When mobile executives talk about monetizing 5G,what they really mean is “how can we boost revenue to cover the higher costs of 5G, compared to 4G?” Obviously, the primary driver of 5G revenue is the same as it was for 4G: mobile phone subscriptions largely sold to consumers.
All other revenue is ancillary to that fundamental driver, as none of the “new potential revenue sources” have the magnitude to displace the phone subscription model. Edge computing, private networks, IoT connections and virtual private networks collectively might only add single digit percentage increases to mobile operator revenues.
Only fixed wireless for home broadband has any near-term ability to lift revenue by as much as one percent to two percent. All the others combined might not reach one percent. Granted, supporters hope for much more, but right now it is just that: hope.
And even some “new 5G revenue” actually is hard to distinguish from all the other new features and services that are bundled with 5G. In other words, if purchasing 5G is required to get an unlimited usage plan, a plan supporting multiple users, a content subscription or other features, it is hard to attribute the sale strictly to 5G. In fact, 5G might be a feature of a plan desired for other reasons.
And monetization remains an issue because revenue generation remains a key issue. According to analysts at Omdia, worldwide revenues from mobile and fixed broadband services will grow 14 percent between 2022 and 2027. That is the good news.
The bad news? Monthly average revenue per user will fall by 4.2 percent from €7.48 in 2022 to €7.16 in 2027, Omdia forecasts. In other words, service providers are getting more customers, primarily in developing regions, but revenue per account is dropping.
“In mobile markets, it is now evident that 5G will not be sufficient to offset ARPU decline as customers are unwilling to pay more for it,” says Omdia.
In fixed network broadband markets, service providers sometimes see immediate and positive changes in revenue per account. That effect seems to fade over time, however, as competition intensifies, putting pressure on prices and profit margins. In other words, fiber-to-home revenue has, in some cases, dropped over time, rather than climbed.
5G monetization is not the actual issue. 5G simply replaces the lion’s share of revenue already earned by 4G services. The real issue is how much incremental new revenue can be generated from the 5G platform.
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