5G Fronthaul & Backhaul equipment market was valued at US$716.049 million in 2019 and is expected to grow at an impressive CAGR of 57.51% over the forecast period to reach a total market size of US$10,933.796 million in 2025. 5G, the fifth generation mobile network, has not yet taken off completely, but is anticipated to offer a new type of network which can connect virtually everyone and everything. The new wireless standard is designed in a way that would allow it to deliver data speeds higher than those in earlier generations, ultra-low latency, immense network capacity, better network availability, and degree of improvement in performance and efficiency that would connect a wider group of customers, industries and components, both small and large, across the ecosystem. The 5G Fronthaul and Backhaul equipment market growth is majorly being driven by increasing flow of investments by 5G-enabling companies across the globe into making the infrastructure 5G-ready. This flow of investments is witnessing a continuous increase in velocity as governments across countries seek to gain wireless leadership by being the first to roll-out 5G for customers. China, Japan, South Korea and the United States, for instance, are the key competitors in this race to win the 5G lead. What has been making this environment more competitive is the fact that losing the wireless leadership can significantly hit a country’s economy. The U.S., for instance, lagged behind in the deployment of 2G and 3G, and this led to migration of economic advantage out of the country. Japan and Europe, on the other hand, despite leading the world in 3G and 2G respectively, lost this race to the U.S. when 4G was yet to take off, and this affected their communication and technology industry. Wireless leadership brings with it an impetus to a country’s economic growth, besides creating millions of jobs in next-gen sectors like smart cities and the Internet of Things (IoT). This is a major factor responsible for huge investments in the sector. According to a data from Accenture, America’s communication and technology industry is poised to funnel $275 billion in the deployment of 5G networks, and these investments would bring with them an increase of around 3 million in new jobs and an addition of around $500 billion in economy. However, taking a lead in new wireless standards deployment is not easy. Governments need to take actions in order to quickly resolve issues pertaining to setting of a clear schedule for spectrum auctions and finalization of roadmap for modernization of infrastructure siting rules, among other pending legislations and regulatory reforms.
Initially, the deployment of 5G is being carried out for enhanced mobile broadband applications that cater to the human-centric needs which include, but are not confined to, faster access to multimedia content and various other services. Applications of enhanced mobile broadband are witnessing a continuous expansion, and these applications require networks with improved performance in order to offer seamless experience to users, that which was difficult to achieve with previous generation networks. As we continue to advance into a smarter society, many smart infrastructure applications may need to be complemented with network hotspots. Hotspot zones can be referred to as zones which have high user density, network with very high traffic handling capacity, and user data rates which are usually way higher those in wide area networks.
As we continue to see improvements in these sectors, we expect to see more efficient data transmission across the globe, translating into lowering in cost for transmission of every bit of data. 5G ecosystem is already witnessing a very heavy inflow of investments by industry players. For instance, 5G providers in South Korea have already registered millions of 5G subscriptions since launch in April, 2019. Three key vendors of 5G in the country are offering 5G by leveraging both 3.5GHz spectrum and 28GHz (mmWave).
A major share of the demand for 5G is being contributed to by governments and industrial sectors which require highly reliable communication channels with very low latency, and which adhere strictly to the strict requirements in terms of network throughput, availability and latency. Many municipalities are expected to deploy Massive Internet of Things which is characterized by presence of a very large number of connected devices continuously transmitting data of varying priority levels over the network. As 5G will bring down the cost of enabling massive IoT, while robust modules with long life and high reliability will continue to facilitate applications like continuous asset tracking, smart cities, and continuous monitoring of vital infrastructure, the demand for 5G will continue to grow, thus propelling the demand for 5G fronthaul and backhaul equipment to support the expansion.
The market growth is also being driven by increasing demand for a faster internet connection by people in many regions. This demand continues to increase as people continue to incline towards consumption of content which requires high speed internet in order to be consumed. The use case of 5G will not be confined to this, as many mission-critical applications, which have been struggling with getting a reliable internet connection in order to reach their complete potential, will also account for a fairly large share of 5G use. Completely autonomous vehicles, which are still in trial phase in many countries, can be expected to come on road as 5G penetrates this segment. Self-driving cars are witnessing a heavy inflow of investments into them. In February, 2019, SoftBank Vision Fund pumped a funding of $840 in Nuro’s self-driving car. In the same, year, Uber secured a funding of $1 billion and General Motors’ Cruise unit got a funding of $1.15 billion for the purpose of catalysing R&D in self-driving cars. This year, Waymo has been securing some big funding in autonomous vehicle segment. In March, 2020, the company had already announced a $2.25 billion funding round. In May, 2020, the company received a funding of $750 million in fresh capital from investors. This round of funding was led by T. Rowe Price Associates, Fidelity Management and Research Company, and Perry Creek Capital. T. Rowe Price Associates has been pumping investments in Cruise as well. Autonomous vehicle is just one segment which is expected to benefit significantly from the 5G arrival. Smart Grids are also expected to benefit from the arrival of 5G. This is another segment which requires highly reliable and low-latency internet connection in order to yield results. This sector is also witnessing a fairly heavy inflow of investments by entities which see immense growth potential locked underneath. According to the Knowledge Sourcing Intelligence estimates, the global smart grid market was valued at US$20.540 billion in 2019, and is expected to grow at an impressive CAGR of 23.62% over the forecast period to reach a total market size of US$73.316 billion in 2025. Other sectors which are expected to remain major end users of 5G include telehealth, industrial automation, drones, smart agriculture, geolocation and tracking, and numerous others. As has already been discussed, these all are expected to contribute to the total value added by 5G to the global GDP. Since this value is expected to be very high, companies are pumping investments rigorously into 5G, which is propelling the demand for backhaul and fronthaul equipment required for it. The outbreak of the novel coronavirus disease also has a significant role in shaping the market growth. Since the reliance of customers, both individuals and industrial sectors, on technology infrastructure has grown significantly since the disease outbreak, market players are pumping even more investments into 5G equipment. This pandemic can be seen causing disruptions in the way businesses used to operate. With working remotely is picking up pace, and is expected to become a norm over the short or medium term, the demand for improved wireless network infrastructure is also expected to increase significantly, thus driving the market growth.
Geographically, the 5G fronthaul and backhaul equipment market has been segmented into North America, South America, Europe, Middle East and Africa, and Asia Pacific. To give a clearer view of the market, these regional markets have been further segmented into countries which account for a considerable market share.
Asia Pacific accounts for a significant market share in the global market and the market growth in this region is majorly attributed to heavy flow of investments into 5G in countries like China, Japan and South Korea. These three economies rank high in the list of countries with 5G investments. North America and Europe also account for a fairly large market share. The United States lead the race in 4G commercialization, thus leaving Europe and Japan behind. Since losing race to bringing a new wireless standard can come with high cost, these two regions are making huge investments into 5G. Other regions like South America and Middle East and Africa account for a relatively small market share, and these regions are expected to show a decent market growth over the projected period.
Competitive Insights
Prominent key market players in the 5G Fronthaul & Backhaul Equipment market include Huawei Technologies Co., Ltd., Qualcomm Technologies, Inc., and Telefonaktiebolaget LM Ericsson among others. These companies hold a noteworthy share in the market on account of their good brand image and product offerings. Major players in the portfolio management systemmarket have been covered along with their relative competitive position and strategies. The report also mentions recent deals and investments of different market players over the last two years.
Segmentation
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