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GlobalData Technology

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The battle to make 5G profitable

As the number of 5G rollouts grow, telecom operators (telcos) need to consider 5G monetisation models for growth and profitability. We are already seeing a number of moves from telcos to uplift average revenue per user (ARPU).

Some telcos have made 5G available on dedicated 5G plans, tying the service with data-centric allowances yielding higher ARPUs. As an example, EE UK offers 5G with five data package allowances – 10GB, 30GB, 60GB, 120GB and Unlimited. Other telcos, such as Swisscom Switzerland and Viva Bahrain are applying a premium 5G activation fee on some existing plans. Others are further monetising their 5G unlimited plans through speed-based price tiers (for example, Vodafone).

Plenty of variety in 5G monetisation models

Telcos are also leveraging 5G to upsell faster speeds and larger data allowances. 5G monetisation models include applying 5G premiums to offering speed-based pricing tiers on unlimited data plans. Additionally, telcos can leverage a ‘More4More’ approach by bundling 5G plans with cloud gaming, video and AR/VR content. For now, except for a few telcos, such as Etisalat UAE, that have made 5G available on all their plan tiers at no extra fee, 5G remains a mid- to high-end customer play. Further down the line, we could see additional monetisation models based on latency differentiation.

Since late 2018, 5G launches have developed relatively quickly and gained momentum with a focus on two main use cases – 5G Fixed Wireless Access (FWA) and 5G Enhanced Mobile Broadband (eMBB).

The US and South Korea were the first to commercially launch 5G in 2018, followed by Optus Australia in January 2019, Swiss operators Sunrise and Swisscom, Elisa Finland and Ooredoo Qatar in April 2019. Then, from May to July 2019, a number of other telcos, mainly from the Gulf and Europe, joined the 5G wave. These include EE/BT, Vodafone, Etisalat, Saudi Telecom Company (STC), Zain and T-Mobile.

Key commercial 5G launches

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Related Report:

5G: Review of 5G Technology Readiness and Commercialisation