To a greater degree than has been the case in the past, 5G success will be uneven: offering bigger potential financial rewards to the bigger service providers and possibly even some financial distress for smaller operators.
The reason is that smaller operators will be able to monetize access services, while the larger operators might (should) be able to leverage applications and services built on 5G connectivity. The analogy is video entertainment services, which have proven a positive revenue source for the biggest operators, while being a money-lower for most small providers.
“One of the most important politicians in the EU told me that it looks like 5G will drive tremendous growth in mobile companies' revenue, and he could not understand the complaints from mobile operators around Europe,” said telecom analyst John Strand. “He simply assumes that mobile operators will automatically make money with a new mobile standard, even though that was not the case when they rolled out 3G and 4G.”
To some extent, managerial prowess and ability to foster and leverage innovation might also matter, as the applications and services part of the internet of things, enabled by 5G, will be created--willed into being--not simply harvested. Not every country or region will be equally situated, in that regard.
Keep in mind our history with 3G and 4G, both of which were supposed to unleash waves of innovation leading to valuable new services and revenue streams. That expectation lead to overbidding for spectrum in India and Europe, where operators also overpaid for 3G spectrum.
As it turned out, 3G eventually lead to mobile email and then mobile internet access as new apps that drove revenue, but might have had less upside than expected.
Bidders were more restrained in bidding for 4G spectrum, but the notion remained that a faster network, with lower latency, would drive creation of new apps. Early on, tethering emerged as a new driver of behavior, 4G being a much-more-effective platform for use of mobiles for browsing and app use. At the moment video entertainment consumption also is joining those earlier apps as hallmarks of 4G as an enabler of new use modes, behaviors and apps.
In a similar way, 5G is seen as enabling a new wave of applications, services, revenues and user behaviors, partly by humans but mostly by machines. The extent to which that happens remains a big question. But it is safe to say that it mostly will be the bigger operators, with bigger internal markets and assets, that will benefit most, because they will be able to participate not only in the “access” demand, but also be owners of the applications and services enabled by the access.
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