5G: Unlimited data… but what about our revenues?
With Vodafone, Three and EE all recently announcing unlimited 5G voice and data tariffs, and O2, only this week, bringing a 4G tariff to the table that includes “unlimited data”, I am sure that there are meeting rooms and boardrooms across the country, full of concerned senior management teams asking “But what about our revenues?” and if there aren’t, there probably should be.
The majority of us who have been working in mobile for a significant amount of time have long suspected that, as previously seen with minutes and SMS, unlimited data was inevitable. 5G now seems to be the key driver forcing the networks down this road. I believe the main reason they haven’t done this before is the negative impact we all suspect it will have on our revenues.
Hundreds of millions are spent each month on data consumption that falls outside of standard allowances in the UK. Therefore, in order for unlimited data offerings to become an industry standard, there surely needs to be an opportunity, a new BIG thing, to make up for this massive potential loss to the market and, in turn, the shareholders.
5G is clearly considered to be that opportunity, that new BIG thing that all of the networks were waiting for. The proposed speeds and latency available with 5G will drive a new host of exciting technology, the likes of which we are already starting to see. Networks, resellers, ISPs and their partners should already be considering expanding their portfolios in the near future, preparing to be in a position where they are not only offering basic connectivity via SIM-based subscriptions but also offering entire Internet of Things (IoT) and Fixed Wireless Access (FWA) solutions.
For me, the most obvious route for an existing communications provider, already selling lines, broadband and Ethernet, would be FWA. Not only will you find opportunity in the upcoming PSTN switch off, requiring all users of traditional fixed telephony to make the jump over to VoIP services, including existing analogue users who will require a new high speed, low latency internet connection, for both home and business. But also, in those areas with poor broadband speeds due to location, where 5G FWA solutions can offer users a truly “superfast” experience for the first time.
If the network infrastructure and wireless technology is implemented efficiently, we could genuinely see mobile broadband taking the lion’s share of all internet connectivity requirements within the next 5-10 years. To give you an idea of the size of that opportunity, there were 5.7 million registered SMEs and 27 million listed households in the UK in 2018.
Then there’s the opportunity to specialise in specific solutions, for key verticals, with vastly expanding plans for smart cities. Devices such as connected sensors that gather and manage data on anything from energy consumption – to enable massive cost savings on waste energy – to vehicle traffic – with systems linked to traffic lights and road systems that could be automatically manipulated to reduce tailbacks and create safe and clear passage in congested areas for emergency services.
On the subject of vehicles, we are already seeing smart transport coming on in leaps and bounds, while the potential low latency service offered by 5G will truly support the self-driving vehicle prototypes already being tested and innovations around in-car entertainment will soon follow. However, realistically, this is quite some way away, given 5G would need vast land coverage for driverless travel and 5G connectivity on the move.
Whichever way you look at it, the industry has to accept that “unlimited” usage is here and it will only grow more popular, and inevitably cheaper, over time, presenting a lower Average Revenue per User (ARPU) across the industry and, ultimately, impacting all of our targeted deliverables.
It’s certainly not all doom and gloom though, I want to reassure everyone that existing set limit, lower user voice/data tariffs and shared data group packages will still be very much in demand; they will not just disappear overnight. Additionally, and possibly more importantly, the new channels of opportunity, the likes of which we are only just touching the surface, are already becoming apparent. These could not only fill that hole in revenue, but potentially increase your overall customer base spend considerably.
As key players in the Channel, the Digital Wholesale Solutions product team will be looking to the future with an open mind, learning all we can about what could work for our partners and their customers, working tirelessly to implement these solutions effectively, and it is imperative that you look to do the same.
This really might be the beginning of the end for what has long been a “gravy train” for the mobile industry, but I’m confident in the knowledge that there are many more trains set to leave the station… Just make sure you’re all on board.