5G Might Truly be Different

There is one way 5G might be quite different than all prior generations of mobile, and not for reasons directly related to network performance. All prior generations of mobile service had business models based on humans using phones. But 5G is the first mobile network where most of the actual subscriptions might be used by computers and sensors.

Ericsson points out that consumer-related service revenues will have an annual growth rate of 0.75 percent through to 2030. Providers of apps and services in other parts of the information and communications technology, on the other hand, will see compound annual growth rates (CAGR) of close to 12 percent over the same time frame. 

Ericsson believes connectivity service providers could address as much as 18 percent of total information and communication technology revenues, representing about $700 billion. 

By definition, those information and communication technology opportunities will come from enterprise customers, not consumers. And that could be the biggest strategic change caused by 5G. 

Unlike all prior mobile generations--might feature incremental revenue sources and growth mostly coming from enterprise services, not consumer mobility that has driven growth since the 2G era (the first generation of mobile arguably having been adopted mostly by businesses). 

As Syniverse sees matters, for example, “5G is not dependent on consumer subscription of services like the wireless generations before it.”

“With decreasing average revenues from consumers in developed markets, U.S. mobile operators (60 percent of survey respondents) are shifting the focus to enterprise use cases to make money on the evolution to 5G,” says Syniverse. 

Nearly 60 percent of poll respondents say that 5G will swing their company’s focus to enterprise ecosystems, while 77 percent of respondents believe services such as network slicing supplied by 5G core networks. 

Mobile industry executives believe most of the new revenues from 5G will come from enterprise services including network slicing. Some service providers expect revenue lift from enterprise customers of perhaps five percent to 10 percent within just a few years. 

In fact, "In the 5G era, telcos will earn 70 percent of their 70 percent of their net revenue from enterprises” says Sanjay Kaul, Cisco head of Asia Pacific and Japan service provider business.