5G IoT often is touted as a growth opportunity for mobile service providers, and rightly so. Sensors, appliances and computers supporting internet of things applications will generally have to communicate.
So the need for internet and data connectivity is not really an issue. How big the revenue opportunity might be is the key question.
The core problem for new 5G services in the edge computing, private networks or internet of things areas, for example, is that these lines of business will contribute almost non-measurable revenue increases for most mobile operators in the near to medium term. And even long term, one might argue that substitute products will satisfy much of the demand.
Keep in mind that mobile service represents about 75 percent of global service provider revenues. And that business is close to saturated in many markets.
The new revenue streams will be small in magnitude, while even a modest decline in a legacy service can--because of the larger size of the existing revenue streams--can pose big problems.
Still, many service providers, for example, expect big opportunities in business services, which underpin hopes for private networks, edge computing and IoT. But revenue magnitudes matter.
Mobile consumer revenue always drives the bulk of mobile operator service revenues. Fixed services add about 25 percent. And revenue growth is the key issue for both types of business.
Multi-access edge computing has been touted as a new value driver and revenue source for access providers. But how big a contribution might be possible is the issue. No matter how big the recurring service revenue becomes, it seems likely that most of the revenue will be reaped by the same sorts of firms that presently offer cloud computing as a service, and not access providers.
Private networks and internet of things connections always are said to be growth opportunities, and that remains correct. The only issue is “who” earns those revenues and “how much” revenue can be generated.
No matter how important internet and data connections are for IoT sensors and devices, most of that demand will likely be fulfilled by rival platforms, not mobile networks. Wide area network connectivity will play a role, but possibly mostly as indirect transport for devices that connect locally using Wi-Fi and other wireless in-building and in-home technologies.
And even when the mobile operator does provide the connections, per-device revenue is going to be a fraction of what we are accustomed to seeing from phone accounts.
The point is that it will be hard for new 5G services for enterprises and business to move the service provider revenue needle.
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