The evolution of networks from 4G to 5G has brought unprecedented opportunities for telecom operators and businesses worldwide. While data consumption and enterprise solutions have driven revenue in the 4G era, 5G brings new opportunities through network slicing, Fixed Wireless Access (FWA), cloud partnerships and more. As we move forward, Artificial Intelligence (AI), the Internet of Things (IoT), and future innovations with 6G will further shape the monetisation strategies of telecom operators. This is typically what you may have read about monetization from the perspective of a telco or network gear vendor, or in their press releases.
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For the sake of realism, let's map out what telcos, vendors, and other members of the telco ecosystem have said at various instances and analyse the current telecom monetisation landscape.
What is Monetisation?
First, let's start with the basics—what is monetisation? In the telecom industry, monetisation refers to the process of generating revenue from telecommunications services, infrastructure, and digital offerings. Simply put, telcos invest significant capital into network infrastructure and technology to provide connectivity and digital services.
When customers pay for various services offered by telcos, companies generate revenue and recover their investments. Thus, customers paying for plans and packs—voice, data, SMS—along with value-added services (VAS), enterprise solutions, or other offerings, all fall under the monetisation aspect for telcos.
Telecom Industry Buzzwords for Monetisation
Now, let's analyze what telcos and gear vendors have presented at various instances and compare it with the reality from a consumer perspective.
Before delving further, let's take a look at the current buzzwords that the telecom industry claims will drive monetisation—5G, 5G Standalone Network (SA), 5G Advanced Capability, Fixed Wireless Access (FWA), Network Slicing (a feature of 5G SA), Application Programming Interfaces (APIs), Artificial Intelligence (AI) services, Generative AI apps, the IoT ecosystem, Reduced Capability (RedCap) service for IoT, programmable networks, and others.
4G and 5G Services in India
Now, turning to the Indian market, incumbent telcos initially launched 4G networks, followed by VoLTE capability, the stabilization of 4G VoLTE services, and later the launch of VoWi-Fi services. According to the government, 4G now covers 99 percent of the population. 4G was a much-needed upgrade, offering high-speed internet connectivity and HD voice.
Regarding 5G, Airtel officially launched 5G services in October 2022, followed by Jio. So far, only two operators—Airtel and Jio—are offering 5G on a complimentary basis with select 4G data plans. There is currently no monetisation aspect for 5G services. More than two years and three months since the launch of 5G, operators claim that there is no use case for 5G except speed differentiation for customers.
In India, as we all know, it was Jio that first started offering free unlimited 4G and Unlimited 5G services, forcing other operators to launch similar offerings.
Also Read: Reliance Jio Slows Down 5G Expansion Amid Monetisation Issues: Report
Vodafone Idea Unlimited Offering
Vodafone Idea, another private Indian telecom operator, has reportedly started trials of 5G services in the Mumbai circle and may officially launch them this month. However, Vi is already offering unlimited 4G or almost generous amount of data on most of its plans, such as Hero and Vi SuperHero. From a technological standpoint and use case perspective, the maximum a user can do on 5G is stream video seamlessly, which they can already do on 4G. Therefore, considering current pricing and offers, there is little excitement or monetisation potential in this regard with 5G.
Also Read: Vodafone Idea Targets Gaming and Content to Expand 4G Subscriber Base: Report
Vi: Gaming and Entertainment Services
Vodafone Idea's Chief Marketing Officer reportedly stated in September last year that the telco is ramping up efforts to develop gaming and entertainment as service categories to drive data consumption. Furthermore, he noted that the growth of the pay-to-play model presents a monetisation opportunity.
TelecomTalk: In both cases, a consumer must pay for both the game and the data, increasing the monetisation aspect. We believe, the said growth in gaming is primarily driven by cheap data, ultimately circling back to telcos' efforts to monetise data.
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Enterprise 5G
If we consider enterprise usage of 5G, let's examine what Vodafone Idea's CTO said in October 2024 about private 5G networks: Private 5G networks for enterprise deployments have not taken off globally. The reason could be that there is no business case. We have conducted trials for one or two customers, but we don’t see a strong use case that justifies the cost.
A senior Airtel executive, speaking about industrial applications, reportedly said: For tangible monetisation, 5G still requires significant application development for the technology to be fully utilized and create revenue opportunities. These must be industrial applications. For that, you don't need ubiquitous networks, you need more bespoke networks."
Also Read: 5G Yet to Create New Revenue Streams for Telecom Operators, Says Airtel Executive: Report
GenAI App Usage by Smartphone Users
According to the Ericsson Consumer Lab Report (November 26, 2024), the number of smartphone owners using GenAI apps is expected to increase over the next five years. These users indicate a willingness to pay a premium for guaranteed performance. 67 percent of 5G smartphone users in India are expected to use GenAI apps weekly within the next five years.
