5G service revenues to hit $73 billion this year - Juniper

Operators have the potential to generate hundreds of billions of dollars per year in revenue from 5G services in the coming years, provided they focus on virtualization in the core.

So predicts Juniper Research, whose latest report puts global 5G service revenues at US$ 73 billion by the end of this year, an increase on the $20 billion recorded last year when 5G services were very much in their infancy, and representing 8.5% of operator revenue. The figure will increase to over $600 billion by 2026, but operators will need to prepare their networks as data usage grows.

It’s the same conclusion the analyst came to in a similar report published a year ago, albeit with different figures, That perhaps suggests that operators have not made as much progress in virtualization as the analysts would have liked to see in the past 12 months. Admittedly, Juniper did not specifically make that point though.

“Given the varying requirements of these 5G use cases,” said report author Dave Bowie, referring to mobile gaming and immersive reality services that will grow in usage over the coming five years, “network orchestration tools that enable the real-time management of network performance are key to providing a service that meets the demand of 5G subscribers and enable operators to fully maximise 5G service revenue.”

Indeed, Juniper predicts that operators will “will face challenges in meeting the mobile data demands arising from 5G networks,” forecasting an increase in cellular data traffic generated by 5G connections to 1.5 billion Petabytes globally by 2026. More than 80% of 5G data will be attributable to mobile broadband connections.

It did not provide a comparative figure, nor is there a traffic figure in its precis of last year’s report; however, the 2020 version includes a prediction that data-intensive 5G use cases will trigger overall cellular data traffic growth of 270% over five years, which provides a useful indicator of the magnitude of the issue.

Focusing their efforts on visualizing core network functions will help operators address those traffic demands as they seek to generate a return on the massive investments they have ploughed into 5G thus far.

The ongoing 3.45 GHz spectrum auction in the US is one of many 5G frequency sales of the past year or so that have encouraged operators to part with their money. The current auction will not hit the dizzying heights of its C-band predecessor earlier this year – the running total stood at $2.2 billion at the close of play on Tuesday, incidentally – but globally telcos are spending heavily on spectrum, not to mention equipment and rollout costs.

It therefore makes a lot of sense for them to look to virtualization and automation to get the most out of those networks and deliver a good experience to the customers they hope will ultimately pay more for 5G.

In addition to increasing network virtualization and network orchestration efforts, Juniper advises telcos to accelerate the rollout of fibre backhaul infrastructure to reduce the threat of 5G traffic congestion.

Fibre doesn’t come cheap either, but then again neither does customer dissatisfaction, and there are big investments on the line.