Will 5G Become a Platform for Connectivity Provider Solutions?

Will connectivity service providers sustain themselves strictly on connectivity revenues through 2030? Maybe not. Bearing Point forecasts negative two percent industry revenue growth to 2030. Will 5G help?

Many business customers and service providers believe 5G will help.

Many service providers expect revenue lift up to 15 percent from 5G. The issue is whether this is a reasonable expectation, and where the anticipated revenues will be produced. Will the boost--and how much--come from connectivity services (more accounts, more revenue per account) or solutions built upon 5G?

At least at this point, an overwhelming percentage of surveyed business customers believe connectivity providers do have a role to play in 5G-enabled business solutions, especially when telcos partner with app providers, integration specialists and others. 

source: BearingPoint

Connectivity service providers generally anticipate that 5G business-to-business (B2B) use cases will have a significant impact on current revenues. On average, service providers expect a 15 percent revenue bump, with North American and European suppliers slightly more bullish at 16 percent. How that happens is the big question. 

Connection growth can help, especially if billions of new distributed internet of things connections are bought, and if a great bulk of those connections accrue to telcos, and not to rival suppliers, and if substantial numbers of connections are wide area, not local. 

But most observers believe the bigger revenue upside will come from solutions, not connectivity, potentially. And that is likely where the big challenge will come. 

A survey by BearingPoint found that “roughly a third of enterprises and four in ten SMBs perceive the CSP’s role in 5G use cases as a simple connectivity provider.” Those are significant numbers, if they prove to be correct. 

If service providers were to limit themselves to this role, and maybe five percent of enterprise and SMB ICT spend, then they will both be commoditized and struggle to fund 5G investments, particularly standalone 5G networks, BearingPoint argues. The economics simply won’t work, BearingPoint argues. 

Perhaps the good news is that significant percentages of end users believe connectivity providers, partnered with other entities, will be reasonable choices as solution providers. 

source: BearingPoint