 2030. The study team employed a mixed-methods approach including a literature review, interviews with various stakeholders including academic experts, industry players, regulators, and policy makers, horizon scanning, scenario impact analysis, expert survey, and online workshops.

The study team identified four potential scenarios for 5G supply market trends determined by factors such as evolving technology, standards readiness, and Radio Access Network (RAN) disaggregation initiatives. Economic, technological, environmental, and societal impacts were analysed for each scenario, covering key European Commission and stakeholder concerns, including market competition, costs, cybersecurity, energy efficiency, and needs for standards.

What did we find?

The study team identified the following eight key trends influencing the future development of the 5G supply market:

1. The virtualisation of the RAN and the development of new RAN architecture (including full virtualisation of the native 5G core network and Open RAN initiatives) are expected to create pathways for the implementation of open and interoperable solutions in the network.
2. Open and interoperable network solutions are expected to pave the way for new players in the 5G supply market.
3. Current European Research & Innovation (R&I) investment in 5G development is low compared with international benchmarks (including the Asia-Pacific region). Increased R&I investment for European players could help the 5G innovation ecosystems thrive.
4. 5G investments in Europe have historically occurred on a national level, creating a challenging environment for achieving pan-Europe public initiatives with high cohesion and at scale.
5. Funding and financial support for new players entering the 5G supply market could help facilitate 5G deployment and increase the diversity of European 5G supply market actors.
6. Developments of 5G application possibilities in vertical markets and industries has implications for future 5G supply markets.
7. 5G networks are expected to become increasingly critical infrastructure for the functioning of public and private sectors. With such expected growth, security challenges are also likely to grow in prominence.
8. An advancement of 3GPP specifications and releases, along with standard-essential patents (SEPs), could further promote agreements on universal standards for 5G.

Based on the trends outlined above, the study team identified four plausible scenarios of 5G development in Europe for the time horizon of 2030.

Scenario I: Incumbent players driving 5G

In this scenario, incumbent vendors and Mobile Network Operators (MNOs) are expected to shape the ecosystem pulled by increasing demand for new services from verticals requiring high performance. The adoption of Open RAN for specific applications and in specific regions is seen to create incentives for established vendors to further improve the efficiency of their proprietary solutions.

Scenario II: Slow pace of 5G Roll-Out

In this scenario, MNOs and vertical industries struggle to find the right business case for 5G. A fragmented approach to the implementation of cybersecurity requirements in Europe is envisioned to lead to legal uncertainty regarding supplier requirements. A fragmented approach is also foreseen to contribute to long transition periods for any multi-vendor strategies.

Scenario III: Open RAN as a game-changer

In this scenario, Open 5G platforms are envisioned to enable standardised services on fully virtualised networks in the medium and long term. The demand for new 5G services is expected to be created by verticals that are served by MNOs but also new entrants specialised in operating networks. Established MNO, incumbent vendors, verticals, and new entrants are foreseen to build up the 5G innovation ecosystem and new solutions for factories or autonomous driving are on the rise.

Scenario IV: 5G for Big Tech

In this scenario, network virtualisation and disaggregation of software and hardware change the landscape for network equipment, deployment and service provision. New business models based on Open RAN architectures and interfaces are envisioned to gain momentum and new major players enter the market. As complete 5G solutions encourage companies from vertical industries to enter the market, Big Tech are foreseen to become the "new operators" and serve as virtual operators.

What can be done?

The study concludes that establishing a viable 5G supply ecosystem requires a combination of system-oriented policy measures, including:

• Research & Development (R&D) investments are needed across the whole supply chain, from basic research to experimental development to trials to, pilots and large-scale deployment.
• Standardisation and the resulting standards, testbeds, and certifications are crucial for the development of mobile telecommunication networks. To avoid fragmentation or a lack of interoperability, the required standards should be developed at the global level.
• The ecosystem diversity benefits from the entry of start-ups and companies from other domains. In addition, technological sovereignty or digital autonomy, the EU needs to foster entrepreneurship in 5G related technologies, business models and services.
• Public procurement can stimulate innovation and growth through public sector demand.
• All regulations should be based on the principle of technology neutrality. An effective competition regulation can promote both the 5G ecosystem as well as digital autonomy or technological sovereignty.

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