Most observers now believe 5G revenue growth will be disproportionately driven by new use cases and value for enterprise applications. In large part, that is because businesses are expected to be the buyers of edge computing, network slicing and internet of things sensor applications.
That noted, consumer revenues in Europe, for example, are stable at about 68 percent of total revenue (mobile and fixed). In some markets, business revenues could range from 30 percent to 40 percent of total. Smaller providers might generate only about 15 percent of total revenue from business segments.
The implications are clear enough. It will be harder to move the revenue needle if revenue growth is driven by enterprise and business applications and use cases, compared to consumer use cases, simply because of the installed base of accounts.
Adding to the near-term possibilities is the fall in business revenues caused by Covid-19 economic shutdowns, which will crimp enterprise revenue and destroy as much as 60 percent of the smaller business customer base, permanently, at least for those small businesses forced to cease operations.
To be sure, business average revenue per account is higher than consumer ARPU, on either mobile or fixed networks. In virtually all markets, the differential in the mobile business has narrowed substantially over the last decade.
But mobile and fixed businesses still derive the majority of revenue from consumer services. At least for the near term, it is likely that business bankruptcies will inhibit the return to 2019 levels of business customer revenues.
Optimists about 5G business customer revenues expect revenue lift from new use cases related to internet of things or edge computing, for example. Evidence from the value-added services beyond connectivity might shed some light on reasonable expectations.
European telecom provider share of the business services market in Europe has fallen from 16.2 percent in 2014 to 14 percent in 2019, ETNO says. Those services, such as desktop management, hosting and colocation, security, public cloud services or unified communications, mostly are provided by third parties.
If mobile operators and other connectivity providers are as successful with value-added apps and services as they have been with other non-connectivity services, they might expect to capture a few percent of the opportunities, best case.
ETNO expects connectivity provider IoT revenues to represent about 2.7 percent of total revenue by about 2027, for example.
Connectivity alone generally represents less than 10 percent of total revenue from an IoT application, ETNO notes. In 2019, total IoT connectivity revenue in the ETNO countries reached EUR1.1 billion, about 0.4 percent of total telco revenues in the region and 1.2 percent of business segment connectivity revenues.
Revenues might grow steadily to reach EUR2.9 billion by 2027. In 2019, IoT accounted for 0.9 percent of mobile service revenue in Europe, and by 2027 this is forecast to have risen to just 2.6 percent.
Vehicle communications will likely provide the single biggest industry vertical revenue, ETNO says.
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