Way too much is made of near-term potential revenue gains for mobile service providers because of 5G. Keep in mind that nearly every 5G account replaces an existing 4G account.
When a 5G account generates more revenue for a mobile service provider, it might sometimes be for a mix of reasons, such a customer switching from an account with a consumption allowance to an unlimited usatge account that costs more, as often as a revenue boost coming from a higher price for 5G, compared to 4G.
So revenue impact must be evaluated on a number of perhaps indirect metrics, including better new customer acquisition, lower churn and upsell prospects, on the revenue side of the ledger. Across the industry, “flat to declining ARPUs, despite upgrading subscribers to 5G,” are the likely outcome, ABI Research predicts.
There are other benefits, however, on the cost side of the ledger. Mobile operators must supply ever-increasing amounts of capacity across the whole network, but also most immediately at perhaps 20 percent of cell locations. 5G provides a more-efficient way of supplying lots of new capacity at a lower cost per bit than 4G, even when 4G capacity continues to improve, up to a point.
Some might therefore conclude that the whole 5G project is some sort of mistake.
“In the most advanced 5G market, South Korea, 5G has managed to stop the declining ARPU trend, but it is now clear that it cannot generate new consumer revenue” ABI Research notes.
New technology sometimes is important most crucially for suppliers, when they can reduce the underlying cost of consumer products supplier sell to consumers, while improving performance characteristics. That is not to underestimate the longer term value of new technology in enabling new products and better end user experience.
It is to note that 5G is important right away because it allows suppliers to position themselves for ever-increasing customer expectations, and not because dramatically-new and different experiences are the result of deployment. That will come, simply not at first.
In consumer markets, at first, the value of 5G accrues mostly to service providers, who can use 5G to alleviate congestion on urban cell sites. Only later will additional applications, use cases and end user experience benefits be created.