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Strategy Analytics has published a revenue forecast for different generations of cellular technology and finds that 4G revenue is set to surpass 3G for the first time.
This year, 4G is expected to account for 49 percent of mobile operator revenues despite representing only 25 percent of subscriptions at year-end. Although this marks a major shift in the market, operators are not expected to see net financial gains because the rise in 4G income will be offset by an estimated 21 percent drop in 2G service revenue and a 19 percent decline in 3G revenue.
Phil Kendall, Executive Director of Wireless Operator Strategies, says, “Advanced markets such as the USA, Japan and South Korea will derive the majority of their revenue from 4G LTE services this year, with China also contributing significantly. China will overtake the USA to become the world’s largest 4G market in Q3 2015, and it is notable among developing markets that over half of its 2016 revenue is projected to come from 4G LTE.”
By the end of 2016, 4G will represent approximately 1.9 billion connections, up from roughly 1.1 billion at the start of the year. Strategy Analytics forecasts that the number of 4G LTE connections will reach 5.6 billion by the end of 2022, representing about 62 percent of all user-linked wireless subscriptions.
Looking ahead, Strategy Analytics expects commercial 5G services to begin in a small number of markets in 2020, starting with the USA and advanced Asian markets. User-linked 5G connections are projected to grow from 2 million in 2020 to 116 million in 2022, with early volumes driven by modems and routers.
“Commercial 5G services will begin in a small number of markets in 2020, mainly in the USA and advanced Asian markets,” said Susan Welsh de Grimaldo, Director of Wireless Operator Strategies at Strategy Analytics.
The forecast should serve as a wake-up call for operators that have yet to deploy 4G. While most operators in Western markets have launched 4G, many providers around the world still have limited or no presence. For example, several Indian carriers—including Vodafone, Telenor, Tata Docomo, BSNL and MTNL—have had only limited 4G deployment.
Vodafone recently announced it would slow its 4G investment in India, a strategy it may now need to reconsider in light of these projections.
Download the full report from Strategy Analytics.
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