MTS in 2016, in its core Russian market, saw slightly negative revenue growth, year over year, in both its fixed network and mobile businesses. That might be one reason why MTS executives are skeptical about the 5G business case. Also, MTS, having largely finished its 4G network builds, would prefer to spend less on network capital, not more, which 5G will require.
As always, statements questioning business models have to be parsed. When any executive or scientist says “something cannot be done,” there are unstated qualifiers, whether the speaker acknowledges those qualifiers or does not.
When it is said that there is “no business model for 5G,” that can mean many things. It might mean that “at the present moment, before settled standards, available transmission gear and customer devices such as phones are available, there is no existing business model.” That is correct.
Sometimes, as with earlier generations of technology, some companies, having capital issues, and having just made a big platform investment, have downplayed the importance of a coming platform, to protect the value and revenue of their “just built” platform. That is reasonable, and provides yet another set of qualifiers: “we cannot, at the moment, having just finished our latest next-generation platform, afford to invest in yet another next-generation platform.” That also would be reasonable.
In other cases, the qualifiers might relate to potential market opportunities, as in “we do not see, in our current markets, serving current customers, incremental revenue opportunities of sufficient size to justify making the investment in 5G.” That also would be a rational set of qualifiers.
All of those sorts of qualifiers, and others you might think of, are reasonable enough ways to understand what actually is being said when one hears an exec say “there is no 5G business model.”
What is meant is that “there is no 5G business model for our assets, geographies, customer bases, financial resources, human and financial capital assets and markets, at this time, and with our current understanding of incremental revenue opportunities.”
That never should be taken as a statement that “no other company, in any market, and with any different set of resources, can create one or more new business models sufficient to support investment in 5G, at some point when standards, network platforms and consumer terminals are available.”
There is a difference between “we cannot do so” and “nobody can do so.”
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