Edge Computing, Private Networks, APIs Won't Drive Net Revenue Growth for Telcos by 2030

Respondents from eight telcos believe their revenue prospects are highest in such new areas as edge computing, private networks and wholesale access, such as allowing third parties access to network features. 

While logical beliefs, and while revenue might be a positive number in all these cases, service providers, on the whole, are likely to find disappointment in these sources as a way of moving the revenue needle. 

Put simply, there is not enough revenue in those areas to offset the huge reliance on traditional subscriptions. 

source: STL Partners

Using estimated revenue from a variety of sources, including IDC, International Telecommunication Union, GSMA and ABI Research, for example, global service revenue might grow an additional $250 billion from 2023 to 2030. 

Revenue from new sources including edge computing, private networks and other horizontal services might add about $300 billion. But revenue from the mainstay subscription revenues might decline $250 billion as well. 

Revenue Source	2023 ($ billions)	2030 ($ billions)
Mobile subscription revenue	1,200	1,400
Fixed network subscription revenue	300	250
New revenue sources	100	400

 In other words, new revenue sources will be welcome, but might only offset declines in the legacy drivers of revenue. 

Revenue Source	2023	2030
Mobile subscription revenue	$1.5 trillion	$1.2 trillion
Fixed network subscription revenue	$0.5 trillion	$0.4 trillion
Edge computing	$0.3 billion	$3.2 billion
Private networks	$0.2 billion	$2.72 billion
IoT connections	$0.1 billion	$1.42 billion
Total

Of course, if one were to compile a list of forecasts for new revenue put together by suppliers, one would see a different set of numbers. New sources such as private networks might add $2.5 trillion in new revenue, for example, by 2030. Does that seem credible for an industry that only grows about two percent a year, and generates about $2 trillion a year in annual revenues?

Likewise, edge computing is thought by some proponents to represent $2.9 trillion in new revenue, in an industry generating only about $2 trillion in total revenue in 2023. 

Revenue Source $ Trillion	2023	2030
Mobile subscription revenue	1.50	1.20
Fixed network subscription revenue	0.50	0.40
Edge computing	0.30	3.20
Private networks	0.20	2.70
IoT connections	0.10	1.40
Total	2.60	8.90

The point is that revenue growth of such magnitudes represents a cumulative annual growth rate in excess of 23 percent. That is an order of magnitude higher than analysts expect the global service provider business to grow, overall. 

The only real issue is how far short the predictions of new revenue from edge computing, IoT, private networks and all other sources will fall short of the aggressive predictions.