Wednesday, May 18, 2022

BT Business Push Reflects Market Structure

BT's new push to support business customers makes sense for a couple of reasons, but primarily because much of the revenue earned by a telco or mobile operator comes from business customers. 


source" Grand View Research 


Also, much of the new revenue from 5G is expected to come from business use cases. 


The other obvious angle is that there is only so much revenue connectivity providers can coax out of consumers, who tend to spend less than three percent of their income on all communication services and devices. 


Even when business customer spending is not materially higher, percentage-wise, the gross revenue and profit margins tend to be much higher than for consumer services. 

source 


And that matters, as telco return on invested capital has been falling since 2010. Industry supporters cite government regulation as a possible way of boosting returns. The call for payments by a handful of giant app providers to fund telco infrastructure is an example of that. 


source: McKinsey

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