Sunday, August 6, 2017

What are Prospects for Higher Mobile Data Spending on 5G Networks?

Here, in a nutshell, is the challenge for 5G networks, where it comes to the amount of incremental access revenue service providers can earn: consumers or businesses will only spend so much on all communications services. In the United Kingdom, for example, since 2011, household spending on fixed network voice and mobile voice has dropped.

Spending on fixed internet access services has grown, in large part because more consumers are paying incrementally more for faster speed services that cost more. Faster speed networks both are a response to higher usage, and arguably drive higher usage.

As a result, average revenue per gigabyte consumed is falling. “While average broadband revenue per connection has been increasing year on year, the average revenue per GB has been falling; from almost £1 per GB in 2011, to £0.15 in 2016 (a negative 5-year CAGR of 31%), Ofcom notes.

That is essentially the pattern seen in the capacity business, where volume increases do not keep linear pace with revenues earned supplying capacity. At the same time, big app providers increasingly build and operate their own networks, removing much of the demand from the potential capacity market.

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