Showing posts sorted by date for query revenue growth mobile fixed. Sort by relevance Show all posts
Showing posts sorted by date for query revenue growth mobile fixed. Sort by relevance Show all posts

Wednesday, March 26, 2025

Asking the Wrong Question about 5G

The claim  that "5G has failed” is in some ways an odd one. On one hand, critics tend to cite the unfulfilled promises of exciting new use cases. On the other hand, critics tend not to focus on the lower latency, faster speeds or energy efficiency that each successive network also is founded upon. 


But that might be the main point: each successive mobile generation has been successful and necessary precisely for the reasons that consumer home broadband experiences have been based on ever-increasing bandwidth, capacity and access speeds. 


So alter the question just a bit to understand the real impact. Do you ever really hear observers arguing that mobility services (mobile phone service) actually have failed? One does not hear such claims because mobile service clearly has been a raging global success. 


Some 71 percent of humans presently use a mobile phone, according to the GSMA.  


source: World Economic Forum 


So “mobility” has clearly succeeded, even if some feel particular mobile platforms have not. To be sure, proponents have touted the creation of platforms for futuristic use cases (the network will support them), not the extent of usage. Some examples can always be cited, though often not mass market adoption. 


To be sure,  every mobile generation since 3G has made such claims. And we might advance some very-practical reasons for the claims. Each mobile generation requires the allocation of additional spectrum from governments, which have to be convinced to do so.


Pointing out the new potential applications; the contribution to economic growth; educational advantages and so forth are part of the effort to secure the new spectrum. 


Also, infrastructure suppliers have a vested interest in enticing operators to create whole new networks precisely because it might be possible to create new revenue streams, or provide


Still, each successive mobile platform has promised, and delivered, latency improvements of about 10 times over the preceding generation, as well as potential bandwidth (internet access speeds) of 10 times more, and typically also energy consumption efficiencies as well. 


The practical improvements always vary from laboratory tests, though. The actual behavior of all radio waves in real-world environments is an issue. So are the realities of impediments to signal propagation (walls, trees, other obstacles) and signal interference.


Cell geometry also matters. Higher bandwidth is possible when smaller cells are used. 


Higher bandwidth is possible when channel sizes are increased (as when channels are bonded together to create a single wider channel from two or more narrower channels). 


And real-world “customer-experienced speeds” also are dependent on which actual frequencies are used widely by each mobile generation. Lower frequencies propagate better, but higher frequencies support higher speeds, all other things being equal. 


Still, the point is that observers never question the “success” of the mobile phone and mobile networks, only the “failure” of futuristic apps to emerge. 


That is not the point. The primary and essential value of each successive mobile platform comes from network performance (lower latency, higher bandwidth) and not the possible new apps, which cannot be created by mobile operators in any case, anymore than internet service providers having created Facebook. Google, Amazon, YouTube or Uber. 


Mobile operators can only create the physical infrastructure third parties can use to create new use cases. And that has been accomplished. But then innovation leading to new apps rests in the hands of entrepreneurs and investors.  


That’s the whole implication of “permissionless innovation” the internet is based upon: innovators do not have to own networks to build apps that use the networks. The entities that own the access or transport networks do not necessarily or primarily create and own the apps. 


Oddly, the reverse tends to be the case: highly-successful consumer app providers find they can vertically integrate into core network transport as a means of lowering their costs. That is why most of the world’s long distance networks (subsea, especially) are built and owned by a relative handful of big app providers such as Alphabet (Google) and Meta. 


It is fair to note that few of the futuristic apps touted for 3G, 4G or 5G networks have become mass market realities. On the other hand, lots of highly-useful apps not envisioned for any of those networks have emerged.


Net

Predicted "Futuristic" Use Cases

Unexpected "Everyday" App Developments

3G

Video conferencing, mobile TV, advanced multimedia

Mobile social media (early stages), basic GPS navigation, early app stores

4G

Immersive VR/AR, high-definition mobile gaming, remote surgery

Ride-sharing apps (Uber, Lyft), widespread video streaming (YouTube, Netflix), robust social media (Instagram, TikTok), advanced turn-by-turn navigation (Google Maps)

5G

Holographic communication, tactile internet, massive IoT deployments

Enhanced real-time location based services, very high definition mobile video streaming, cloud gaming, very reliable real time social media interactions. Increased use of live streaming services, and the further enhancement of cloud based applications.


All of which suggests we are very bad at predicting the future; innovations often emerge unexpectedly and only when users see the value. 


