Mobile Experts has recently released new market research that describes a cross-section of 5G costs and investment predictions. What it seems to show is that, although the telecom industry is heavily hyping up 5G, the hard financial calculations the firm did to determine the applications and scenarios where 5G can be successful indicate that pure speed and lower latency are not going to be enough to encourage adoptions of 5G. Rather, Mobile Experts says it has discerned that 5G should be able to achieve a 10x reduction in cost per bit compared with LTE, directed mostly toward video services of various kinds. And that means, there might not be any money in it.
“Personally, I don't believe that new 5G applications will drive a lot of revenue. Virtual reality? No, that's short-range wireless, not mobile. Massive IoT? No, we have cheaper solutions for that. Critical IoT? Maybe, but that revenue will grow very slowly,” said Joe Madden, Principal Analyst, Mobile Experts.
According to the report, the real problem that faces mobile operators is financial: they are expected to deliver more data, but revenue growth is slowing down. Verizon has a distinctly slowed earnings outlook currently, and that could be due to this trend of needing more data at lower cost, the researchers said. Since about 70 percent of data traffic is video content, operators really need a cheaper pipe for video, which might be why they are pushing for 5G adoption so hard.
“We've been tracking the estimated cost of a mobile 5G network and the likely architecture that it will follow," said Madden. "Over the past three years, our predictions about the structure of the 5G network have been correct so far: the LTE control plane will be used, and operators will rely on both low band (<6 GHz) and high band (20+ GHz) spectrum to achieve both coverage and capacity. As the industry reaches consensus on these concepts, we've been locking them in to our cost model.”
Ten years from now, Mobile Experts’ analysts predict that the “phone” will not be a meaningful part of the market. Instead, the battle for control over high-quality movies, shows, games, and VR will define the winners and losers. Mobile Experts suggests that operators use 5G to make video delivery cost-effective—but they also need to work just as hard on developing their menu of entertainment choices.
Edited by
Alicia Young
