As 2023 draws to a close, the telecoms industry is at a critical juncture. The challenges and opportunities posed by the rollout and monetization of 5G, legacy network switch-offs, and the powerful implications of recent AI developments are all front of mind.
Despite significant advancements in 5G performance, including notable speed improvements, the industry faces a hurdle today in waning consumer sentiment around 5G paired with the need to monetize 5G beyond its initial use cases.
Considering AI has been the ‘hot topic’ of 2023 in the tech world, developing smart and adaptive networks has jumped to the top of the agenda for telcos globally, as well as seeking out use cases for generative AI across the business. Looking ahead to 2024, preparations will move forward.
Initial 5G rollouts prioritised speed over performance costs and energy efficiency, leading to energy operational efficiency (OpEx) being substantially higher than necessary. Therefore, sustainability has proven to be a necessary factor to address within the telecoms industry and shall remain a priority throughout the course of 2024 as 5G aims to meet sustainability targets.
Sylwia Kechiche, Principal Analyst at Ookla, shares her views on the key trends and developments that are poised to define the telecom landscape in 2024.
#1: Monetisation challenges persist amidst customer disillusionment
As we approach the new year, the trajectory of 5G performance, while displaying improvement, fails to garner unanimous consumer praise. Per Speedtest Intelligence® Q3 2023 data, 5G outshines 4G in terms of speed, with median global download speeds surging to 7.37 times faster at 203.04 Mbps compared to 27.51 Mbps for 4G. Uplink speeds follow suit, demonstrating a 2.3-fold acceleration in favour of 5G. However, the Achilles' heel remains latency, as 5G records 43.97 ms, compared to the 51.78 ms of 4G. Despite these advancements, consumer sentiment remains apathetic, with the Net Promoter Score (NPS) for 5G falling in mature markets. The challenge for the industry in the year ahead will be to find ways to monetise 5G beyond the Fixed Wireless Access (FWA) use case and to support investment into 5G Advanced ahead of 6G era.
#2: Transition from testing to full-scale implementation will reach a critical juncture for 5G SA
Although the true potential of 5G lies in 5G Standalone (SA), the extensive investment required, coupled with a challenging macroeconomic environment, have resulted in a slow rollout of this technology. In 2024, the focus will be on demos and proof-of-concepts demonstrating the power of 5G SA in the enterprise setting. The crucial task for operators will be to translate these promising developments from the controlled environments of laboratories and testing into real-world commercialisation. The next year will be a turning point for 5G SA, determining whether it can successfully transition from the experimental phase to a commercially viable technology across various sectors.
#3: Open RAN faces a challenging year ahead
Beyond continued questions on its performance and limited traction outside greenfield networks, there is growing concern over how open Open RAN will really be. Industry sceptics point to solving interoperability challenges across hardware and software stacks, slowing down its progress and adding to implementation timelines. However, the direction of travel continues to be virtualizing network functions as they allow for greater flexibility, scalability, and cost-efficiency in network operations.
#4: Satellite technology has come of age, driving greater industry collaboration
Starlink, which uses LEO satellites, has proven that it not only performs better than GEO satellites but also offers a viable alternative in locations where terrestrial networks aren’t present. Looking ahead to 2024, we anticipate a greater integration of terrestrial and non-terrestrial networks (NTN). We also expect to see more partnerships between satellite providers and telecom operators to build a seamless and robust communication infrastructure that can address connectivity challenges in underserved regions.
#5: Saying goodbye to 3G: embracing spectrum efficiency in 2024 and beyond
As LTE and 5G technologies are much more efficient in terms of spectrum, network operators are phasing out their 3G networks. This move is motivated by freeing up spectrum and refarming it to deliver faster, more advanced and more efficient networks. In 2024, operators in Europe and APAC, in particular, will continue to migrate customers away from 3G as they witness a decline in network traffic over 3G, and seek to achieve efficiency gains and Capex reduction.
Looking ahead, the telecoms landscape in 2024 and beyond will be shaped by strategic decisions regarding 5G monetization, the transition to 5G SA, Open RAN, fostering industry collaboration in satellite technology, and optimising spectrum efficiency. It’s now up to telcos across the globe to get the big calls right.
