This is not a paywall.

Register for free to continue reading.

We made a promise to you that we’ll never erect a paywall and we intend to keep that promise. We also want to continually improve your reading experience and you can help us do that by registering with us. It’s quick, easy and will cost you nothing.

Nearly there! Create a password to finish up registering with us:

Please enter your password or get a login link if you’ve forgotten

Open Sesame! Thanks for registering.

First Thing, Daily Maverick's flagship newsletter

Join the 230 000 South Africans who read First Thing newsletter.

We'd like our readers to start paying for Daily Maverick

More specifically, we'd like those who can afford to pay to start paying. What it comes down to is whether or not you value Daily Maverick. Think of us in terms of your daily cappuccino from your favourite coffee shop. It costs around R35. That’s R1,050 per month on frothy milk. Don’t get us wrong, we’re almost exclusively fuelled by coffee. BUT maybe R200 of that R1,050 could go to the journalism that’s fighting for the country?

We don’t dictate how much we’d like our readers to contribute. After all, how much you value our work is subjective (and frankly, every amount helps). At R200, you get it back in Uber Eats and ride vouchers every month, but that’s just a suggestion. A little less than a week’s worth of cappuccinos.

We can't survive on hope and our own determination. Our country is going to be considerably worse off if we don’t have a strong, sustainable news media. If you’re rejigging your budgets, and it comes to choosing between frothy milk and Daily Maverick, we hope you might reconsider that cappuccino.

We need your help. And we’re not ashamed to ask for it.

Our mission is to Defend Truth. Join Maverick Insider.

Support Daily Maverick→
Payment options

Telcos Seek Killer App to Recoup Billions Spent on 5G

Business Maverick

Business Maverick

Telcos Seek Killer App to Recoup Billions Spent on 5G

Posing for the 3D avatar creation at the Jump Studio in the SK Telecom headquarters in Seoul.
By Bloomberg
11 Aug 2021 0

About a decade ago, mobile carriers poured billions of dollars into high-speed 4G networks only to see technology giants such as Apple Inc., Facebook Inc. and Google walk away with most of the profits fueled by social media. As operators plow even more cash into 5G, they are betting on a futuristic concept in hope of a fair share of the returns this time.

Telecommunications companies are looking to build a platform based on the metaverse, an idea that inspired “Ready Player One” and online games by market darlings such as Roblox Corp. Early-stage examples include virtual and augmented reality headsets or glasses that provide immersive experiences. Advanced versions — still years away pending super-fast wireless data speeds — combine multiple technologies like holograms to bring the internet to life: 3D avatars of people working, interacting and relaxing in digital replicas of offices, factories and leisure venues.
SK Telecom Metabus
Posing for the 3D avatar creation at the Jump Studio in the SK Telecom headquarters in Seoul.

Recognizing the business potential, telcos ranging from China Mobile Ltd. to Verizon Communications Inc. and SK Telecom Co. are jumping into the fray — alongside online-game developers — to build a “killer app” that could resemble a blend of today’s social media and e-commerce, but on steroids. Operators could earn a third more in revenue, potentially reaching $712 billion by 2030, if they introduce such innovative 5G applications on top of just laying pipes, according to a research by Ericsson AB’s research arm Consumer & IndustryLab.

“If you do nothing, you will stay on a flat curve revenue wise,” said Stockholm-based Pernilla Jonsson, head of Consumer & IndustryLab. “We see the potential. It will be very interesting to see how this plays out. Who will actually be the winners of the metaverse is still a very open question.”

Jonsson expects the development of the metaverse to be gradual, starting with those headsets and glasses piggybacking on smartphone connections. Cutting-edge metaverse applications are still at the conceptual stage. If they do become reality, virtual meetings and shopping online would feel like real-life activities, with digital copies of almost everything that also reflect real world changes in real time through advanced 3D image capturing.

The World’s Next ‘Arms Race’ Will Be All About 6G Dominance

China Mobile, the world’s No. 1 carrier by subscribers, Verizon, the largest U.S. operator and South Korea’s leader SK Telecom are among those building platforms based on virtual or mixed reality, a term that means blending the digital world with real-life environments.

