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5G set to be worth US$31tn by 2030, spurring new ecosystems

September 21, 2021

5G set to be worth US$31tn by 2030, spurring new ecosystems

Jonathan Kriegel

CEO

A recent report compiled by research company Omdia in partnership with Ericsson emphasises the importance of consumer services – including mobile, fixed voice, broadband, TV and video – to telcos and MNOs as they continue rolling out fifth-generation (5G) mobile networks.

Ericsson ConsumerLab conducted an online survey of 7,500 smartphone users in Australia, Belgium, China, France, Finland, Germany, Ireland, Italy, Romania, South Korea, Sweden, Switzerland, the UK, the UK, the UAE, Qatar, and the Kingdom of Saudi Arabia in July 2020. The study aimed to uncover the 5G consumer revenue opportunity for telcos and MNOs over the next decade.

It estimates that mobile, fixed voice, broadband, TV and video services accounted for 56% of communications services provider (CSP) turnover in 2019 on average, up to two percentage points over 2017. Those same consumer services will deliver most CSPs’ 5G mobile revenue over the next decade. Ericsson and Omdia estimate that 5G technology will drive US$31tn of revenues across the ICT industry between 2021 and 2030, US$3.7tn of which (US$712bn annually) could find its way to CSPs specifically.

Digital service revenue can directly generate US$131bn within the same period with opportunities in the enhanced video (4K/8K video-on-demand formats, for example), advertising, in-car connectivity and extended reality (XR, AR and VR). And being proactive in driving 5G differentiation now could deliver average revenue per user (ARPU), up to 34% higher between 2021 and 2030. By that time, almost six bn 5G subscribers are likely to spend an average of US$9.61 a month with those service providers, calculate Ericsson and Omdia.

Multi-device bundles to include smartwatches

The benefits of 5G have so far been sold to consumers as faster mobile data download speeds and increased capacity, which delivers a more reliable connectivity experience. In another report – 2021 Trends to Watch: 5G – Omdia recommends that providers need to start using their 5G capabilities as an additional pricing lever now to attract more subscribers.

That should involve various tactics, including re-tariffing 4G data bundles, content and digital services subscription add-ons. They could also deliver multi-device options, including smartwatches from the likes of Apple, Huawei, Samsung and Garmin alongside handsets, for example. Consumer expenditure on these devices has been growing fast over the past couple of years.

The latest edition of its Global Smartwatch Shipments Tracker Counterpoint calculates that smartwatch sales revenue expanded 27% year on year in the second quarter of 2021. That performance was driven by strong demand for devices costing under US$100, with India representing the fastest growing market, increasing its share from 2% of the total in Q220 to 6% in Q221.

Partner ecosystem to deliver the most significant advantage

Rather than any single “killer” 5G app or service, the most robust foundation for future growth that any operator can establish now is perhaps a solid team of multiple innovative content partners. This year will indicate whether those partner orchestration and management capabilities are in place. Still, it might be next before they start to deliver the apps, content and services which help telcos and MNOs start to grow their 5G subscriber growth and revenue in earnest.

For most of 2021, winning the 5G game will be about fine-tuning customer segmentation and finding partners that can add value and differentiation to operators’ 5G proposition, including delivering premium content and experiences. That could include collaboration with content-owners offering paid-for access to one-off premium events, such as music concerts and sporting competitions. But service providers should also harness their 5G capabilities to deliver enhanced communications services around high-quality group calling and enriched messaging.

Omdia recommends that CSPs invest in their ability to manage multiple 5G ecosystem partners to offer end-to-end solutions to their customers, which will include over the top video and audio service providers and games developers and device manufacturers. Alliances with handset makers are already well established and can extend to smartwatch makers, many of whom, like Apple, Huawei and Samsung, are the same companies.

5G allows content providers to get creative

On the other side of the equation, the expansion of 5G networks and subscriber base also presents content providers with a wealth of opportunities to deliver off-the-shelf content and find new ways of offering that content using the faster, lower latency mobile bandwidth available. They should be creative in what they offer and match their telco partners to the technical requirements of the apps and services they offer.

Network quality will play a more critical role in service differentiation within 5G architectures than in the 4G equivalent. Consumers will notice the difference and make their choice, accordingly, predicts Omdia. But ultimately, it is the early adoption of service-centric 5G pricing models which offers the best chance for MNOs to differentiate their 5G offerings and avoid becoming commoditised data pipes in the eyes of both prospective customers and over-the-top content providers. We address this issue in much detail in our recently published whitepaper titled, “Crossing the chasm: mobile carriers accelerate digital services play”.

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