Early in the introduction of 4G networks, many argued that the value, and financial return, would come from growth of data revenues and other application revenue, which would offset declining voice and messaging revenue.
Note the list of new apps and use cases expected to drive new revenues and use cases. Many of them resemble the advantages cited for 5G networks. In retrospect, it is fair to note that expectations for new revenue sources has been less than predicted, the contribution of data revenue greater than expected.
Still, not even higher data revenues have been enough to offset a decline in average revenue per user.
By some estimates, the meaningful new revenue Verizon has created in recent years--that can affect the revenue volume--do not flow from the actual mobile network itself, but content efforts that generate advertising revenues.
AT&T earns a greater percentage of total revenue from content assets, but the point is the same: significant new revenues based on mobile use cases and apps have not had much material impact on revenue.
That is not to say such revenues cannot be created; only that it has proven quite challenging. That is why some of us believe Verizon’s fixed wireless initiative is likely to produce the greatest amount of identifiable “new” revenue, from new sources, in the early 5G era.
And that is largely for situational reasons: Verizon has the smallest “households passed” footprint of any of its major rivals, telco or cable. It therefore has the greatest financial upside from using fixed wireless to attack existing suppliers of fixed network internet access outside its own fixed network region.
It is early to predict how 5G might develop. But experience with 4G suggests it will not be easy to create meaningful new revenue from new use cases, in the early going. Mobile entertainment video services likely are the first place to look for revenue upside big enough to matter.
And what likely will matter is not the total volume of mobile advertising and subscription revenue in total, but the amount that mobile service providers can garner. Generally speaking, that means owning the actual services, and the subscriptions and ad revenues that can be generated on those services.
The bottom line is that, in the early going, it is going to be tough to identify just how much incremental new revenue 5G generates for mobile service providers. Many will count the value of the 5G access account. Some of us consider that mostly product substitution (5G for 4G), and a form of cannibalization, producing marginal, if any, incremental revenue.
Fixed wireless and mobile subscriptions seem the two candidates for early material success. Verizon targets the former, AT&T the latter.
Meaningful new IoT revenue will take longer to develop.
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