The 5G consumer market could be worth USD 31 trillion by 2030 globally, says Wojciech Bajda, VP and head of Ericsson Gulf Council Countries

What kind of 5G-enabled consumer revenues can service providers generate by 2025 and 2030?

The 5G consumer market could be worth USD 31 trillion by 2030 globally, according to the new Harnessing the 5G Consumer Potential report from Ericsson ConsumerLab. The report estimates that communications service providers (CSPs) could earn USD 3.7 trillion of that total – a figure that could increase further as new adjacent digital services opportunities arise. In the Mena region, around 30 percent of mobile subscriptions are estimated to be for LTE at the end of 2020. The region is anticipated to evolve over the forecast period, and by 2026, almost 80 percent of subscriptions are expected to be for mobile broadband, with LTE as the dominant technology with more than 50 percent of the subscriptions.

In the mobile market, the consumer business generated 79 percent of overall mobile broadband revenues for service providers and this is expected to increase to 81 percent by 2024, driven by the impact of 5G. While much attention has been placed on enterprise verticals by mobile operators seeking new revenues that leverage the advanced network characteristics of 5G, the consumer market will still generate majority of the core mobile revenues for service providers. The success of 5G in the consumer market will be crucial for service providers, underpinning the network expansion to enable them to also target new use cases for industries and enterprises.

Which use cases are expected to generate the most consumer spending and interest?

The MENA region is expected to have the highest growth in monthly mobile data usage during the forecast period, increasing total mobile data traffic by a factor of almost 7 between 2020 and 2026. The average data per smartphone is expected to reach 30GB per month in 2026. Back in May 2019, we have tested over 30 use cases with consumers to understand the interest and willingness to pay for these digital services. With this new report we are trying to quantify which use cases will drive scale and consumer spending.

Globally we see that enhanced video services, i.e. subscription VOD streaming services in high resolutions/bit rates like 4K, 8K, emerging formats like 360-degree videos and premium esports streaming bundled on a 5G plan will drive the biggest share of consumer spending. This will be followed by immersive media services like AR applications, primarily multiplayer AR gaming and Cloud Gaming. This will of course vary from region to region. For example, in SE Asia and Oceania, after enhanced video we expect that Hifi-music related use cases which offer better-than-CD quality music streaming are likely to drive 5G digital services revenues for service providers while in Western Europe we expect Cloud Gaming to do so.

Adjacent digital services will also be a source of B2B B2C revenues for service providers with the bulk of these revenues coming from in-car connectivity and entertainment services and digital advertising. Key use cases here include in-vehicle Wi-Fi hotspots, passenger/driver media and entertainment, and consumer-facing car safety/security applications. Nascent services, specifically AR, offer opportunities for service providers to also intermediate in advertising and m-commerce.

What actions do service providers need to take to leverage this 5G consumer potential?

In the 3G and 4G era the lead use cases of mobile web and video were already established while with 5G, the killer use cases are still being explored so we are walking into the unknown. Proactive service providers could play a more assertive role in the industry value chain innovating and curating digital services independently as a service creator or together with ecosystem players as a service enabler bundling third-party digital services on 5G plans and taking a share of those revenues. There is an opportunity to drive ARPU uplift by pricing for speed, and other network characteristics like latency in the long run, but digital services-centric pricing models offer the best opportunities to create 5G differentiation and avoid becoming commoditized data pipes.

What does the future of 5G technology look like in the Middle East region?

Commercial 5G deployments with leading service providers have taken place in the region during 2019 and 2020 with 5G subscriptions forecast reach close to 1.4 million by the end of 2020, mainly in the Gulf countries. 5G is expected to reach 130 million subscriptions in the Middle East and North Africa (MENA) region by 2026, representing 15 per cent of total mobile subscriptions. Service providers across the MENA region continue the build-out of 5G, heralding a new era of end-user applications and devices that make the most out of the technological benefits it provides.