5G: The Driving Force Behind Mobile Operator Revenue

November 2020

Telecoms & Connectivity

Sam Barker

VP of Telecoms Market Research

Despite 2020 only being its first full year of commercial service, 5G is expected to become the driving force behind mobile operator revenue. Indeed, a new study from Juniper Research anticipates that 5G revenue will represent 44% of global operator billed revenue, thanks to the rapid migration of 4G mobile subscribers to 5G networks and new business use cases enabled by 5G technology. One of the reasons behind this growth is that 5G roll-outs are highly resilient to the COVID-19 pandemic, as supply chain disruptions caused by the initial periods of the pandemic have been mitigated through modified physical roll-out procedures.

The positive consequences of 5G adoption are a welcoming change in the telecommunications industry, which has been experiencing declining revenue over the past decade. Services offered by operators have indeed often become commoditised by both consumers and enterprise users, with the exceptions of North America and the Far East & China.

We believe that from 2024 onwards, 5G connectivity will be the only technology standard growing globally. Yet, 2G and 3G will still be prevalent, due to their reliance in regions such as the Indian Subcontinent and Africa & Middle East. Despite this, the emergence of 5G will also prove beneficial in increasing operators’ non-core revenue. For example, we believe that 5G technologies will further demand for private cellular network, another new operator revenue stream, especially in instances where there is a high density of connectors/sensors, or the need for ultra-low latency. Indeed, LTE will not suffice in these scenarios.

Operators therefore need to seize the opportunities brought by 5G technologies. To secure a return on investment into new services, such as uRLLC (Ultra-Reliable Low-Latency Communication) and network slicing, enabled by 5G, operators will apply this premium pricing for 5G connections. However, these services alongside the high-bandwidth capabilities of 5G will create data-intensive use cases that lead to a 270% growth in data traffic generated by all cellular connections over the next five years.

In order to achieve this outstanding growth, then, we encourage operators to ensure that they are able to offer networks with architectures that can be modified to best suit the needs of the end user. Furthermore, they must use future launches of standalone 5G network as an opportunity to further increase virtualisation in core networks. We believe that failure to develop 5G network architectures that handle increasing traffic will lead to reduced network functionality, inevitably leading to a diminished value proposition of its 5G network amongst end users.