There is a simple reason why it is unrealistic to expect 5G to alter retail connectivity provider revenue prospects very much: consumer ability to spend on communications is limited. In developed countries, for example, consumer spending on telecommunications services is about 1.5 percent to two percent of gross domestic product, and arguably is decreasing.
To be sure, spending can grow as GDP grows, but GDP growth is generally slow in developed markets, though faster in developing markets.
Also, while some other markets can grow because they become substitutes for existing products, communications actually faces the opposite problem: its products face substitution by lower-cost or free products.
Yes, 5G will displace 4G accounts, but that is precisely the point: nearly every consumer 5G account simply replaces an existing 4G subscription.
Some might therefore question the value of 5G. That misses a key point: the key immediate value is “more bandwidth at lower costs.” So 5G is important initially for service providers.
The eventual advantage is new enterprise applications enabled by 5G, in conjunction with edge computing, artificial intelligence and the internet of things.
But on the consumer front, 5G is unlikely to move the revenue too much.
No comments:
Post a Comment