The global 5G rollout is entering the third year. In leading markets, such as South Korea and China, 5G subscribers and traffic volume have been growing significantly. By the end of March 2021, 5G accounted for 20.4% of mobile subscriptions in South Korea and these users were responsible for 50.3% of cellular data traffic. The average data usage of 5G subscribers was 26.66 GB in March, which is about 2.9x 4G levels in the same period. In China, the number of 5G tariff plan subscribers has reached 392 million by the end of March. The adoption of 5G service boosts data consumption. The average data usage of Chinese mobile subscribers increased by 32% in 2020.
5G momentum is also building outside of the two leading countries. The adoption of 5G services has accelerated with a combination of greater availability of affordable 5G smartphones and the 'validation' for many consumers following the iPhone 12 series launch. According to Strategy Analytics' Device Technologies report "Vendor Share: Global Handset Market by Technology: Q4 2020", 128 million 5G phones were sold globally in Q4 2020. In an increasing number of developed markets, 5G has grown to 4-8% of the subscriptions. Strategy Analytics estimates that subscriptions used on 5G networks increased from 2.1% of the global total at the end of September 2020 to 3.0% by the end of December 2020.
A Consistent Mobile Broadband Experience is Increasingly Important for Operator Performance
While 5G adoption grows, the global mobile data price continues declining. Mobile data revenue fell below US$1 per GByte for the first time in Q4 2020, according to Strategy Analytics' Wireless Operator Performance Benchmarking Q4 2020. The report also indicates the revenue per GByte has fallen 88% over the last five years. This price erosion raises a critical question for operators about how to stimulate additional monthly spending by customers. The successes of South Korea and Finland may be the answer to the question.
South Korean operators have bundled various contents, particularly the iconic 5G applications such as VR, AR, or cloud gaming, into their 5G service plans to encourage customers to upgrade their tariff plans. In Finland, the model of speed-based price tiers on unlimited plans has been quite a success. In terms of the growth of mobile service revenue and ARPU, the operators in South Korea and Finland have outperformed most of their counterparts in other markets where it is much more common to see pricing tiered by data volume rather than content or network experience. A more detailed analysis of this trend is provided in our recent report Mobile Data Revenue per Gigabyte Falls Below US$1 as 5G Ramps Up.
Either the content bundling strategy or the speed-based pricing model relies on a consistent network experience. Network experience is also linked to subscriber churn, according to the network tests of Opensignal.
Opensignal analyzed the mobile experience of smartphone users in Germany and Singapore, who changed their mobile network service provider in the second half of 2020, a.k.a. Leavers. The results clearly indicate that the Leavers had a worse mobile experience before they switched than the typical user experience observed on their original network provider.
Therefore, the mobile network experience is becoming more and more important to mobile operator's competitiveness in the 5G era. Operators must continuously improve the network performance to ensure a competitive network experience.
Massive MIMO at the Core of 5G Radio Access Network (RAN)
A large number of antennas help focus energy and enable beamforming. Beamforming technology can focus a wireless signal in a specific direction to form beams towards users. Beamforming can significantly increase data rates and capacity for all users. Massive MIMO can also improve network coverage to allow users to enjoy a more consistent experience across the network, even at the cell edge. Thus, massive MIMO is a cornerstone of the 5G network to provide a good user experience. All major infrastructure vendors invest heavily in the development of massive MIMO products. The major vendors announced new massive MIMO products recently. But compared to the hardware upgrade, the innovation on massive MIMO algorithms could be more attractive to operators.
Massive MIMO systems require a combination of antenna expansion and complex algorithms. Algorithms are at the heart of massive MIMO system design and optimization. Various algorithms will be required to implement massive MIMO functions, such as:
- Channel estimation: the beamforming and adaptive modulation and coding of massive MIMO systems rely on the knowledge of channel parameters. The base station can estimate the parameters according to the uplink radio signal and/or the feedback information from the user equipment.
- Beamforming: according to the result of channel estimation, the base station will decide the parameters of the beams, e.g. the horizontal and vertical directions and the width of the beams.
- Adaptive modulation and coding: the base station will also decide the modulation scheme and the coding rate, according to the instantaneous quality of the radio link to improve the efficiency of radio transmission.
At the recent Huawei Global Analyst Summit, Huawei mentioned the Adaptive High Resolution (AHR) algorithms to improve massive MIMO performance in all three areas mentioned above. AHR includes High Accuracy Channel Estimation, which could improve the beamforming accuracy and reduce the system interference, UE/Channel/Service Adaptive algorithms, which greatly improve user experience by the modulation scheme adaption and UEs-networks adaption, and High Resolution Beam, which increases the network capacity by improving the multi-user pairing capability. According to Huawei, the algorithms can improve the average user experienced data rate by 35% and improve the cell capacity by 50%.
AHR algorithms can be deployed easily, without the need for hardware change and site visits. Huawei stated that many 5G base stations in live networks have been deployed with these advanced algorithms. In January 2021, Ookla performed the test on the iPhone 12 5G speed in 15 major cities across the globe. The test results show that Seoul had the fastest median speed over 5G, and in Seoul, LG U+ had the fastest median download speed over 5G on the iPhone 12, although LG U+'s 5G spectrum bandwidth is narrower than its competitors, i.e. 80MHz vs. 100MHz. As a major network equipment supplier of LG U+, the result of the test demonstrates the performance gain of the AHR algorithms.
Preparing for Traffic Growth and Monetization Opportunities
Since Q4 2020, more positive signs in the 5G consumer market have been seen. In Germany, the biggest smartphone market in Western Europe, a 5G Phone became the quarterly top-selling model for the first time ever. The latest consumer survey in the US indicates that 75% of flagship buyers expect to buy a 5G smartphone next. In China, the 5G mobile phone shipment reached 69.8 million in Q1 2021, representing 71.3% of the total shipment. It is the first time ever that the ratio has exceeded 70%.
The increasing adoption of 5G phones and 5G service plans will boost data usage. Meanwhile, mobile operators need to answer the question of how to stimulate additional monthly spending by customers. The excellent performance of the 5G network is the foundation of satisfying the traffic demand and developing new business models. Operators must continuously improve their 5G networks. Advanced massive MIMO algorithms could be a good starting point for 5G network enhancement.