Consider only the industrial, commercial, medical and other applications generally centered around the use of sensors and mobile networks as the connectivity mechanism. Most have not taken off in a significant way, even if there are some instances of viable and routine deployment. 


Generation

Touted Possible New Applications

3G

- Telematics for automotive industry5


- Smart home devices (thermostats, security cameras)1


- Traffic light systems1


- Vending machines with remote monitoring1


- GPS trackers for livestock1


- Wearable devices and e-readers1


- Medical alert devices1


- Remote weather stations1

4G

- Enhanced mobile broadband for video streaming and gaming6


- Smart home applications2


- Internet of Things (IoT) connectivity2


- Remote monitoring systems2


- Vehicle communications (real-time road information, navigation)2


- VoIP calls and video conferencing6


- Mobile payments6

5G

- Telesurgery and remote medical procedures4


- Fully autonomous vehicles4


- Advanced connected homes4


- Portable Virtual Reality (VR) experiences4


- Smart city infrastructure4


- Ultra-reliable low latency communication (URLLC)3


- Massive Machine Type Communication (mMTC)3


- Industrial automation and robotics8


- Remote patient monitoring in healthcare7


- Large-scale IoT deployments in agriculture, utilities, and logistics


For the most part, the futuristic appl;ications have not developed as expected, and when they do take hold, it often is in the subsequent generation.


Many expected 3G to produce mass market usage of videoconferencing. That did happen, but only in the 4G era, with social media and other multimedia messaging apps, for example. That is a fairly common pattern: we overestimate routine adoption by at least a decade. 


Use Case Prediction

Actual Adoption (at least early stage)

Delayed Applications Likely Emerging in Later Generations

3G Expectations

(Medical devices, telematics, mobile TV)1

4G Realizations (IoT connectivity, smart meters, vehicle telematics)2

4G Concepts for 5G Era

- Advanced industrial automation3

- Mobile medical monitoring systems3

- Smart grid controls3

- HD public safety cameras3

4G Expectations

(Massive IoT, Industry 4.0)2

5G Realizations (Network slicing, enhanced mobile broadband)4

5G Concepts for 6G Era

- Holographic communications5

- Autonomous vehicle networks57

- Network-as-sensor technology5

- Microsecond-latency telesurgery7

5G Expectations

(URLLC, mMTC)34

6G Projections

- 1,000x faster latency than 5G7

- AI-optimized networks5

- Energy-efficient massive IoT6

6G Horizon

- Real-time digital twins5

- Military-grade AR simulations5

- Advanced environmental sensing5

- 8K holographic streaming


The point is that mobile services and smartphone services have proven wildly successful. In fact, nobody doubts that. What often gets criticized are the many futuristic apps that could be developed with each next-generation mobile network.


That misses the point. As fixed network home broadband has to continually extend internet access speeds and bandwidth, so too do mobile networks. The bottom line is that each successive mobile generation succeeds to the extent it does so.


Saturday, February 22, 2025

Qualitative AI Benefits Will Likely Outweigh Quantitative Value

Firm leaders will definitely be expected to quantify the upside from their artificial intelligence capital investments. But those quantitative metrics are quite unlikely to capture the full value of AI investments, for similar reasons to the value created by the internet, which is partly quantitative (lower value chain costs; lower market barriers) and partly qualitative (convenience, transaction costs, collaboration cost and effort). 


In fact, the value of the qualitative enhancements, which cannot be directly quantified, likely are greater than the quantitative value that can be measured. 


Aspect

Internet (Quantitative)

Internet (Qualitative)

AI (Quantitative)

AI (Qualitative)

Economic Value

Disintermediates value chains (e.g., e-commerce cuts out retailers). Measurable in cost savings, market growth ($6.3 trillion e-commerce sales globally in 2023).

Enhances convenience and access (e.g., online shopping saves trips). Hard to price but drives user adoption.

Optimizes processes (e.g., AI in logistics cuts costs by 15-30%). Projected to add $13T to GDP by 2030.

Amplifies human productivity (e.g., faster decision-making). Felt as improved quality of work, not just output.

Time Efficiency

Speeds up transactions and info retrieval (e.g., seconds vs. hours at a library). Quantified in time saved per task.

Feels like less stress or more free time (e.g., instant answers via Google). Perception-based value.

Automates complex tasks (e.g., data analysis in minutes vs. days). Measurable in labor hours reduced.

Frees mental bandwidth for creativity (e.g., AI drafts let you refine vs. create). Subtle but transformative.