While most current metaverse platforms are online video games, “what 5G is going to do is really turn that metaverse experience into something that reaches out into your daily life,” Sarah Gilarsky, a business development lead for Verizon’s next-generation entertainment partnerships, said at a February panel discussion by the company’s research arm.

Going Virtual

SK Telecom wants to create a virtual economy based on its platform, said Cho Ik-hwan, SK Telecom’s vice president and head of mixed reality development, where people not only seek leisure and entertainment, but also trade and develop businesses.

“The metaverse is our future business model. It will be our core business platform,” Cho said. “We want to create a new kind of economic system. A very giant, very virtual economic system.”

SK Telecom Metabus
SK Telecom’s employees create a 3D avatar at the Jump Studio in Seoul.

Last year, 113 mobile operators across the world launched their 5G networks in 48 countries, according to industry research platform GSMA Intelligence, which predicts that global carriers will spend $720 billion on the networks between 2021 and 2025, or $144 billion a year on average. Slow adoption of 5G by users and lack of a wide range of applications mean a long slog to recover the hefty costs.

Wireless carriers have lost out in monetizing 4G

In China and South Korea, two of the earliest countries to commercialize 5G, average revenue growth at the six dominant operators has slowed to 15% in the seven years through 2020, versus almost 50% in the previous four years. For instance, China Mobile spent more than 102 billion yuan ($15.7 billion) on 5G last year, but revenue from 5G businesses was just 87 billion yuan in the period, according to Bloomberg calculations.

“It would be so difficult for the telcos to recoup their huge investment just by selling 5G data packages to subscribers,” said Wilson Chow, global technology, media and telecommunications industry leader at PwC China. More carriers will participate in the metaverse space going forward, he said.

While it’s tough to estimate how much metaverse-related applications will generate in the long term — much of the potential remains conceptual — early metaverse uses such as enhanced and immersive media will account for 40% of the 5G-enabled application market by 2030, according to Ericsson’s research arm.

Read more:

For now, developers of games linked to the metaverse concept are performing well. Roblox shares have surged almost 90% since they started trading in New York in early March. Unity Software Inc., a game engine maker investing heavily in virtual reality, has seen its stock price more than double since its September listing.

Committed to heavy investment in 5G over the next few years, telcos would need funding partners to build these platforms and can’t pull it off by themselves, said Fuad Siddiqui, a senior partner and vice president of Nokia Oyj’s research arm Bell Labs.

SK Telecom Metabus
SK Telecom’s metaverse app “Ifland.”

Industry alliances are already being formed. South Korea launched a group in May to develop metaverse-related technologies and ecosystems, composed of 17 companies including SK Telecom and Hyundai Motor Co., as well as eight industry groups including the Korea Mobile Internet Business Association. The Global XR Content Telco Alliance, which has similar focuses, was founded in September last year, with members including South Korean carrier LG Uplus Corp., China Telecom Corp., Japan’s KDDI Corp. and U.S.-based Qualcomm Inc.

Still, there’s no guarantee investing in metaverse concepts will lead to much. Video game Second Life, where players had a virtual life in the game through their avatars, became a massive hit more than a decade ago before its popularity declined as users moved on to mobile-based social media. Google Glass, much touted around 2013, failed to catch on amid concerns over pricing, privacy and safety.

Though Covid-induced lockdowns gave these online games a boost and offered a peek into the early stages of the metaverse, the demand for such applications will outlast the pandemic, said Vincent Lam, chief investment officer of Hong Kong-based VL Asset Management.

“This is the trend for the future,” said Lam. “Covid has changed everybody’s mindset. Not only young people, even older generations feel they need to adapt to a digital lifestyle.”


Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or sign in if you are already an Insider.

Everybody has an opinion but not everyone has the knowledge and the experience to contribute meaningfully to a discussion. That’s what we want from our members. Help us learn with your expertise and insights on articles that we publish. We encourage different, respectful viewpoints to further our understanding of the world. View our comments policy here.

No Comments, yet

Please peer review 3 community comments before your comment can be posted