As operators look to shut down legacy 2G and 3G networks, slow 4G adoption could delay the refarming of spectrum, potentially stifling 5G deployment, according to new research by GSMA Intelligence.
Just 10 markets account for 80% of global 4G connections
Although 4G-LTE has been deployed in 188 countries since it was first launch in 2009, 4G only accounts for the majority of connections in 21 of these countries (11%). 3G is the most common technology in 37% of countries, with the remainder still mainly relying on 2G networks.
Early 4G markets, such as South Korea, Australia and the US, have the highest 4G-LTE adoption rates – all above 60% of total connections at the end of 2016. In these countries, the focus is now shifting to 5G. However, in other markets, including many in Europe, 4G spectrum was made available relatively late, limiting early deployments to refarmed bands. While, on average, more than two in five connections in developed countries now operate on 4G, in 38 developed markets – including Greece, Israel and Russia – adoption rates remain below 20%, even though 4G coverage is now widespread.
In developing countries, one in five connections are on 4G, but more than two thirds of these are in China, which saw adoption jump from 8% in 2014 to 57% at the end of 2016. The remainder of the developing world lags some way behind, with average 4G adoption at less than 10%.
Handset/service costs and lack of digital literacy hold back mass adoption
By 2020, GSMA Intelligence forecasts that global 4G adoption will surpass 40%; by then, an additional 1.6 billion connections will operate on 4G. Although the number of 4G operators is set to increase by a third and coverage will reach three quarters of the world’s population by 2020, 4G will still account for less than 30% of connections in some 150 countries.
A number of developed markets, such as Israel and Greece, already have substantial 4G coverage, yet adoption has been slow. The GSMA’s Global Mobile Engagement Index (GMEI) shows that mobile subscribers in these countries are limited in their use of data-intensive applications, such as video streaming, due to the high perceived costs of handsets and service. Affordability is also a key factor in developing markets, but in some countries, such as The Philippines and Mexico, low levels of digital literacy are an equally significant barrier to use of mobile data.
GSMA Intelligence recommends operators look to stimulate 4G adoption in the coming years by offering more attractive, yet commercially sustainable, tariff models, such as data sharing, converged bundles and data-centric pricing. For example, rebalancing “voice+data” tariffs to offer greater data allowances, but fewer voice minutes at the same price has no implications for ARPU, but offers better value for money for consumers. Otherwise, operators may not be able to fully capitalise on the potential for data growth. In the longer term, slow 4G adoption will delay the shut down of 2G and 3G networks to refarm spectrum for more efficient LTE Advanced and 5G technologies.
The GSMA Intelligence report can be downloaded here.