It’s no secret that demand for data has been skyrocketing, driven primarily by increased video consumption.
Ericsson in its Mobility Report last year forecast average monthly data usage in North America is expected to rise from 5 GB in 2015 to a whopping 22 GB by 2021. And market research firm Analysys Mason added color to that figure earlier this month when it reported entertainment accounted for 57 percent of data usage and nearly a third of all time spent on smartphones. In terms of fixed access, Sandvine found entertainment already represents 70 percent of peak period traffic, and it’s clear mobile isn’t far behind.
As technology has shifted from a focus on connectivity to content, mobile carrier revenues have suffered. An analysis from Mobile Experts found that while the monthly expense for basic phone services has plummeted from the late 1950s to today, TV/radio and internet costs have increased exponentially.
But according to Mobile Experts, the move to 5G could provide some relief to struggling carriers.
The firm indicated 5G is expected to deliver a 10x reduction in cost per bit compared with LTE. Rather than pouring that savings into new use cases, much of it will be directed toward various video services, Mobile Experts said. Why? Because that’s where the money is.
“Personally, I don’t believe that new 5G applications will drive a lot of revenue. Virtual reality? No, that’s short-range wireless, not mobile. Massive IoT? No, we have cheaper solutions for that. Critical IoT? Maybe, but that revenue will grow very slowly,” Mobile Experts Principal Analyst Joe Madden commented. “There’s no growth in the phone business – the phone line is simply a tether that keeps a subscriber connected to an access provider. Prices for data keep coming down, so while there is potential growth in delivery of data, the future profit potential is weak. On the other hand, people that produce quality video programs are all migrating to Netflix and Amazon, and making more money than ever before.”
Rather than being a race to provide the best access technology, Madden predicted the battles of the future will be fought over control of high-quality entertainment – movies, shows, games, and virtual reality experiences. While wireless operators obviously need to make video delivery more cost-effective, it would also behoove them to develop a strong repertoire of entertainment options, he said.