TelecomTalk: If we consider this projected type of usage, GenAI apps will need to be freely available to users, with only data costs borne by the user. On the contrary, some statements suggest that GenAI app developers and companies are also anticipating paid models and revenue monetisation opportunities. In such cases, we may need to assume that customers will be willing to pay for both data and GenAI apps, leading to increased usage and consumption.
Also Read: Ericsson Survey Sees AI Apps Driving Demand for Differentiated 5G Connectivity Plans
Premium Service at Events
According to the same Ericsson report, 5G deployment in India is likely to shift focus from availability to enhancing the experience at key locations such as stadiums, public transportation hubs, airports, and commuting routes. One in six 5G users is willing to pay 20 percent of their current monthly mobile spend for assured connectivity at event venues.
TelecomTalk: So, considering this premium service monetization aspect, one in six 5G users will attend event venues and are ready to pay extra for premium connectivity. In India, again, city, event venues, the number of times a customer attends events, and the pricing of data packs with premium service may present a different picture. We believe that whatever enhancements telcos make at event venues or public locations all fall under general network infrastructure deployment and basic service delivery for the end consumer.
Also Read: Ericsson Finds 5G Delivered Seamless Network Experience Over 4G at 2024 European Events
Moreover, if a serious user attends an event, they typically take a few pictures or record a short video to share with their close ones or on social media. If the concept of unlimited free 5G data is removed, we believe there will be very few users engaging in streaming during the event. Furthermore, we believe people attend events to enjoy the experience rather than continuously stream or use their mobile devices. If telcos require users to opt for a premium plan even for basics, then the purpose of high-speed, high-capacity networks promised by 5G is lost.
Also Read: First 6G Deployments Are Expected in 2030: Ericsson Mobility Report
GenAI Consumer Uptake
Another takeaway from the same Ericsson report is that the accelerated consumer uptake of GenAI will cause a steady increase in mobile traffic in addition to the baseline increase. GenAI consumer uptake could see strong growth—possibly aligned with the future launch of AR glasses.
TelecomTalk: Considering the above statement, may be we need to assume that using GenAI apps will consume significant data for text- and multimedia-based responses. Or maybe video, photo editing, or media generation capabilities will consume significant data. Again, if 5G monetization begins and data is bundled with a pack, why would a price-conscious consumer engage in multimedia or creative work on a smartphone using mobile data? Regarding AR glasses, a consumer would need to purchase them separately and wear the device regularly to consume data. This seems like a rare scenario and not entirely absolute.
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5G Fixed Wireless Access
According to Ericsson, Fixed Wireless Access (FWA) continues to grow in popularity globally as the second-largest 5G use case after enhanced Mobile Broadband (eMBB).
TelecomTalk: However, in India, Reliance Jio claims to offer 5G FWA services using Network Slicing, a key feature of the 5G SA network, whereas Airtel offers 5G FWA services on an NSA network, stating that 5G SA doesn't make a difference now. The only difference they noticed in 5G SA is the uplink speed, which, given the current traffic scenario, does not make a significant user experience impact.
According to a report citing Jio officials, the company has started scaling up to add more AirFiber customers and monetize its 5G network through higher data usage. Strong AirFiber user additions can help break the 5G monetization logjam since the monthly average revenue per user (ARPU) from 5G-based FWA business is more than three times higher (at Rs 650-700) than mobile ARPU.
According to another recent report citing a senior Airtel executive, operators don't deploy 5G for FWA as the economics don't work. Telcos primarily use it for mobile services and add FWA as an additional revenue source. Moreover, since it's the same network infrastructure, telcos are delivering 5G FWA using Customer Premises Equipment (CPE). The executive reportedly also stated that 5G has not yet created new revenue streams for any telecom operator worldwide—5G is largely just about speed and some FWA use cases.
TelecomTalk: Looking at the FWA case above, one operator reportedly claims to monetize 5G via FWA, while another states that the economics don't work. So, only the telcos truly know whether monetization is happening or not. From a technology standpoint, we believe, there is no monetization occurring from a 5G SA or Network Slicing perspective, as there is no differential pricing.
Impact of GenAI on Traffic
According to the Ericsson Mobility Report, Generative AI (GenAI) may significantly impact future mobile network traffic, particularly through increased video consumption and changing uplink requirements. Accelerated consumer uptake of GenAI will lead to a steady increase in traffic in addition to the baseline increase. India already has the highest average monthly usage per smartphone at 32GB, which is expected to grow to 66GB by 2030.
