Where's the New 5G Revenue?

In purely technical terms, every digital mobile generation (3G, 4G, 5G) has produced an order of magnitude increase in bandwidth and an order of magnitude decrease in latency. Each next-generation network has used more advanced coding and modulation, partly responsible for the increased bandwidth.

5G might exceed or add to those order-of-magnitude increases in energy efficiency and device density. What arguably could be different are features of the network that support new use cases beyond those requiring lower latency or much-higher bandwidths. 

source: PwC

Stand-alone 5G networks will run on virtualized cores, allowing network slicing (easier creation and tear down of virtual private networks) as well as virtualized radio access networks that run at lower cost. 

At least in part because new millimeter wave spectrum will be used, small cells will be more prevalent, especially to support indoor venue coverage. Denser small cell networks also will provide more capacity in urban and other high-traffic areas. 

But not every country and market actually needs additional bandwidth “right now.” Some markets, including the United States, actually do require additional bandwidth in the near future, simply to support current usage patterns. But in many markets, 4G has a longer useful runway, and the need for 5G capacity is not generally required. 

That likely means that new use cases and applications, enabled by the network, could emerge as the driver of incremental 5G new revenues, beyond supporting mobile phone users. 

source: PwC

What those capabilities mean for revenues, new revenue sources and profits are not yet completely clear. Many believe that most consumer revenues will be relatively unaffected by 5G, as accounts simply shift from 4G to use of 5G with little incremental revenue lift. 

That leaves all the enterprise use cases--internet of things, ultra-low-latency edge computing, virtual and private networks as the places for incremental revenue growth. 

The exception might be fixed wireless. Near term, fixed wireless--considered as a new use case, even if serving consumers--might produce the most-significant “new” revenue sources for some mobile operators. The reason is simply that it allows “mobile” operators to sell what has been a “fixed network” service domain for the first time. 

That is especially true for “mobile only” service providers or mobile operators who now are able to sell home internet access outside their core fixed network service areas. 

Even if, for most consumer mobile phone users 5G simply will be experienced as “faster internet access,” the experiential gains will be hard to detect, since most applications will not be able to benefit from speeds greater than 30 Mbps or so, and 4G often delivers that already. 

That especially is true for mobile phone use cases, as the “multi-user advantage” of faster speeds is not relevant, as would be the case for a fixed connection supporting many users. 

Some have noted that the primary business advantage of 4G for operators has been “lower cost per bit,” and that will be true for 5G as well. Direct consumer revenue gains will be hard to detect. What likely matters are enterprise use cases.