NEW YORK: Moody's Investors Service said on Monday that current business case for 5G is not compelling and adoption will be slow across Asia-Pacific.
Lack of demand and a clear business case for deployment are likely to slow adoption and rollout. Monetisation prospects for 5G investments are limited at the moment and are mainly related to increasing speeds and capacity of operators' existing 4G networks.
"We expect more advanced applications such as medical services, robotics, and smart home devices to be the main driving force for 5G demand. However, these applications are still developing in most countries and need more evolved device ecosystems and higher band spectrums to run efficiently," it said in a credit outlook report.
All rated companies believe that 5G will lead to a change in the business model. In addition to the lack of a clear business case, rated companies which responded to our survey on 5G believe that implementation of 5G networks will require a reconfiguration of networks and a change in business models.
Business models may move beyond traditional connectivity and could involve network sharing and access to radio networks and transmission networks. As the 5G architecture advances, the platform for higher frequency spectrum will take shape and unlock the full potential of 5G applications.
Moody's said South Korea, China, Japan, and Australia will pave the way to 5G in the Asia Pacific. There is a wide gap between these four countries which will pioneer 5G services in the region and the rest of Asia Pacific in terms of 5G readiness.
South Korea commercially launched 5G in April while the rest will commercially launch 5G by 2020. Operators in the pioneer countries will seek to transition their subscribers to 5G services at premium average revenue per user (ARPU).
Early adopters are making cautious investments with a longer time horizon for commercialisation, said Moody's. Telcos in Singapore, Malaysia, Hong Kong, and the Philippines are targeting commercial launch by the second half of 2020 and 2021.
"Their cautious stance is underscored by the lack of demand and the business model overhaul that implementing 5G involves," said Moody's.
The 4G LTE (long term evolution) network will remain the coverage layer as the 5G small cells are added for capacity in areas of high usage. 5G and 4G will co-exist for a lo
