Supply chain and auction delays are postponing 5G plans in Europe, India and Canada

a salesman in a mobile phone shop in India

The COVID-19 pandemic is having some far-reaching effects on the rollout of 5G around the world. Although U.S. operators have said that their long-term 5G plans remain intact, mobile operators in other parts of the world are not so sure.

5G isn’t the only part of the wireless ecosystem that is being challenged by the pandemic. Smartphone sales are also declining dramatically and supply chains for certain key components will likely remain disrupted

However, the pandemic may bring about some positive changes as well. Increased emphasis on working and studying from home has placed both wireless and wireline networks in the spotlight and that could mean more investment in networking. In addition, although smartphone manufacturers are expecting sales to decline dramatically in the next couple of quarters, they are realizing the need for more affordable smartphone models and are expected to unveil more models later this year. And finally, some governments are helping operators accelerate their 5G deployments as a way to generate economic growth and also support the health care crisis by deploying cell sites near hospitals and universities. 

Spectrum auction delays

a cellular signal tower

The spread of COVID-19 across Europe quickly put a damper on 5G spectrum auction plans as a number of regulators have decided to postpone auctions that were scheduled for earlier this year. These auction delays will mean that some countries may not see commercial 5G services until 2021 or later. 

In Austria, the Telekom-Control-Kommission (TCK) postponed its second 5G auction that was originally scheduled for April until late August of this year. The auction will include spectrum in the 700MHz, 1500MHz and 2100MHz spectrum bands. TCK has said that they don’t think the auction will cause too much of a delay in actual 5G network deployments. 

In France, regulator Arcep postponed its auction of 3.4 to 3.8 GHz spectrum that was originally planned for April until September of this year. The regulator said that mobile operators – Bouygues Telecom, Free Mobile, Orange and SFR – had qualified to take part in the auction. Arcep expects to raise $2.38 billion in the auction and said it will be able to distribute the new licenses by November, but it’s unclear how quickly operators will be able to begin deploying their 5G networks.  

Spain also postponed its auction of 700MHz spectrum. Likely bidders in that auction included Euskaltel, MasMovil, Movistar, Orange Spain and Vodafone Spain. The auction was originally scheduled for June 30 and no new date has been announced. 

In the Czech Republic, the auction of 700MHz and 3.5GHz spectrum was postponed, but no date has been set yet. The delay is expected to have an impact on the rollout plans of O2 CZ, Vodafone CZ and T-Mobile CZ.  

In addition, Poland’s regulatory commission has suspended the deadline for operators to submit bids for its 5G spectrum auction in the 3.6 GHz band. Poland had initially wanted operators interested in bidding on spectrum to submit paperwork by April 23 but the deadline was missed due to the pandemic and a new deadline has not yet been determined. 

And Europe isn’t the only region of the world facing delays. India also said that it is delaying its 5G auction. The auction was initially scheduled for April but now is unlikely to be held until September or later. 

The auction involved the sale of 4G spectrum including 700MHz, 800MHz, 900MHz, 1.8 GHz, 2.1GHz, 2.3GHz and 2.5GHz spectrum bands, and 5G spectrum in the 3.3GHz -3.6 GHz range. 

Indian regulators cited “logistical challenges” associated with the pandemic for the reason for the delay. 

The most recent country to announce 5G spectrum auction delays is Canada. The country said earlier this month it was postponing its 5G spectrum sale of 3.5 GHz spectrum that was originally scheduled for late this year until June 2021. The Canadian Minister of Innovation, Science and Industry Navdeep Bains said this delay of the auction was intended to help Canadian operators provide essential services and keep consumers connected during the COVID-19 pandemic. 

According to Fitch Solutions, which provides global economic analysis, the prolonged uncertainty surrounding these 5G auctions will hurt the industry because mobile operators will likely put off some of their near-term network investments because they don’t have spectrum licenses. However, they also fear that particularly in Europe, this could cause the European Union to lag in technology compared to its peers in other countries. 

2020 will not be a lost year for 5G.

Deployments continue

Despite 5G spectrum auction delays in some countries, other parts of the world are proceeding with deployments. Phil Kendall, executive director of the service provider group at Strategy Analytics, said that 5G has been commercially launched in more than 15 countries since the beginning of 2020 including in Thailand, Hong Kong, China, Japan, South Korea, the United States and more. “2020 will not be a lost year for 5G and there are many positive signs both in terms of 5G growth potential and its ability to support initiatives tackling the coronavirus,” he said. 

Likewise, Rajeev Suri, CEO of Nokia noted on the company’s first-quarter earnings call on April 30 that the company still expects a “high-level of network deployment services as new 5G builds continue.”  However, he also noted that there may be some issues with cell site deployments. “We do see some COVID-19 risk hampering some technology deployments due to challenges with getting on-site access.” 

Smartphone sales declines

A showcase window display with smartphones in modern electronics store, shop.

Samsung executives are expecting decreased smartphone sales in the second quarter because of supply chain issues in China and also because many wireless retail stores were closed because of the pandemic.  On the company’s first-quarter investor call, Jongmin Lee, vice president of Samsung’s mobile communications division, said that Samsung expects demand for the company’s smartphones to drop sharply. “As the market shrinks and the effect of store closures continue to have a direct impact.  A drop in sales of our major products and overall performance seems inevitable.”

However, he added that the company plans to continue to work on different models and widen its price range of smartphones to provide consumers with more choices and stay competitive.  

Research firm Omdia notes that many smartphone vendors have delayed launches of 5G smartphones that were planned earlier in the year. The firm said it expects vendors to reschedule those launches for the second half of 2020 and that shipments of smartphones will accelerate in 2021. 

The research firm also expects a similar trend to occur with chipsets and other components that initially were impacted by COVID-19. The firm said that while companies will see a slowdown in demand in the first half of 2020 it expects them to have a “modest” recovery in late 2020 with a greater recovery in 2021. 

Focus on networks

Both wireline and wireless networks have been in the spotlight during the pandemic because they have had to keep people connected while they worked, studied and were entertained at home. And that bodes well for future investment in the networks. According to Omdia, capital expenditures in networks will likely rebound gradually with flat growth in 2020 and just slow growth in 2021. 

And Strategy Analytics’ Kendall predicts that some governments will want to work with telecom operators to help get 5G cell sites deployed in critical areas such as near hospitals or universities so that the networks can be used to help combat the pandemic, or be used to help researchers better understand the virus. 

The COVID-19 pandemic will likely result in 5G deployment delays in many European countries and in India and Canada. The postponement of key spectrum auctions that are necessary for 5G expansion will surely put some countries behind others. However, it’s unclear how severe the long-term impact on 5G will be. Much of the outcome depends upon the length of the pandemic. 

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