September 27, 2023

5G Will Represent 91% of Mobile Connections in North America by 2023, Up From 39% in 2022

"The US and Canada are among the global leaders in terms of 5G adoption, reflecting the ambitious rollout plans of operators and strong demand from consumers for new services," the GSMA says in its latest report on the state of North America's mobile economy. "However, following extensive 5G network buildout over the last few years, capex levels will begin to trend downwards as operators turn their attention to generating a return on investment." The UK-based organization, which represents the interests of mobile operators worldwide, adds: "The focus over the next few years will be on improving 5G coverage in less densely populated areas while also ramping up investment to support the growing momentum behind use cases enabled by 5G standalone (SA) and 5G-Advanced."

The report's findings include:

The 5G monetization imperative grows

"As 5G adoption grows, the monetization imperative will escalate. GSMA Intelligence research shows that the mobile ARPU trend in the US and Canada improved in the 12 months after launching 5G. The technology is also having a positive impact on revenue growth for North American operators beyond mobile services, as highlighted by fixed wireless access (FWA) momentum in the region. Looking forward, the enterprise sector is expected to be the main growth driver for operators. 5G SA brings a host of new capabilities that will be crucial to monetizing 5G investments, including improved support for network slicing. There are also synergies between 5G SA and private wireless networks, opening up new opportunities for mobile operators."

Generative AI takes center stage

"Mobile operators have utilized AI for a while now to varying degrees. However, the emergence of generative AI has pushed the envelope on AI capabilities and thrust AI technology into boardroom conversations globally. With generative AI tools, operators can attempt to automate more complex customer service functions that require a better understanding of context, improved ability to follow a conversation and advanced synthesis of information. The technology can also be used to improve network operations and deliver personalized service plans. However, ethical concerns around the technology still need to be addressed. AI regulation will therefore continue to move up the policy agenda as governments develop frameworks for regulating the use of new AI tools."

eSIM momentum builds

"The last few years have been crucial for eSIM development and commercialization, highlighted by Apple’s launch of eSIM-only smartphones in September 2022 in the US and Canada. There has since been an acceleration in operator eSIM deployments and commercial launches. However, eSIM awareness among consumers remains limited. As the main contact points with end users, operators and smartphone manufacturers have a key role to play in accelerating consumer awareness and adoption. Additionally, eSIM technology has long been seen as a major enabler and accelerator of IoT deployments across multiple sectors. This has led North American operators to partner with a range of players across the IoT ecosystem to accelerate eSIM adoption in the region."

Infographic: GSMA

The shift towards circularity gains traction

"The concept of circularity has risen up the agenda for policymakers and industry players in light of growing concerns around the generation of e-waste and unsustainable levels of consumption of natural resources. Although the technical lifespan of a mobile device is now between four and seven years, the average use period of mobile devices is only around three years. Governments and industry players have a role to play in incentivizing consumers, such as by building new channels for suppliers to collect, refurbish and resell devices and implementing awareness campaigns on sustainability. Operators and other ecosystem players in North America are already taking a lead in this regard, with a number of initiatives to drive circularity in mobile phones and other digital devices."

Growing opportunities for operators as fintech demand surges

"GSMA Intelligence survey data shows that between 2020 and 2022, the share of 4G/5G smartphone users in the US using their devices for financial services on a daily basis grew by four percentage points on average across mobile banking, online shopping, paying bills and contactless payments. This reflects growing momentum behind digital financial services as the competition heats up in the fintech market. For example, Apple recently announced the launch of a buy now, pay later (BNPL) service, which should contribute to a boost in e-commerce transactions. It has also launched a high-yield savings account through a partnership with Goldman Sachs, which reportedly brought in $990 million in deposits over its first four days. By the end of the first week, around 240,000 accounts had reportedly been opened."

Policies for growth and innovation

"The success of 5G rollouts depends on operators' 5G spectrum holdings across low, mid- and high bands to deliver both speed and geographical coverage. Additional spectrum can boost the provision of cost-efficient investment and enhance network quality in North America, which can help 5G become a central pillar of the region’s economic development strategies."

Infographic: GSMA

GSMA points out that "5G connectivity is already proving to be a powerful driver of GDP growth, with 5G's contribution to GDP in North America expected to surpass $200 billion in 2030 (16% of the overall annual economic impact of mobile in the region)." What is more, "Beyond its contribution to GDP, the mobile ecosystem also supports 2.1 million jobs (directly and indirectly) and makes a substantial contribution to the funding of the public sector, with $130 billion raised through taxation in 2022. This economic contribution underlines the importance of stakeholders taking the right steps to sustain the impact of mobile services on the digital economy, with spectrum availability a key driver of affordable 5G for all."

What do you thinking of the report's findings? Do you see the North American mobile sector more attractive for investment compared to other geographic markets?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

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