13 MAY, SEOUL In 2019, South Korea became the first country to launch a fifth-generation mobile network, paving the way for self-driving cars and smart cities at breakneck pace. The euphoric promises have yet to be delivered three years later.
After $20 billion in network upgrades that have increased connection speeds five-fold, 45 percent of the country’s citizens are now on 5G, one of the highest percentages in the world. Telecommunications corporations, on the other hand, have been unwilling to invest in the more advanced technology, which would increase speeds by 20 times above 4G.
Demand is decreasing.
This is due to a lack of demand at this time. App developers have yet to bring services like autonomous driving to the masses, which would necessitate additional processing power. Customers can use existing 5G equipment to watch Netflix and surf the internet.
Telcos have adapted by diversifying their businesses. Making the quantum jump to 5G will necessitate the deployment of critical services that require such rapid connections.
“When people start having robots at home, for example, telcos will scale up infrastructure expenditures, and the highest-speed 5G will be partially available around 2025,” said Kim Hyun-yong, an analyst at Hyundai Motor Securities.
Other countries racing toward 5G should learn to temper their enthusiasm. Although the new technology has immense promise, the high-speed internet future will continue to evolve rather than revolutionize.
South Korea’s three mobile carriers, as well as Verizon Communications of the United States, rushed their commercial 5G launches ahead of schedule in April 2019, with a PR campaign featuring K-pop stars and an Olympic gold medalist, all eager to claim first place in the high-profile wireless technology.
Even when COVID-19 blasted demand for 5G equipment, Asia’s fourth-largest economy remained the 5G pioneer, but the enthusiasm had begun to dissipate. Companies have been hesitant to invest the projected $370 billion required to build the fastest 5G network, and revenue growth has slowed.
“Even in Seoul, rolling out 20 times faster 5G is practically impossible,” said Ku Hyun-mo, CEO of KT Corp, South Korea’s largest telecoms company.
“Establishing universal coverage is impossible since 5G frequency goes in a straight line and cannot go around barriers,” says one expert “Ku said to Reuters. “After a few hundred meters, it can’t deliver the same speed.”
According to a McKinsey analysis, the fastest version, which uses ultra-shortwave in a high-band spectrum called millimetre wave (mmWave), will require 15 to 20 base stations per square kilometer (40-50 per square mile), compared to merely two to five for 4G.
There’s no killer app.
Telecom companies in South Korea have deployed roughly 215,000 5G base stations, but just 2% of them can handle mmWave. Other 5G-enabled countries, such as the United States and China, rely heavily on the slower mid-band spectrum.
South Korea has 22.9 million 5G customers in March, just under half of its 4G users. In comparison, when 4G turned three, its user base had more than twice that of its predecessor.
“When 4G was originally introduced in 2011, data consumption surged as people switched to 4G to watch YouTube and Netflix,” said analyst Kim. However, he claims that “telcos now lack a killer service that can generate greater data demand” to justify spending for 5G.
Carriers’ average revenue per user (ARPU) increased by 5% to 12% yearly in the first two to three years of 4G. KT’s ARPU increased 3.7 percent year over year in the first quarter, while SK Telecom Co’s up 0.6 percent and third-placed LG Uplus Corp’s decreased 4.2 percent.
“If telecoms stick to their current connectivity business, they’ll plateau,” KT’s Ku predicted.
Mobile carriers are increasingly looking for new business opportunities. KT is developing artificial intelligence to power call centers in the hopes of doubling sales this year, while SK Telecom’s cloud and data center revenues have increased.
So far, diversification has paid off for investors. Even as ARPU growth slowed, SK Telecom and KT shares have increased 26 percent since 5G launched, outperforming the broader market’s 18 percent gain.
“Data consumption increased tremendously from 3G to 4G. However, data consumption is now expanding in a linear fashion “Hyundai’s Kim stated. “Mid-band 5G would help popularize 5G and act as a stepping stone to the next level.”