5G Technology delivers gigabit speeds, increased capacity, better coverage, and comes with sustainability features and optimisations, along with connectivity for IoT (Internet of Things) devices. This is what we may have heard until recently. These were marketed by network vendors as primary reasons for Communication Service Providers (CSPs) to upgrade from 4G to 5G, with significant potential for monetisation. When the technology was first launched in India at IMC (India Mobile Congress) in October 2022, there was immense excitement among users to witness and experience what 5G felt like and what new capabilities it could bring.
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Current Reality
Fast forward to IMC 2024, two years later, and we are nearing the end of 2024. The initial excitement has waned. Customers have not experienced anything new with 5G technology, aside from the satisfaction of speed tests showing Gbps speeds. Currently, 5G is being offered as a complementary service on select prepaid plans (or select users) and all postpaid plans by Airtel and Jio as an introductory offer, with no monetisation aspect. However, in some cases, users are also struggling to access quality 4G services.
Challenges in Monetising 5G
According to a recent report, operators are slowing down their 5G rollout, citing monetisation challenges. In layman's terms, this means that currently there is no commercial use case for operators to generate revenue from 5G deployments. Furthermore, once free 5G data is discontinued and data is bundled with a plan, users are unlikely to spend their data on speed tests. The thrill of testing speeds diminishes when commercial factors come into play, leaving only serious usage.
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Required 4G Upgrade
It's worth noting that operators struggled to monetise 4G as well. However, 4G was a comprehensive upgrade, providing faster speeds and HD voice quality with VoLTE. It was a necessary improvement. Before any realisation of investments occurred, operators were compelled to upgrade to 5G, possibly to keep pace with technological advancements, but this was done without a clear commercial use case (at least from what we are witnessing now).
While it was claimed that 5G offers significant capacity compared to 4G, certain users report slow speeds even on 5G. Let's set aside discussions about speeds, technology, and specifications for a moment as we explore the monetisation prospects of existing and upcoming generations (G) of technology. We should also remember that technology groups are already working on 6G technology, its frameworks, and the roadmap. With that in mind, let's navigate this discussion further.
What’s Different with 5G?
So, if we ask the question, 'What are users doing differently with 5G that they couldn't do with 4G?', it's somewhat difficult to answer. Perhaps gear vendors have technical jargon ready to sell their technology to network operators, but the operators themselves seem unclear on how to create a use case and commercialise the same data or higher speeds at scale. This is where the problem lies.
Comparing Use Cases to Human Senses
If we observe and compare technology use cases with human senses, we find that, at most, only Sight (Vision), Hearing (Audition), and Touch (Tactile) can be fully utilised through the internet via smart devices. The visual aspect encompasses videos, photos, and related media/elements, while the hearing pertains to audio. Although Touch is not directly related to the internet, we can somewhat consider the touch screen functionality of smart devices and continue to explore its use cases.
Video and Audio Streaming
At most, users can leverage high-speed connectivity for video, with various quality options like 4K HD or 8K UHD. For instance, Netflix recommends a stable internet connection of 15 Mbps or higher for streaming Ultra High Definition (UHD) video at 4K resolution. In terms of audio, if we consider Apple's Spatial Audio with Dolby Atmos (Lossless), it likely doesn't require speeds greater than those needed for video streaming. Therefore, we can safely assume that speeds of 100 Mbps are sufficient for every known online activity. Despite 5G boasting gigabit speeds, there is technically no compelling use case that would warrant customers paying extra for the service.
Additionally, since HD voice and unlimited data are offered at minimal prices, it is increasingly challenging for CSPs to introduce price tiers and charge customers for something they have come to expect as a standard or base experience.
Other Use Cases
Having covered video and audio aspects, let's address basic browsing. Everyone knows how little data is consumed just for information browsing on the internet; it is hardly significant. Now, let's discuss other aspects regularly encountered during company or technology announcements: the reduced 5G technology for IoT devices that require low performance and continuous connectivity, as well as Virtual Reality (VR), Augmented Reality (AR), holographic calls, network slicing, and more.
