So much for that late 2020 5G super cycle. The long-awaited release of Apple’s 5G-equipped iPhone figures to hit the market with a thud, according to the latest 5G device penetration projections.

A combination of factors are fueling a “significant stall in the adoption of 5G mobile devices,” Dan Hays, principal at PwC’s Strategy& division, told SDxCentral. Fewer than 2% of active mobile devices in the U.S. are 5G capable today and that’s only expected to grow to 4% before the end of the year, he said.

“We still don’t have most of the most popular flagship devices available with 5G capabilities at this point and likely we won’t really have that availability until fairly late in 2020,” Hays said. Moreover, the higher costs of 5G devices that are currently available is “troublesome in the midst of an economic downturn,” and mobile device upgrades have “slowed in general, and even more so at the top end of the market.”

Those figures don’t include IoT devices, but “5G IoT devices really weren’t expected to be present en masse during 2020 and we’ve always anticipated that, like most generations of mobile technology, 5G IoT devices will probably lag consumer devices by at least two or three years,” Hays explained.

Specifications to support more advanced IoT features in 5G, particularly lower power modes, were just adopted by 3GPP earlier this month, “so most networks don’t support 5G IoT devices in a meaningful way today,” Hays said. Additionally, “it typically takes some time for IoT chipsets to ride the cost curve down before they become economical for what are typically more price sensitive IoT devices.”

More broadly, the COVID-19 crisis is creating a moment of reckoning for enterprises that are abruptly facing an uncertain future and long-lasting impacts that will precipitate a shift in resources and goals. This calls into question the extent to which 5G will be an expansive opportunity for operators and vendors to earn new business with enterprises.

“We absolutely expect that there may be a slowdown in rolling out 5G in enterprises where they’re largely operating in office buildings or other facilities where there may be a slow return to the workplace,” Hays said. 

“5G in the enterprise space is really a tale of those who will move forward and those who will pause,” he said, adding that those determinations will largely be based on the type of facilities involved and the objectives each business is trying to achieve. There’s a real chance that the 5G business opportunity will be whittled down to hospitals, health care facilities, factories, industrial environments, and warehouses. 

These segments of the market “may actually accelerate the adoption of 5G” because there’s an even more urgent need, especially among businesses where remote working is not an option, Hays said. “They are now looking at greater automation in order to reduce the density of human beings that are needed in these facilities.” 

This acceleration isn’t showing up in the numbers yet, but rather in conversations with enterprises that might be making these investments, according to Hays. Despite the potential for increased 5G investments among a smaller group of enterprises, there’s a significant risk that delays or outright shifts in resources could negatively impact enterprise spending that benefits network vendors and operators, he added.

“We all hope for the time being that this is more of a pause than a permanent shift, but I think that COVID-19 has definitely increased the threat for a significant amount of enterprise spending in the long term,” Hays said. “If we do see a structural rotation to remote work, that’s a significant issue.”

Moreover, he added while the impact of the COVID-19 crisis on small to midsized businesses (SMB) hasn’t been fully felt yet, these companies disproportionately bear the brunt of this calamitous environment and uncertain outlook. The pain and duration of that pain experienced by SMBs is another major risk for network operators.

“You can bet that they’re going to be a higher credit risk, they’re going to default on some of their bills, and they may never reopen their doors. So this is a big risk for the telecom operators,” Hays said.

“From an operator standpoint, the other question here is, will they continue to largely just play the role of dumb pipe, or will 5G be their moment to move up the value stack and get into being true solution providers,” he said. “For them to capture their fair share of enterprises’ wallets, they may have to have some new capabilities. They may have to be able to truly create solutions and do systems integration, things that have historically been the domains of big IT systems integrators.”

Meanwhile, U.S. operators are making good on their 5G deployment plans and coverage continues to make gains, according to Hays. 5G coverage reached 60% of the U.S. population earlier this month and operators are on pace to collectively cover 75% of the population with 5G by the end of the year, he said. 

Hays and his colleagues don’t expect 5G to hit a tipping point in the U.S. market until 2023.