Will 5G Drive Higher Business Customer Revenues?
So who is right: customers who mostly claim they are willing to spend more for 5G than 4G, or suppliers of 5G, who mostly believe a price premium will not be sustainable?
A recent global Gartner survey revealed that 75 percent of respondents at end-user organizations would be willing to pay more for 5G mobile capabilities. Only 24 percent of the survey's respondents would be unwilling to pay more for 5G than for 4G.
The survey also found that respondents from the telecom sector tend to see 5G migration as a matter of gradual and inevitable infrastructural change, rather than as an opportunity to generate new revenue, Gartner notes.
With the important caveat that survey respondents often say one thing and do another, the use cases suggest incremental service provider revenue is possible, but mostly because there are many new use cases related to internet of thing, meaning a new class of connections will be required.
Also, even if most of the end user respondents think their organizations would be prepared to pay more for 5G, few (eight percent) expect 5G to deliver cost savings or increase revenues. That might suggest the respondents are incorrect about the price increases.
End users tend to see 5G as a network evolution (59 percent) and only secondarily as an enabler of digital business (37 percent).
On the other hand, the end user responses also suggest why the belief in incremental revenues has some foundation. The survey found that almost half the respondents intend to use 5G to access videos and fixed wireless capabilities. The former is unlikely to drive incremental spending, but the latter could, in many instances.
The reason is akin to the possible implications of software-defined wide area networks. In principle, fixed wireless could allow new high-bandwidth connections where they are today not economically attractive, as SD-WAN might do the same for business data connections.
Some 57 percent of respondents believe that their organization’s main intention is to use 5G to drive Internet of Things (IoT) communication, and that might well prove to be correct.
Some might argue, with persuasiveness, that 5G will offer new capabilities primarily for very-high bandwidth applications, and conversely for very-low bandwidth connections used by some IoT sensors, or use cases where low latency is a necessity.