Network Slicing
According to claims, network slicing offers customisation options for telcos to provide specific characteristics such as bandwidth, latency, and reliability, depending on application requirements. For example, a slice could be optimised for low-latency applications like autonomous vehicles, while another could be designed for high-throughput applications like video streaming. This sounds promising. However, from both a customer and telco perspective, this represents a sub-service on top of 5G.
Slicing Monetisation Implications
If 5G is monetised, it will be challenging for telcos to convince users that there is another layer (a separate slice) that offers enhanced quality for specific usages like gaming, VR, or the internet. As telcos are already marketing 5G with improved experience and usage, what more can operators present to users? Moreover, if data offerings on slices are priced differently, can operators convince users about the differential pricing of the GB of data? If they manage to do this, can it be scaled effectively for monetisation? This seems difficult given the current state of use cases.
One of the largest telcos in India is already offering Fixed Wireless Services (FWA) leveraging network slicing technology. Yet, we observe there is no differential pricing and minimal monetisation aspect for this specific technology. This may also apply to gaming and other usage scenarios.
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VR, AR, and Holographic Calls
Regarding VR, AR, and holographic calls, we have seen the market and success of VR and AR products, along with their large-scale usability. Even with a high adoption rate, we believe these devices do not require speeds exceeding 100 Mbps for optimal performance. Thus, the gigabit speeds provided by any generation of technology are not of much use. Additionally, we should consider the monetisation aspect of 5G. If 5G data is monetised—or if 4G pricing applies to 5G as well—customers will be more conscious of their usage, and higher speeds could lead to faster data consumption due to buffering and pre-loading for a smoother experience.
Hologram calls may be an impressive technological advancement, but we do not expect these calls to be widely used in corporate settings or for serious purposes. We believe there will be privacy concerns for both parties involved in the calls. As for IoT, everyone knows the success and practicality of this technology, as well as the resources required for large-scale adoption. Although there are some crucial use cases, a few alone will not determine the success of an ecosystem, which may eventually fade away.
The most notable service being promoted as a potential use case for 5G is FWA, claimed to be a significant commercial aspect of the technology. This will be particularly relevant in areas where fiber is difficult to deploy. However, this is just another service based on 5G wireless technology, offering nothing new; LTE can be provided in the same manner, which is not unique. As discussed earlier, even with network slicing for this service, there is hardly any monetisation aspect.
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6G Framework Roadmap
In December last year, the ITU released a 6G development framework to establish globally accepted standards for 6G. This framework identified 15 capabilities for 6G technology, nine of which are derived from existing 5G systems.
In April, a 6G technology roadmap was unveiled by a region, outlining anticipated advancements, including support for use cases such as the digital transmission of human senses (sight, sound, taste, touch, and smell) worldwide, robotics, artificial intelligence, autonomous intelligent transportation systems, and transformative healthcare developments like remote surgery and diagnostics. We may need to wait and see if the transmission of human senses becomes possible in the future, though we believe this is practically impossible.
Also Read: ITU Releases Framework for 6G Development
Conclusion
As of now, with known use cases and the limited application of technology for various services, even if multi-Gbps speeds are delivered to mobile or smart devices, there is hardly any scope for monetisation left for telcos. Currently, there seems to be no use case or service in existence that requires 1 Gbps (or even hundreds of Mbps) on a smartphone for individual users.
If we consider hotspot usage, where multiple connections necessitate higher speeds, data pricing and bundling also need to be factored in. Since Voice and SMS are offered for free, and the data usage aspects developed and known to mankind have already reached saturation, there is hardly any scope for monetisation with any generation, except for some optimisation tweaks.
Looking ahead, it's likely that terms like "sustainability" and "AI" will be added to any upcoming generation of technology or Generation Narrative, but as previously discussed, there will be little monetisation potential left for the data or services delivered on top of that layer.
