By the end of this decade, 5G could add trillions of dollars to the global economy, but much can come from low- and mid-band 5G rollouts rather than more costly high-band 5G deployments, according to a new report by the McKinsey Global Institute.
By 2030, the research firm forecasts 5G deployments using millimeter wave spectrum will cover just 25% of the global population, at an estimated cost of $700 billion to $900 billion.
Coverage, though, is expected to be higher in countries that have been at the forefront of 5G.
McKinsey said high-band coverage could hit up to 55% of the populations in countries like U.S., China, South Korea and Japan, “thanks to extensive existing radio access and backhaul infrastructure and providers with strong capital positions.”
In the U.S. carriers including Verizon, AT&T and T-Mobile have rolled out 5G networks using millimeter wave spectrum, but deployments remain limited to select parts of major cities. AT&T and T-Mobile each launched low-band 5G networks in late 2019, while Sprint has deployed 5G using mid-band 2.5 GHz spectrum. U.S. operators have said they’re aiming for nationwide coverage this year.
Due to high investment costs, “these [high-band 5G] networks are likely to be limited to select geographies for the foreseeable future,” wrote the authors. They’re also expected to skew largely urban, with the firm predicting up to 80% of global city-dwellers would be covered with high-band 5G in 2030, compared to “almost none” in rural areas.
In contrast, low- and mid-band 5G that performs more similarly to 4G LTE, is expected to reach 80% of the global population (roughly 7 billion) by that time, costing between $400 billion and $500 billion, according to McKinsey.
“This deployment will rely heavily on existing 4G infrastructure but would offer upgraded capabilities that can support most (but not all) use cases,” stated the report.
Overall, McKinsey forecast global GDP could increase by $1.2 trillion to $2 trillion by implementing new use cases across four domains alone: mobility, healthcare, manufacturing and retail.
“This implies that the value at stake will ultimately run trillions of dollars higher across the entire global economy,” wrote the authors.
A November report from IHS Markit forecast 5G could generate $13.2 trillion in sales enablement by 2035.
Examples within the four McKinsey report areas include improved vehicle safety and traffic flow, remote patient monitoring and automation, and more efficient inventory management and warehouse operations.
Of the predicted GDP increase, McKinsey said 70-80% could be achieved with low- and mid-band 5G networks anchored in existing 4G networks, alongside advancements in fiber technology and Wi-Fi 6, among others.
“A great deal can be achieved without investing in frontier [high-band 5G] connectivity. This is because even in the wealthiest economies, only a relatively limited set of leading companies are deploying the most ambitious use cases that can run even on today’s networks, from sensor-enabled inventory management to logistics tracking,” the report states.
Millimeter wave 5G is forecast to account for up to 30% of the remaining GDP increase, offering what McKinsey called a significant step change in overall network performance. The firm pointed to the ultra-low latency and speed required for things like automated guided vehicles and quality control needed in smart manufacturing setting.
“Existing use cases can run on a bigger scale while becoming more sophisticated and reliable. For example, these [high-band]capabilities could open the doors to deploying tens of thousands of infrastructure sensors in a dense urban area, streaming data to consumer vehicles and public institutions securely in real time to enable safety features and faster emergency response,” the report stated, adding it’s possible that the value of high-band 5G could climb if use-cases like AR and self-driving vehicles reach mass adoption in the next decade.
Additionally, 2 billion new users are expected to come online by 2030, generating an estimated $1.5 trillion to $2 trillion in GDP impact, according to report.
It called out low-earth orbit (LEO) satellites, like those being pursued by SpaceX and OneWeb as a frontier technology that could deliver breakthroughs for the expansion of coverage and bringing connectivity to remote areas of the world.
“However, providing ubiquitous coverage requires a constellation of many satellites orbiting at once, making viability uncertain,” noted McKinsey.