TelecomTalk: Whether it's AI or any other technology, an HD or even a 4K video streamed on a network today will consume the same amount of data tomorrow, assuming codecs and streaming usage remain unchanged. It is unclear how GenAI can specifically impact video consumption unless a user frequently utilizes video or image tools via mobile networks. However, we believe if unlimited 5G data is removed, this aspect of consumption becomes doubtful too. The reported average monthly usage per smartphone is 32GB. However, given the same usage and current pricing, the industry is expecting monetization—which, according to reports, is not happening. If monetization happens through future tariff revisions, such growth projections of usage may not be feasible.
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Application Programming Interfaces
Telecom operators are said to be able to monetize Application Programming Interfaces (APIs) by exposing their network capabilities to developers, enterprises, and third-party service providers, enabling new revenue streams and business models. Some examples include identity and authentication, billing and payments, and 5G and edge computing APIs. However, we believe, even if some apps or services leverage these APIs, real monetization only occurs when the customer (or someone in the ecosystem) pays for it. Otherwise, APIs will only be seen as software features or facilities, contributing merely to customer experience rather than revenue.
It is also said that "Communication service Providers (CSPs) can expose Quality on Demand (QoD) network APIs to developers, thereby tapping into consumer demand for high-performance apps. This allows developers to offer premium, high-performance experiences and unlock new revenue streams."
It is unclear what high-performance apps are in demand by consumers—perhaps they may emerge in the future. Telcos have repeatedly emphasized that there are no killer apps for 5G currently. However, one thing is certain: without consumers paying for the services (whether for apps without advertising model or telco services), there is no real monetization.
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Government's Perspective
Even if we set aside what telecom operators claim about monetization, according to a recent report, even the government seems aware that there is no monetization of 5G and that telcos are struggling with the lack of returns on 5G investments. "The government is looking at addressing challenges related to the lack of returns on 5G investments while also considering the need to expand telecom infrastructure due to increased data usage," the Telecom Secretary (India) stated at a recent event.
The telecom secretary also acknowledged that most people in India consume data primarily for entertainment purposes and that there is a continuous need to expand telecom infrastructure.
The Telecom Secretary further noted that ensuring returns on 5G investments remains a challenge, as India has not yet been able to fully utilize 5G use cases despite significant investments. So far, the only noticeable improvement has been higher speeds from 4G to 5G.
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5G Upgrade
As an upgrade to 4G, 5G was introduced with promises of greater speed, capacity, and a seamless experience, without AI being a significant consideration at the time of launch. Whether AI usage increases now or later, 5G networks are expected to deliver more than 4G. However, based on usage, use cases, and services discussed in our earlier analysis, there are no applications that can bring in monetization without tariff revisions.
For the sake of simplicity and usability, let's discard these technology generations such as 4G and 5G and instead classify them as 'High-Speed Data Networks/Mode,' while 2G can simply be referred to as 'Voice Network/Mode.'
Also Read: Airtel MD Calls for Some More Tariff Repair, Highlights India’s Lowest ARPU Globally
A Circle of Loops
On one hand, the Department of Telecommunications (DoT) boasts that India offers the cheapest mobile data rates globally, while private telcos are urging tariff revisions to sustain investments. Meanwhile, another report states that India aims to promote its cheap data tariffs to attract foreign companies that rely on affordable, high-speed broadband to deliver essential services. This comes at a time when the industry is struggling to maintain a healthy four-operator structure and seeking support. Additionally, another report suggests that the government is working to address challenges related to low returns on 5G investments and the need for infrastructure expansion due to surging data consumption. We believe this is a repetitive cycle with no clear resolution in sight.
Also Read: Prices Need Further Uptick to Generate Reasonable Returns: Vodafone Idea
Conclusion
We believe, showing growing numbers, usage statistics, and metrics at cheaper prices or with unlimited free offerings and projecting them as an opportunity for monetization tomorrow is flawed logic. There is no rule that a customer who availed the service at, say, Rs 199 will avail the service tomorrow at a higher price. The equations change. Preferences, choices, usage, and the priority of telecom services change with reference to pricing and need.
TelecomTalk has spoken to people over the years, trying to understand their preferences and choices. In response to a question about tariffs, the only answer we repeatedly heard was, "Operators are offering services at cheap prices, so I'm using them without restrictions; otherwise, I will use the services only for what I really need." Again, it depends on individual preferences, purchasing power, and what a consumer thinks is truly required and worthy of their spending.
Also Read: Telcos Have Reached a Saturation Point with Limited Monetisation Prospects?
You may ask, if that is the case, who asked the telcos to offer free 4G or unlimited 5G? Well, we leave the answer to individual perspectives and an understanding of the market. That said, this is a circular approach, and without paying subscribers, there is not much anyone can do. Only time will tell how telcos can monetize their services.