Scalability

Enables global reach for businesses (e.g., small sellers on Etsy reach millions). Seen in user bases and revenue.

Connects people socially or culturally (e.g., global friendships). Intangible sense of belonging.

Scales decision-making (e.g., AI diagnoses for millions). Quantified in throughput or accuracy rates.

Personalizes at scale (e.g., tailored learning for each student). Feels bespoke, enhancing individual experience.

Job Impact

Displaces some roles (e.g., travel agents) but creates others (e.g., web developers). Net job shift measurable.

Changes how we work (e.g., remote collaboration). Less about numbers, more about lifestyle shift.

Replaces routine jobs (e.g., cashier bots) while creating high-skill roles (e.g., AI trainers). Net effect trackable.

Augments roles (e.g., doctors with AI diagnostics). Enhances capability, not just efficiency—harder to measure.

User Experience

Increases access speed and volume (e.g., streaming vs. VHS rentals). Quantified in bandwidth or clicks.

Delivers entertainment or ease (e.g., Netflix binging). Emotional or convenience-driven value.

Boosts precision (e.g., recommendation algorithms hit 80% accuracy). Measurable in engagement metrics.

Feels intuitive or proactive (e.g., AI predicts your next song). Personal resonance over raw utility.

Data Utilization

Generates user data for monetization (e.g., ad revenue $600B+ in 2023). Clear financial metric.

Shapes how we navigate info (e.g., targeted ads feel relevant). Subtle influence on behavior.

Leverages data for predictions (e.g., fraud detection saves $B). Quantified in error rates or savings.

Adapts to individual patterns (e.g., AI learns your habits). Feels like an extension of self, not just a tool.


And many of the quantitative metrics overstate the impact. Consider a simple measurement of e-commerce retail sales, by revenue. Such metrics generally fail to discount the likelihood that the same products would have been sold through legacy channels. 


In other words, the value of internet retail sales is not the total sales volume, but rather the incremental savings to consumers (price savings, less shipping costs) or retailers (cost of sales). That is likely to be a low-single-digit percentage of sales volume. 


Beyond that, there are the disruptive effects of substitution, which have led to replacement of sales and profit for many legacy industries as new internet-based products replaced the existing products. 


Industry

Legacy Product/Service

Internet Substitute

Impact

Retail (Books, Music, Movies)

Physical stores, CDs, DVDs, printed books

E-commerce platforms (Amazon), streaming services (Spotify, Netflix), e-books

Significant decline in physical store sales, near-elimination of some physical media formats.

Media (News, Newspapers)

Printed newspapers, magazines

Online news websites, blogs, social media

Sharp decline in print subscriptions, shift to digital advertising.

Communications

Landline phones, postal mail

Email, instant messaging, video conferencing (Zoom)

Reduced use of traditional phone lines, decline in postal mail volume.

Travel

Travel agencies, paper tickets

Online travel agencies (Expedia), online booking platforms, digital tickets

Decline of traditional travel agencies, shift to online booking.

Education

Physical textbooks, in-person lectures

Online courses (Coursera), digital textbooks, online learning platforms

Increased accessibility of education, growth of online learning.

Advertising

Print ads, broadcast ads

Digital advertising (Google Ads, social media ads), targeted marketing

Shift from traditional to digital advertising, increased data-driven marketing.

Finance

Physical bank branches, paper statements

Online banking, mobile banking apps, digital statements, online trading platforms.

Reduction of physical bank branch traffic, increase in online financial transactions.

Photography

Film, physical photo albums, photo developing services

Digital cameras, smartphones, cloud storage, online photo printing.

Near elimination of film photography, shift to digital photo storage and sharing.


In some cases, we can quantify the shift. 


Industry

Source

Media (Newspapers)

U.S. Census Bureau: "Newspaper Publishers' estimated revenue dropped by 13.4%, from 2015 to 2022."

Telecommunications

U.S. Census Bureau: "Wired Telecommunications Carriers experienced a 29.6% drop in employer revenue generated through fixed local telephony services from 2015 to 2022, according to the SAS. Meantime, the industry's revenue from internet access services increased 46.3% from $79.1 billion in 2015 to $115.8 billion 1 in 2022."

Information Sector

U.S Census bureau: "The U.S. Census Bureau's 2022 Service Annual Survey (SAS) estimates that revenue of employer firms in the Internet Publishing and Broadcasting and Web Search Portals industry soared 181.9% from $120.2 billion in 2015 to $338.7 billion in 2 2022."

