Robust Apps Could Help Operators Find Path to 5G Profits


Promotions of 5G smartphones by US telecom carriers were swift and furious during the holiday season, as US carriers attempted to lure consumers to either switch providers or upgrade their plans through free phones or through other incentives such as access to free streaming services, wireless chargers, and game subscriptions. .

On multiple occasions, AT&T, Verizon, and T-Mobile have vowed to give away free or discounted smartphones to gain customers, but with 5G rolled out in most major metropolitan areas across the country, the offers are back as the operators are looking to cash in their 5G deployments.

Do the math

“Once upon a time, we had cell phone grants. Then the industry swore at them, and now they’re back,” said analyst Roger Entner of Recon Analytics. “We did the math and the math said it made sense. They don’t take a financial bath with it. Look at AT & T’s EBITDA. It went up 4%, which isn’t that bad. . It makes sense once you start. Calculating the numbers. ”

Entner said the smartphone promotions were helping US carriers recoup some of the costs of building their 5G networks by extending the life of the customer. Typically, carriers force consumers to subscribe to their more expensive tiers, such as T-Mobile’s premium Magenta Max plan. In contrast, AT & T’s promotions include a range of devices and plans at different levels, Entner said.

“It would concern me much more if the recurring monthly fees [MRCs] were going down, ”Entner said of promotions on smartphones. “In fact, they are improving their prices. When you subscribe to one of these new devices, many carriers ask you to subscribe to the higher tariff plan and this helps recoup the cost. It becomes much more of a concern if they provide free devices and we see pressure on RCMs. ”

Rich 5G apps set to take off in 2022

In addition to attracting and hopefully keeping more mobile subscribers with the promotions, US carriers are also putting new phones in customers’ pockets to sell them the apps and services that 5G enables. The long-awaited monetization side of 5G deployments, which includes network slicing on the enterprise side, is poised to accelerate in the United States in 2022. In addition to U.S. telecom operators, cable operators MVNO, such as Charter and Comcast, are also working on deploying their own apps to further sell their 5G services.

According to a 5G poll by research firm Omdia, “access to new and better apps” ranked third behind “faster speeds” and “better mobile coverage”, respectively, when asked what 5G meant for those surveyed.

In a recent Light Reading podcast, Nicole McCormick of Omdia, senior senior analyst for 5G and broadband, pricing and strategy, said carriers from countries like South Korea, Japan and China already had rich apps as part of their bundles. While US operators have built their 5G networks in a patchwork fashion, telecom operators in China or South Korea were very early in the market with their advanced 5G applications, as their networks were rolled out nationwide as early as departure.

On the podcast, McCormick said about 158 ​​carriers have launched 5G. The initial phase of most 5G launches often only included services and handsets with no apps or premium services to sell to customers. On the other end of the ‘do nothing’ 5G operators are the operators who bundle ‘rich’ 5G applications, such as 4K streaming and augmented reality, to show customers that 5G is more than faster speeds. .

“We rank the cluster of applications rich in 5G as the most innovative [tier offering], because it gives consumers visibility into what it means to pay a little more for 5G, “said McCormick.” Of those 158 operators today, about 22% are actively engaged in this new ecosystem, this new value chain of bringing together these rich 5G applications. American operators are starting to take this route. ”

Rich 5G apps include 3D AR shopping or 3D AR children’s eBooks. On the electronic books side, AT&T announced last summer that it was offering a six-month free trial of children’s books with e-book company Bookful for customers who owned a 5G device from the phone company.

McCormick said the proverbial fruit at hand for 5G applications is cloud gaming, because there are already large-scale cloud gaming companies and ecosystems in existence today. Entner disagreed that cloud gaming was a successful 5G application because he said it requires a wired connection.

“It is relatively easier for telecom operators to go and discover this ecosystem, find out who the players are and discover the monetization models,” she said. “Monetization gets sophisticated when we start looking at 3D AR and when we start talking about cloud gaming, it’s not just a basic model of giving us $ 10 a month and you have your cloud gaming service. ”

In addition to direct monetization, McCormick said there are also indirect monetization revenue models in play that operators need to understand.

“At the end of the day, a lot of what operators tell me about is that they feel challenged by this new ecosystem, because a lot of them still haven’t dug it out,” a- she declared. “A year ago many more operators were doing nothing, but they have since jumped into more sophisticated models. So slowly some of these new value chain propositions are better understood.”

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?? Mike Robuck, Associate Analyst, Light Reading


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