February 26, 2019

MWC 2019 Journal, Day 2: Improved Connectivity and Network Liquidity but Profitable Revenue Models are Still Scarce

The second day of Mobile World Congress 2019 brings about more insight into 5G and cloud networks, but skepticism still remains around realistic revenue models.

Mobile World Congress is now in full swing, and it has once again opened its doors to the mobile industry and the plethora of affiliated companies that aim to make money from existing and future networks. Services providers continue to respond to the evolution of 5G connectivity and the eventual rollout of what will hopefully be unique and profitable services. The mobile economy is now the same size as the economy of the fourth-largest world economy, Germany. More than 5.1 billion unique subscribers worldwide are connected via 8.8 billion mobile connections. As positive as that sounds, it is not without significant challenges that must be overcome. In most markets, connectivity is cheaper than coffee. Data volumes continue to grow at 50 percent per year, with the equivalent of 80 million years of Netflix content being generated this year. However, the unit value per byte continues to fall at a staggering rate. Even with the explosive data growth, the expectations for revenue growth have yet to materialize in the new 5G world.

In some of its keynote presentations, GSMA has been very quick to point to unnecessary regulations as one of the negative influencers to innovation, as greater levels of market competition actually hinder consistent network coverage. Some of these issues are and will be addressed via network liquidity, as NFV continues to roll out, bringing greater scale and service creativity to the end user, but it doesn’t solve the ultimate issue.

In 2019, the telecommunications industry faces a repeat of what we saw with the 3G revolution in its early days: the conundrum that data revenue growth isn’t driving revenue. As consumers upgrade to the latest $2,000 foldable handset (or not) and 5G networks expand the breadth of services available, the share of wallet isn’t going to increase without a truly unique service model. It may shift from one source to another (e.g., fixed-wireless access stealing customers from cable), but the value of network speeds and capabilities have yet to be monetized.

Fortunately, new sources that create data will be where future revenue is generated. We can expect that as 5G rolls out, 95 percent of new revenue will come from dedicated applications, platform and services. The derived value of those platforms creates the new “killer app” that every service provider will be after.

This new 5G era is also an opportunity to change legacy processes. As more services become cloud-native, service providers will expand their use of the cloud to both enable new services as well use it as the platform of choice for critical parts of their operations. The cloud model brings hyperscale, flexibility, faster time-to-market and lower-costing test and development environments, all of which are the cornerstones of any service provider’s transformation end state.

As these changes become prioritized, so must the need for operations and business support transformations for this new, faster, cloudified world. If you are attending Mobile World Congress, stop by the Netcracker booth in Hall 2 to learn about how our solutions can help service providers can transform and modernize critical infrastructure and derive maximum value from new revenue sources.

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