Preparing for 5G: Modeling the Revenue Opportunity
Our friends at iGR recently published a report on practical revenue opportunities once 5G finally goes mainstream. Estimates on availability for 5G services are not expected until 2020,* so there is plenty of time to prepare. Considering Bandwidth Logic is in the communications infrastructure industry, we keep a watchful eye on developments that impact our customers.
According to the report, “U.S. 5G Revenues, 2021-2026: The need for new revenue sources,” the first 5G services are likely to include some or all of the following:
• High bandwidth services for mobile devices, including support for HD video.
• Support for fixed wireless video and Internet services, including HD video.
• Types of “evolved” IoT use cases that goes beyond today’s examples of metering, connected cars and homes, and B2B applications that connect stoves and vending machines to their owners’ back-end systems – and many other examples. Potential revenues from 5G IoT are not included in this model.
• Wide-support for advertising-driven business models to support new mobile business cases. Note that potential revenues from product placement (in operator-created content) and sponsored content are not included in this model.
• Support for network ‘slicing’ enabling mobile operators to provide private network services to third party organizations. This model does not include a revenue forecast for network slicing.
The report details each of these areas, and projects revenues in four ways. The first is ARPU (Average Revenue Per Unit). “In 2021 iGR forecasts that monthly ARPU will be $54.76, which due to continued competition is lower than today’s mobile ARPU. The mobile services monthly ARPU is expected to decline to $47.02 by the end of the forecast period.” The second is revenue generated by advertising online and on social sites, measured by CPM or cost per thousand impressions. The third measure is fixed wireless broadband service subscriptions and bundles, and the final measure is entertainment services where mobile operators will sell directly to consumers via subscriptions.
Clearly, as the report states, “Preparing a forecast for potential revenues that are four years away is obviously difficult and requires a considerable number of assumptions,” iGR could be way off in its calculations, but one observation is indisputable. If you manage a building, a campus, a stadium, transportation network, or any physical structure… you’re gonna need a bigger boat. It’s coming.
For more information on the report, contact Iain Gillott at (512) 263-5682.
*iGR considers 5G as networks using IMT-2020, with commercial services available in 2021.
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