5G a boon but high-priced handsets and tariffs may slow down adoption

Analysts predict wide-scale adoption only two-three years down the line, with introduction of 5G enabled smartphones in ₹10,000-₹20,000 range

Up to 10 times faster Internet speeds, download of 8K movies in seconds and console quality gaming experience on smartphones — these are just some of the many benefits that 5G networks will bring to users. However, lack of affordable devices and high tariffs may drag down the pace of adoption of these services.

Even though 5G services were unveiled by Prime Minister Narendra Modi just last week, the first 5G smartphone was introduced in the country two years back in 2020. Since then, total 5G smartphone penetration has reached only about 50 million shipments of the total smartphone base of 550 million units.

Currently, almost all smartphones priced above ₹30,000 are 5G smartphones. While these 5G-enabled smartphone users will not need to switch devices to experience 5G services once the network goes live in their cities, analysts say they are expecting only premium phone users to switch to 5G initially. A mass switch is possible only when good device options are available in the sub-₹20,000 category.

“The actual 5G years are yet to come in India that will be marked with the introduction of mass volumes in ₹10,000- 20,000. It’s important that for extremely price-conscious segments, there are options in 5G available in the sub ₹10,000 also; but looking at previous trends and consumer behaviour, the mass opportunity is likely to fall in the ₹10,000-20,000 range,” according to a report by Techarc.

For a 5G device, people will have to spend more as the average selling prices have already gone up by 15-25% after 5G devices launched.

While 5G may come as a ‘saviour’ for the smartphone industry that has seen its user base plateauing in the past three years, users will have to wait two-three years for convincing use cases. Faisal Kawoosa, Founder of Techarc, notes that switching to 4G gave users access to video content, OTT apps as well as aggregator apps such as Uber, Swiggy and Zomato. “...what is the use case and motivation for users to come on 5G (on a mass scale). Anyone affording ₹10,000-15,000 for a device will find it difficult to pay for cloud gaming or any other application, which comes up as a primary use case for 5G for consumers.”

As per Prachir Singh, Senior Research Analyst at Counterpoint Research, Indian consumers are looking to be future proof. They want a 5G device but whether they will continue using 4G services or shift to 5G plans will depend on the tariffs. “In China also a lot of people have 5G devices but only a fraction of those users are availing 5G services. So, all will depend on tariffs. But from a device standpoint, 5G will be the name of the game.” In China, where 5G services were launched in the second half of 2019, the 5G users account for 40% of the total smartphone base.