Anyone who’s had a Zoom meeting in the past week will attest to the fact that connectivity is having a moment. That doesn’t mean, however, that the star turn expected from connectivity’s guiding light this year will happen.
For retailers, it was supposed to be the year of 5G. Smart dressing rooms, immersive reality, in store sensors — all these were supposed to bring people to department stores and malls. Recent research from Gartner finds that 46 percent of retailers expected to deploy augmented reality (AR) or virtual reality (VR) solutions this year. Companies already piloting AR — including top retailers and a leading eCommerce platform, according to Gartner — may accelerate their experiences with 5G.
So in that way, 5G is an important element or recovery when the COVID-19 crisis passes. But depending on who you listen to, 5G is still on track to make an impact.
Why? Shortly before the coronavirus pandemic became a national emergency, Verizon announced it was increasing its capital investment for this year by $500 million to accelerate its 5G efforts. AT&T abandoned a planned $4 billion stock buyback on March 20, telling regulators that it would keep the cash for its workers and “enhancing our network, including nationwide 5G … to help ensure the Company is well positioned when the pandemic passes and economies begin to recover.”
Fitch Ratings agrees. Its most recent guidance says that 5G wireless networks will not be slowed by the coronavirus shock. It sees telcos facing revenue pressures from reduced demand, but they will maintain enough cash flow to support a continuation of planned introduction of 5G service later in the year.
“We believe the telecom sector has a lower level of risk to economic pressures as a result of the coronavirus, particularly when compared with other sectors, such as airlines, non-food retail, restaurants, lodging and leisure, automotive, and media,” says Fitch. “The lower risk is due to the integral nature of wireless services in consumers’ day-to-day lives with predictable recurring payments supported by low post-paid churn levels. As such, wireless phone services have a high position in consumer priority payments.”
Some analysts aren’t convinced. “At Omdia we are revising our 5G forecast,” said Omdia 5G Practice Leader Dario Talmesio. “There are many factors to be looked at, including consumer confidence, business confidence, disposable income, employment data, availability of networks, availability of devices, retail environment, marketing budgets. all these are converging to one direction which is very negative for 5G eMBB. We previously believed that 2020 was going to be the real year of 5G. This is no longer that case under the current circumstances.”
Which way will 5G go? A lot depends on Apple. It had grand plans to introduce a 5G iPhone in the fall. But last week Nikkei Asian Review reported that Apple had held talks internally about delaying the 5G iPhone for months because of the COVID-19 pandemic. “One source told the paper Apple won’t be able to provide a timetable for the device’s launch until after California removes its shelter-in-place order, while another said the iPhone maker could decide in May,” according to NASDAQ.com.
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