Telecom revenue growth in most markets globally in 2020 will be rather restrained, as growth of gross domestic product also is constrained, and telecom spending by consumers tends to track GDP growth.
So it is unrealistic to expect 5G to alter retail connectivity provider revenue prospects very much. Consumer ability to spend on communications is limited, GDP growth is limited and so will 5G availability be limited. And most 5G accounts will replace 4G accounts, so there will be little net account growth.
In developed countries, for example, consumer spending on telecommunications services is about 1.5 percent to two percent of gross domestic product, and arguably is decreasing.
To be sure, spending can grow as GDP grows, but GDP growth is generally slow in developed markets, though faster in developing markets.
Moody’s Investors Service expects modest revenue growth of between 2.5 percent and 2.7 percent in 2020 for Asia Pacific telecommunication companies.
Gross domestic product in 2020 will grow about 3.8 percent. The point is that consumer spending on communications tends to be fixed, with spending increases happening at the rate of GDP growth or less.
Also, while some other markets can grow because they become substitutes for existing products, communications actually faces the opposite problem: its products face substitution by lower-cost or free products.
Yes, 5G will displace 4G accounts, but that is precisely the point: nearly every consumer 5G account simply replaces an existing 4G subscription.
Some might therefore question the value of 5G. That misses a key point: the key immediate value is “more bandwidth at lower costs.” So 5G is important initially for service providers.
The eventual advantage is new enterprise applications enabled by 5G, in conjunction with edge computing, artificial intelligence and the internet of things.
But on the consumer front, 5G is unlikely to move the revenue too much.
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