5G ushers in a new world of opportunities
What’s ahead for telecom providers in 2019? Fifth generation (5G) wireless technologies will be gaining ground quickly, unleashing the full potential of augmented and virtual reality, Smart Cities, and IoT. Mic Locker, managing director in Deloitte Consulting LLP’s Technology, Media & Telecommunications (TMT) industry practice, shares her thoughts on opportunities for growth in our new telecom industry overview.
2019 will present several opportunities for providers to bolster current revenue sources-or to create entirely new revenue streams. Many of those opportunities will arise from changing market conditions and consumer preferences-and from the first large-scale rollouts of 5G technologies, which are expected to create significant business opportunities for telecom companies.
Even before the rollout of the 5G, there is work to be done. Consumers continue to display an insatiable appetite for mobile data. With more data-heavy applications securing their place in consumers’ daily lives, we only expect this trend to continue. Consumers demand higher data limits, and they opt in for unlimited data plans. According to the US edition of Deloitte’s 2018 Global Mobile Consumer Survey, 37 percent of respondents now have unlimited data plans—up from 25 percent in 2017.1 We now see providers offering lower prices for these plans as well as a variety of bundled services, decreasing the average revenue per user (ARPU). To balance the competitive landscape and possibly stabilize pricing, telecom companies will likely be looking to expand their boundaries and search for new opportunities.
One of the main opportunities could come from consolidations and partnerships, especially in the areas of cable and content. Today, we observe a high number of consumers who prefer video streaming services over cable subscriptions. Our Digital Media Trends survey revealed that 55 percent of US households now subscribe to paid video streaming services while pay-TV penetration fell to 63 percent-down from 75 percent the previous year.2
In response, cable companies are looking to augment their pay-TV business with communications services—and by extending their programming distributions beyond fixed lines. Changing dynamics and competitive pressures from both sides can encourage telecommunications providers to consider M&A deals to integrate content and media into their offerings. Partnerships are also likely to increase as providers attempt to accelerate development of new business models and services based on 5G technology.
Once available, 5G is expected to create significant business opportunities for telecom companies,3 helping them gain revenue in the fixed broadband market and business-to-business (B2B) opportunities such as smart cities and Internet of Things (IoT). It will also provide the ideal environment for telecommunications providers to employ “network slicing” to customize their offerings.4 In the context of 5G, this will enable sharing of a given physical network to run IoT, mobile broadband, and very low-latency applications-including many connected-car and connected-home functions that have the potential to create entirely new revenue sources for providers in 2019.5
Two other key revenue-generating opportunities for telecom providers will be mHealth and mPayments. In the area of mHealth, operators can monetize services targeted to the growing number of subscribers who have adopted health care–centric wearables to, for example, help them ensure they’re taking the proper dosages of medications. In the world of mPayments, on the other hand, mobile operators can play a different role: As an integrator for devices, applications, methods of mobile payment, and customer identity management. One study estimated that this strategy could help telecommunications providers increase their mobile payments revenue at least fourfold by 2022.