Sometimes, life gets in the way of our plans. COVID-19 is an outstanding example of that. The outbreak of the virus is already calling into question some of the basic assumptions that underlie organisations’ plans for investing in information and communications technology (ICT).

In some cases, the changes weaken the case for ICT investment; in some cases, they strengthen the case for ICT investment; and in many cases, it’s simply too soon to tell.

For this reason, we are undertaking a series of fortnightly surveys to test enterprises’ sentiment regarding the impact of COVID-19 on their ICT investment plans. The first wave, surveying 231 organisations in six European countries, was carried out from March 23 to 26, 2020.

Results of the Survey

One of the technology areas covered by IDC’s European IT Buyer Sentiment Survey is 5G. This is the new generation of mobile network technology that started commercial availability in Europe during 2019.

We asked: “Compared to your organisation’s originally budgeted IT spending plans, how do you think actual spending on 5G will be affected due to COVID-19?” The picture that emerged was mixed, but stable overall:

  • 30% expect 5G spending to decrease.
  • 19% expect 5G spending to increase.
  • 39% expect no change either way in 5G spending.
  • 13% either don’t know what the impact will be, or they think it’s too soon to tell.

Telcos’ Plans for 5G

5G is at the heart of telcos’ plans for maintaining sufficient capacity in their networks during the coming decade. Its role is too fundamental to be permanently changed by COVID-19.

In the near term, it is already clear that COVID-19 has massively increased the importance of strong performance and high reliability in telecoms networks. For example, Vodafone reported on April 3 that in Spain and Italy, following the COVID-19 lockdowns, it was seeing 30% higher usage of its mobile networks. Also, it reported a 50% higher usage of its home broadband networks.

As a result, Vodafone is bringing forward planned upgrades to add 4Tbps of extra network capacity.

These early indications of higher network usage — and more importantly still, of a higher value placed by customers on reliable connectivity — are strengthening the case for investment in network technology, rather than weakening it.

Correspondingly, our survey results indicate no general intention among telecoms and media organisations to scale back their 5G plans. Indeed, some respondents indicated that COVID-19 might lead to an acceleration in 5G investments.

Impact of COVID-19 on 5G

However, COVID-19 is already having an impact on the supply side of 5G, in two areas in particular:

  • Devices: Telcos may find that it takes longer than they expected, at least for a while, to obtain 5G network equipment and 5G smartphones. A lot of the manufacturing of these products takes place in China and South Korea, where COVID-19 caused factory production to grind almost to a halt in the early months of 2020.

Factories are now reopening, but the earlier loss of production means that fewer 5G products than planned are in the supply pipeline. The resulting shortages may slow down some operators’ 5G rollouts during 2020.

  • Spectrum licences: Telcos can’t start offering 5G commercially until they have a licence for the radio spectrum that 5G uses. About half of the countries of Western Europe licensed 5G spectrum during 2019, and most of the remaining countries were planning to issue licences by mid-2020.

However, the telecoms regulators in two of those countries, France and Portugal, have already announced that they will be postponing their 5G spectrum auctions because of COVID-19. Others look likely to follow suit.

Operators in those countries will be able to install some 5G in anticipation of licensing, but not to the full extent that would have been possible if spectrum auctions had gone ahead as scheduled.

Therefore, despite the positive sentiment indicated in our research, some telcos may find their near-term plans for 5G rollout impacted as a consequence of the COVID-19 outbreak.

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