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Tech News & Podcast | Africa

The Rise of 5G: What it Means for Tech and Telecom

The benefits of 5G extend beyond just faster download speeds. It has the potential to revolutionize industries such as healthcare, transportation, and manufacturing by enabling new applications such as remote surgery, autonomous vehicles, and smart factories.

How might 5G and other advanced technologies impact the world?

If 5G is deployed across just four commercial domains—mobility, healthcare, manufacturing, and retail—it could boost global GDP by up to $2 trillion by 2030. Most of this value will be captured with creative applications of advanced connectivity.

Here are the four commercial domains with some of the largest potential to capture higher revenues or cost efficiencies:

  • Connectivity will be the foundation for increasingly intelligent mobility systems, including carsharing services, public transit, infrastructure, hardware and software, and more. Connectivity could create new revenue streams through preventive maintenance, improved navigation and carpooling services, and personalized “infotainment” offerings.
  • Devices and advanced networks with improved connectivity could transform the healthcare industry. Seamless data flow and low-latency networks could mean better robotic surgery. AI-powered decision support tools can make faster and more accurate diagnoses, as well as automate tasks so that caregivers can spend more time with patients. McKinsey analysis estimates that these use cases together could generate up to $420 billion in global GDP impact by 2030.
  • Low-latency and private 5G networks can power highly precise operations in manufacturing and other advanced industries. Smart factories powered by AI, analytics, and advanced robotics can run at maximum efficiency, optimizing and adjusting processes in real time. New features like automated guided vehicles and computer-vision-enhanced bin picking and quality control require the kind of speed and latency provided by high-band 5G. By 2030, the GDP impact in manufacturing could reach up to $650 billion.
  • Retailers can use technology like sensors, trackers, and computer vision to manage inventories, improve warehouse operations, and coordinate along the supply chain. Use cases like connectivity-enhanced in-store experiences and real-time personalized recommendations could boost global GDP up to $700 billion by 2030.

How will telecommunications players monetize 5G in the B2C market?

The rise of 5G also presents an opportunity for telecommunications players to shift their customer engagement. As they reckon with the costs of 5G, they also must reimagine how to charge customers for 5G. The B2B 5G revolution is already under way; in the B2C market, the value proposition of 5G is less clear. That’s because there is no 5G use case compelling enough, at the present time, to transform the lives of people not heavily invested in gaming, for instance.

But despite the uncertainty, McKinsey has charted a clear path for telecommunications organizations to monetize 5G in the B2C sector. There are three models telcos might pursue, which could increase average revenue per user by up to 20 percent:

  • Impulse purchases and “business class” plans. 5G technology will allow telcos to move away from standard monthly subscriptions toward flexible plans that allow for customers to upgrade network performance when and where they feel the urge. Business class plans could feature premium network conditions at all times. According to McKinsey analysis, 7 percent of customers are already ready to use 5G boosters, and would use them an average of seven times per month if each boost cost $1.
  • Selling 5G-enabled experiences. The speeds and latency of 5G make possible streamlined and seamless experiences such as multiplayer cloud gaming, real-time translation, and augmented reality (AR) sports streaming. McKinsey research shows that customers are willing to pay for these 5G-enabled experiential use cases, and more.
  • Using partnerships to deliver 5G-enabled experiences. When assessing customer willingness to pay for 5G cloud gaming, McKinsey analysis showed that 74 percent of customers would prefer buying a 5G service straight from the game app rather than from their mobile provider. To create a seamless experience for customers, telcos could embed 5G connectivity directly into their partners’ apps or devices. This could greatly expand telecommunications organizations’ customer base.

Wrap Up

5G has already gained adherents in the B2C segment, and business players can build on this base.
Although this technology offers many opportunities, advanced electronics companies and industrials must place their bets carefully to ensure a strong return on investment over the next few years. The
companies that move now to pursue distinctive use cases and prepare for standardization may be the ones that will capture the greatest returns.

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