I’ve been increasingly excerpting Analyst reports which I find insightful as my group works with global Telcos on 5G and enterprise platform deployments. Telcos are convinced that they can profit from 5G core in the B2B market, but the value case for consumers is less obvious. According to McKinsey, numerous exciting innovations may change that.
According to the McKinsey Report “Unlocking the value of 5G in the B2C marketplace,” Telcos can access additional revenue sources if they focus on providing customized client experiences rather than just selling connectivity. For instance, seamless multiplayer cloud gaming, AR sports streaming, and other enhanced experiences that are widely desired by specific demographic groups can be made possible by the fast speeds and low latency of 5G. The revenue potential of serving these kinds of consumer categories will increase as new, appealing 5G-based products and services emerge.
Customers have indicated a readiness to pay for the following 5G-enabled experience use cases, according to McKinsey research. From the Repor[1]
Low-latency multiplayer gaming: Real-time, multiplayer gaming, featuring AR and high degrees of interaction; potential ARPU increase of 2.0 to 2.5 percent.
Immersive entertainment: Virtual-reality (VR) entertainment, featuring 360-degree views, for watching sports, visiting museums, exploring cities, and more; potential ARPU increase of 4.0 to 4.5 percent.
Smart stadiums: Connected experiences built into live sporting events or concerts allowing spectators to view the event from multiple angles and access augmented content through personal screens or smartphones; potential ARPU increase of 0.5 percent.
Fixed wireless access (FWA) hybrid plan: Hybrid router—using both fiber and 5G connectivity—to offer ultrahigh network stability and high-speed broadband (with no outage, thanks to 5G) in the home; potential ARPU increase of 1.0 to 1.5 percent.
Real-time translation: Translation services in real-time, including as an add-in for videoconferencing or to aid in live discussions; potential ARPU increase of 0.5 percent.
5G deployments are already underway as operators have realized the immense value that 5G can provide in the B2B space. The value of 5G, however, is still unclear in the B2C sector.
Although 5G promises to bring about significant improvements in a number of areas—for example, by lowering lag time and enabling high-quality video streaming from virtually anywhere—there aren’t any 5G use cases that are now compelling enough to change the lives of regular consumers. Potential “killer apps” could appear and persuade substantial segments of consumers to pay more for enhanced connectivity. Telcos are having trouble estimating the cost of 5G for consumers since they are unsure of whether and when these apps will be available.
Carriers have a new opportunity to charge customers for what 5G promises and delivers as the telco industry deals with a jump in network traffic volume, a vast proliferation of connected devices, and a future based around ubiquitous automation and augmented reality (AR).
The report is a crisp 30-minute read and is highly recommended.
References
[1] McKinsey – “Unlocking the value of 5G in the B2C Marketplace” https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/unlocking-the-value-of-5g-in-the-b2c-marketplace