Operator voice revenues to fall by 45 per cent by 2024
- OTT players the reason
- To compete against their flexibility and "free" services is incredibly difficult
- However, 5G offers traditional operators a voice and video services lifeline
- Investment in AI-enabled platforms now a necessity
A new report from Juniper Research published this morning concludes that operator voice revenues will drop even further, this time by a massive 45 per cent over the next four years, as the onslaught against traditional carriers by the massed phalanxes of OTT players continues to intensify. In terms of hard cash it means that mobile operator voice revenues will decline from the US$381 billion achieved in 2019 to $208 billion by 2024, almost halving their current take.
It's not hard to figure out how and why. Users simply and sensibly prefer the flexibility of OTT services and are more than happy to put up with a few glitches and dropped connections given that the OTT services are ostensibly completely free. One of only a couple of bright spots on the horizon for the traditional operators is that they should be able - ‘ought’ to be able - to monetise 5G-enabled voice and video services, if they play their cards properly and get the services and pricing right.
Juniper's new report, "Mobile Voice: Emerging Opportunities for Operators & Vendors 2019-2024", forecasts that third-party OTT voice services will continue to grow and will reach 4.5 billion users by 2024 as the voice revenues for traditional operators continue to spiral downwards. A bad situation for them will be compounded by a massive 88 per cent increase in the total number of third-party OTT mVoIP users. Juniper says that operators will, perforce, have to invest in AI-enabled comms platforms that can facilitate the delivery of voice service able to compete with the offerings from the OTT players.
The other potential bright spot for the established operators is that the improving availability of 4G coverage and the ever-increasing number and variety of 4G-capable devices will boost the number of mobile video call users and so at least slow the rate of voice revenue losses. The study predicts that ViLTE (Video over LTE) operator revenue will exceed $33 billion by 2024.
Juniper also opines that the proliferation and presumed potential popularity of 5G will generate new revenue streams for operators via the enablement of innovative use cases for both VoLTE and ViLTE. The research indicates that the high data throughput and low latency associated with them will drive a range of emerging services such as Real Time Interaction (RTI), remote control and Vo5G, and that they will find widespread usage across a range of industries and sectors.
Juniper's report advises that operators should speed the launch of VoLTE services and quickly have them in place in good time to exploit and benefit from emerging Vo5G services. It notes that establishing a 5G-enabled IMS (IP Multimedia Subsystem) infrastructure for VoLTE will provide a pivotal foundation for future voice services rollouts, which operators should be able to monetise in due course.
Automotive industry take the lead in 5G
Meanwhile, although much is eventually expected of 5G's low latency, speed and reliability as far as the world's manufacturing industries are concerned, few have, as yet, taken up the technology in any really meaningful way. A recent report from research house Gartner points out that while the global sector can manage with with 4G/LTE (for a while at least and as many are), the real opportunity and future-proofing lies with 5G.
And change is on the way. Sachin Lulla, the global digital strategy and transformation leader at Ernst & Young says, “Industrial companies have a significant and immediate appetite for 5G. A new wave of hyper-connectivity is set to redefine the enterprise." And he's absolutely right. The consensus amongst the analyst community is that, with 5G, where manufacturing leads other sectors including health care, transportation, utilities and the public sector and bound to follow.
According to a recent UK survey by Ernst & Young, 10 per cent of British companies have set aside budgets for 5G and half of all UK enterprises say they will move to 5G by 2023. However it is manufacturers that are in the vanguard with 65 per cent of them committed to the implementation of 5G "as soon as possible" - which could, of course be 2023 not least because it is generally acknowledged that the ubiquitous rollout of 5G will be a difficult task. Again according to Ernst & Young, manufacturers are particularly concerned about 5G network security because the technology will dramatically increase the potential scope of hacking and other cyberattacks on the network.
The report shows that 40 per cent of respondents regard cybersecurity as the most important of their Top Three 5G worries. The other two main concerns are that 5G technology may prove to be immature and unable, in the short- to medium term at least, to satisfy the unique and complex demands of the manufacturing environment (34 per cent), and that 5G might lack of business relevance (32 per cent) - although it's hard to see why that would be the case.
And then, of course there's the cost, not just of 5G technology itself but also of the concomitant expensive upgrading of backend systems that will be required to accommodate 5G. At the moment few manufacturers have backend systems that are even minimally compatible with the new technology.
That's why many manufacturers, although looking towards the deployment of 5G systems, are currently hedging their bets, biding their time and continuing to rely on the proven efficiency and resiliency of fibre-optics, Wi-Fi and 4G - after all 4G has been in use for getting on for a decade now and users understand its capabilities and can manage its limitations.
Many manufacturing sectors are looking to learn lessons from the experiences the automotive industry has had and is having as it moves to 5G. Vehicle makers favour 5G and are committed to it, not least because initial deployments have shown that productivity gains and speed of delivery of new products can be increased by between 30 per cent and 50 per cent. Unsurprisingly, China is investing massively in 5G, not only in its automotive sector but also across its entire manufacturing industry which is so huge as to be almost unimaginable.
A recent report from IHS Markit concludes that, globally, 5G will spawn some $13.2 trillion by 2035, with manufacturing benefitting to the tune of $4.7 trillion in new revenues.
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