Mobile Network Operators (MNOs) have invested significant sums in upgrading to 5G. In increasing numbers they are also making the further step up to upgrading to a 5G Standalone (5G SA) core network. Much of the promise of 5G comes from the latter, giving MNOs the potential to deliver richer features and functionality including real-time latency, improved reliability, and ‘Quality on Demand’ type features. The combination of Network Exposure Function (NEF) and APIs also offers the potential to monetise 5G’s promise of the programmable network.
In this report we explore the likely true revenue potential for MNOs by applying the additional capabilities of 5G (and particularly 5G SA) to the Internet of Things.
The report starts with analysis of the key elements of 3GPP Releases 15 to 19 that relate to 5G and IoT. The includes the key functions of 5G New Radio in the form of enhanced Mobile Broadband (eMBB), Ultra Reliable Low Latency Communications (URLLC) and massive Machine Type Communications (mMTC). It also considers features such as network slicing, 5G RedCap, Cellular-V2X, Non-Terrestrial Networks, Network Exposure Function, APIs, edge computing, and much more. Under each sub-section the report considers how the features and functionality could be applied to IoT.
The report then goes on to quantify the market opportunity associated with all of the various elements. For the period 2025-2040 it provides a view on the IoT connectivity revenue that will be attributable to each of the features. It does so in three main categories: ‘5G SA’ (which uses the additional features provided by the core network upgrade), ‘5G NSA’ (which have a requirement for the capabilities of the 5G access network but not advanced SA capabilities) and finally ‘5G future-proof’ (which would be addressable with 4G, or below, networks, and will migrate to 5G by default rather than because they demand any 5G functionality). The modelling is done as an assessment of what proportion of the connectivity revenue of a European or North American MNO (along with their channels) might be accounted for by each of the revenue types.
Finally, it examines some of the contingencies and dependencies that might influence the timing of such revenue opportunities and provides a set of conclusions and recommendations for MNOs.
Transforma Insights’ prognosis for the revenue potential of 5G, and particularly 5G SA, does not make for very positive reading for advocates of the merits of upgrading to the latest generation. The majority of revenue comes from connections that barely need 5G and certainly don’t need 5G SA. While there are a lot of monetisable features within the 3GPP standards we expect adoption of those features to be relatively slow and the additional premium that can be charged for connectivity is modest.
By 2040, over 80% of IoT connectivity revenue will be accounted for by 5G, but only 9% will come from 5G SA. In total a typical mobile network operator will generate just 0.4% of its overall connectivity revenue from IoT connectivity which depends on 5G SA. The most prominent opportunity lies in the provision of network slices for particular purposes.
