Business model viability is perhaps the biggest single challenge most service providers now face, as legacy revenue sources that drive the business mature and decline. In that regard, 5G is viewed as a strategic platform to support new machine-to-machine, low-latency and other services requiring ultra-high bandwidth.
At the same time, the importance of legacy solutions is hard to avoid. Consider that the bulk of existing internet of things apps run on 2G networks, for example. Of course, most believe the huge wave of growth is yet to come.
Ovum’s forecasts suggest mobile network machine-to-machine (M2M) revenue (not including NB-IoT) will reach 733 million globally by 2021, with global annual revenues of $67 billion in 2021.
Keep in mind that this forecast includes all service provider revenues earned from IoT services, not simply the value of the access connections. One might argue that the key variable is the ability to generate revenue “up the stack,” from platforms, applications and services.
The greatest revenue will be earned in Asia, North America and Western Europe, Ovum predicts. IoT connection revenues will total US$ 22 billion in Asia, US$ 16 billion in North America and US$14 billion in Western Europe, Ovum predicts.
Of all current mobile generations, LTE will be dominant in the long term, accounting for 212 million connections in 2021, Ovum predicts.
That should provide an opportunity for reflection. If 5G business opportunity is premised in large part on IoT services, that reliance on 4G, if it emerges, will limit the 5G revenue opportunity.
In 2021, 2G and 4G will be at a point of parity, while 3G will account for 172 million connections, Ovum predicts.
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