Internet Economy

IAB: "found that the internet economy grew seven times faster than the total U.S. economy during the past four years, and now accounts for 12 percent of the U.S. gross" 

https://www.census.gov/library/stories/2024/05/internet-growth.html

https://www.iab.com/news/study-finds-internet-economy-grew-seven-times-faster/


“Time saved” or “trips saved” likewise are hard to quantify. The former is helpful, but does not have an actual “cost” we can accurately measure. “Trips saved” might be calculated using a “fuel saved” or “miles not driven” or some other transportation cost savings. 


Study/Source

Focus

Estimated Annual Savings per Consumer

Year

Assumptions

PwC Global Consumer Insights (2023)

Time and Cost Savings

~$200-$300 (product cost savings)

2023

80% of consumers prioritize cost savings; assumes 5-10% savings on $3,000 annual online spend.

Shippo E-commerce Report (2023)

Travel Savings

~$150-$250 (reduced travel costs)

2023

60% shop online to avoid trips; assumes $10-$20 saved per trip, 12-15 trips avoided yearly.

Statista Mobile Commerce (2023)

Time Savings

~$50-$100 (time value)

2023

70% cite time savings; assumes 10-20 hours saved yearly at $5/hr (low-end opportunity cost).

Forbes E-commerce Stats (2023)

Item Costs

~$250-$400 (cheaper goods)

2023

$5.8T market driven by lower prices; assumes 8-12% savings on $3,500 annual retail spend.

Digital Commerce 360 (2022-2023)

Travel & Cost Savings

~$120-$180 (shipping as proxy for travel)

2023

62% value free shipping; assumes $10-$15 saved per order, 12 orders yearly.

Brand Builder University (2023)

Travel & Time Savings

~$200-$350 (travel + time)

2023

$436B mobile commerce; assumes $15-$25 saved per avoided trip, 10-14 trips yearly.

McKinsey Consumer Pulse (2022)

Incremental Cost Savings

~$180-$240 (online deal-seeking)

2022

27% e-commerce growth; assumes 6-8% savings on $3,000 annual spend via deals.

Hostinger E-commerce Stats (2023)

Time & Travel Savings

~$180-$300 (mobile convenience)

2023

60% mobile sales; assumes $12-$20 saved per trip, 10-15 trips avoided yearly.


In many cases, there are “losses” for individuals as well: jobs eliminated; wage rates depressed; product values decreased; legacy products displaced by substitutes. The aphorism that the internet “replaced analog dollars with digital dimes” captures the essence of the process: internet product substitutes often generate less gross revenue and profits than the legacy products they displace. 


Study/Source

Focus

Estimated Costs

Year

Notes & Assumptions

McKinsey Global Institute (2017)

Jobs Eliminated

400-800M jobs lost globally by 2030 due to automation/internet substitution

2017

Assumes 15-30% of work activities displaced; internet accelerates substitution trends.

NBER - Internet, Wages, Consumer Welfare (2006)

Lower Wage Rates

$8.3-$10.6B GDP gain offset by wage divergence in non-IT regions

2006

Broadband adoption boosts wages in IT areas but depresses them elsewhere by 1-3%.

ScienceDirect - Internet & Labor Productivity (2014)

Lower Product Demand

~$8.16-$14.60 GDP/worker lost per 1% internet use if demand shifts

2014

Based on 108 countries; assumes product substitution reduces traditional sector demand.

Brookings - Economy & Internet (2000)

Product Substitution

~$200B annual cost savings (firms) but losses in traditional retail margins

2000

Savings for firms; assumes 5-10% margin loss for offline retailers (~$50B-$100B).

NBER - Internet Changes Labor Market (2002)

Jobs Eliminated & Wages

10-20% wage premium for IT workers; 5-10% job loss in non-IT sectors

2002

Internet shifts demand to tech skills, reducing traditional jobs by 1-2M in US.

ScienceDirect - Internet & Industry Competition (2016)

Lower Product Demand

10-15% profitability drop in less competitive industries due to internet use

2016

HHI increase suggests smaller firms lose market share; assumes $10B-$20B loss/year.

IMF - Globalization & Wages (1997)

Lower Wage Rates

5-15% wage suppression in manufacturing due to online competition

1997

Older data; assumes internet amplifies global substitution, impacting 10M workers.

BLS - Tech Change Impact (2019-2029)

Jobs Eliminated

1.5-3M US jobs lost in routine tasks by 2029 due to internet-driven automation

2019

Projections for 2019-2029; assumes substitution in manufacturing/clerical roles.


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