5G is the fifth generation of broadband or cellular technology designed to improve the speed and responsiveness of wireless networks dramatically. It provides high speed, greater bandwidth, and a lower latency Internet network. 5G Major Drivers 

As per The Business Research Company’s 5G Services Global Market Report 2023, the global 5G services market size will grow from $95 billion in 2022 to $150 billion in 2023 at a compound annual growth rate (CAGR) of 57.9%. The global 5G services market size is then expected to grow to $781.72 billion in 2027 at a CAGR of 51.1%.

The global 5G services market is concentrated, with a few large players. AT&T, Inc. was the largest competitor with 21.51% share of the 5G services market, followed by Verizon Communications, Inc., Deutsche Telekom AG, China Mobile Ltd., T-Mobile USA, Inc., SK Telecom Co., Ltd., Saudi Telecom Company, Vodafone Group, China Telecom Corporation Ltd. and BT Group plc. 5g major drivers

The top three drivers encouraging players to invest in the 5G services market are:

     1.  Rise In Demand For Connected Cars

A rise in demand for connected cars are expected to drive the 5G services market during the forecast period. 5G car connectivity facilitates connections between automobiles, infrastructure, network services and other road users, like pedestrians and bicycles.  For instance, in February 2021, according to a report shared by McKinsey & Company, a US-based management consulting firm, almost 95% of new automobiles sold globally by 2030 will be connected, up from around 50% currently. These vehicles will have intermediate and advanced connectivity in about 45% of them.

     2.  Increasing Smart Homes

The 5G services market is expected to be supported by the rapid growth in smart homes in the forecast period. 5G technologies provide both home security and home automation. For instance, according to CITyFiED, a Spain-based project funded by the European Union’s Seventh Program, the number of smart homes in Europe is expected to reach 84 million by 2022, with Germany, the UK and France pushing the market forward.  The smart home penetration rate in the UK is expected to reach 63% by 2025.

     3.  Government Initiatives

Favorable government initiatives, particularly in developing countries, are expected to fuel the growth of the 5G services market during the forecast period. Governments across various countries are focusing on 5G infrastructure. For instance, in March 2022, the Minister of Industry and Information Technology (MIIT), China, planned to install over two million 5G base stations by the end of 2022, to expand the application of information and communication technology (ICT).  Therefore, the increasing number of government initiatives will contribute to the growth of the 5G services market.

Restraints On The Market

The high cost of 5G smartphones and related devices is expected to limit the growth of the 5G services market in the forecast period. According to executives of leading companies such as Xiaomi, Samsung and OnePlus in January 2020, the price of 5G smartphone chipsets is twice as costly as the price of 4G smartphone chipsets. Consequently, expensive parts result in a high cost of production and supply chain issues leading to higher prices of 5G smartphones. This scenario is anticipated to adversely impact the growth of the 5G Services market over the forecast period.

Yet, 5G phone prices dropped as their popularity rises and more manufacturers are offering them. According to a recent report by Counterpoint Research, the average selling price (ASP) of 5G smartphones is decreasing, making them more accessible to consumers. In Q3 2021, the ASP of 5G smartphones was around $485, down from $567 in Q1 2020. However, the price of 5G smartphones still remains higher than that of 4G phones. As per the same report, the ASP of 4G smartphones was around $161 in Q3 2021. So, although the prices of 5G smartphones are decreasing, they are still higher than the prices of 4G smartphones.