In Business Model, Internet Access, Mobile

5G will produce some incremental revenue. Just how much is not yet clear. It seems clear enough that 5G prices will be constrained by competitive pressures, no less than 4G was.  

Mike Sievert, T-Mobile US COO already has said that 5G pricing plans will not be set at higher rates than today’s 4G plans. “There are big enterprise opportunities, there are IoT opportunities, there more devices per users, there are new capabilities being developed, all of which we can monetize with revenue growth,” said Sievert. “But we don’t have plans for the smartphone plans that you see today to charge differently for 5G enablement versus 4G LTE.”

And Sievert possibly hints that significant revenues will come from T-Mobile US taking internet access market share away from fixed network suppliers. “So the incremental revenues come from more and more users picking wireless technologies instead of other technologies for their conductivity,” said Sievert.

For some, the inability to boost revenues by charging more for 5G connections is worrisome. Where is the immediate return from 5G capital investments. There are a couple rational answers to that question.

First, to the extent that 5G network investments are phased, and largely within existing capex budgets, 5G can be viewed as part of the normal upgrade of bandwidth that has been part of mobility since 2G.

It is a given that mobile and fixed network operators will have to continuously upgrade capacity supply to meet ever-growing data demand, so 5G is simply a lower-cost way of doing that, as 4G reaches the end of its ability to do so affordably.

In that sense, 5G is simply part of the continual bandwidth upgrade cycle, and not a sharp departure. 

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