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Feb 10 2020

The CSP business case for 5G

The promise of 5G technology to transform the way we work, play, travel and communicate has created significant anticipation for new offerings in both business-to-business (B2B) and business-to-consumer (B2C) markets. Concurrently, communication service providers (CSPs) are tasked with identifying new, profitable solutions that leverage 5G to meet this demand. While many of these use cases have the potential to provide significant revenue opportunity, CSPs must weigh the required investments and identify the best business model that will lead to a positive ROI.

Though CSPs’ search for a sound business case for 5G continues, preliminary deployments and market response to 5G provides a glimpse of how the business case is coming together and what the future may hold.

Nearly every CSP globally that has rolled out 5G thus far is doing so in traditional use cases of the network, namely enhanced mobile broadband (eMBB) and fixed wireless access (FWA). Though the revenue potential of eMBB is limited, ROI can be reasonable when considering the significant reduction in cost-per-gigabyte compared to LTE, which mitigates the expense part of the ROI equation and can make it more efficient for a CSP to provide eMBB service to end users. Early indications in the U.S. and South Korea also suggest consumers will reach for higher tier eMBB plans in order to satisfy the bandwidth requirements that 5G utilizes. In the case of South Korea, some consumers are opting for higher tier plans to support the bandwidth and speed requirements for VR offerings provided by CSPs in that country, whereas in the U.S., some CSPs are offering 5G as part of their premium plans, which also include other value enhancers such as access to premium video content. The enhanced value proposition of these premium plans is causing some U.S. subscribers to justify spending more on eMBB.

The business case for FWA is much stronger and this use case for 5G can provide meaningful revenue and profit contribution for many CSPs across many countries depending on their situation and the dynamics of the market in which they operate. 5G can enable FWA to deliver a cost-effective, wireless fiber-like experience for high-speed internet access and is a viable solution for CSPs to garner new subscribers.

The 5G-related infrastructure and investments that will support eMBB and FWA will serve as a foundation on top of which CSPs will densify and enhance over time to support new, more advanced use cases of the network, such as immersive experiences (e.g., AR and VR gaming) and connected vehicles. Though it is too soon to say with certainty there will be positive ROI from these new use cases, early indications suggest the market dynamics in certain situations could make for an attractive opportunity for CSPs.

Selecting the most promising 5G use cases to maximize 5G ROI will require CSPs to conduct individual, comprehensive assessments that factor in a range of company-specific and market-specific variables. Building these assessments will enable CSPs to maximize their ROI from 5G.

To learn more about this research, read the research overview paper or watch the webinar.

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About Chris Antlitz

Chris Antlitz is a principal analyst at Technology Business Research, Inc., where he leads the telecom research portfolio. Chris covers the global telecom vendor and operator ecosystem and all major trends in the space, including 5G, NFV, SDN, edge compute, digital transformation and IoT. Chris has been quoted by major news sites including The Wall Street Journal, MarketWatch, TheStreet, eWEEK, FierceWireless, Network World, Telco Transformation and Computerworld.

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