5G Monetization Will be both Direct and Indirect

Mobile operators will take different routes to monetizing 5G, some obvious, others less so. Some will monetize by not charging extra for 5G and taking market share from competitors who do charge for 5G. Some will boost revenues directly (charging an incremental amount for 5G) while others will do so indirectly. 

Some 55 percent of Verizon’s customers now buy unlimited data-usage plans, significant because that access provides 5G service, giving Verizon a way to monetize 5G in the guise of shifting customers to unlimited-usage plans. 

Some will bundle new or extra features; others will emphasize value. Some will pay more attention to enterprise use cases supporting internet of things or edge computing. Others will stick to the traditional values of mobility. Some will leverage 5G to deliver home broadband; others will not emphasize this use case. 

All will try to boost average revenue per account, however. That is important also because mobile service revenue tends to grow at a bit above the rate of gross domestic product. 

Different operators--with distinct spectrum portfolios--may make different choices about coverage and capacity value. Some will use millimeter wave spectrum primarily for capacity; others for coverage, as odd as that might sound, given millimeter coverage issues. 

“Our 5G millimeter wave strategy is a mobility strategy,” notes Ronan Dunne, Verizon Communications CEO, Consumer Group. Having that as a strategy, however, creates the opportunity to leverage millimeter capacity to support the consumer home broadband business. 

“Our opportunity then is that we have a lower cost per home passed because the marginal cost to us is not building that incremental 600-foot trench into each home or whatever,” says Dunne. “ It's simply the cost of CPE, which over time, will equate to the same cost as in the Fios footprint.”

Some operators will leverage content; others will see “pure access” as a competitive platform. Verizon contrasts its ability to offer “access only” service with a cable operator's heavier reliance on a bundle of video and broadband. 

It probably goes without saying that operators with both fixed and mobile assets will have different strategies for monetization than operators with mobile-only or fixed-only asset bases. 

“I would also say that the nature of the line between the wireless business and the wireline business is blurring,” says Dunne. “So I don't necessarily see them in the medium term as being two discrete markets anymore.