Wednesday, October 20, 2021

The 5G Revolution Beckons! Time to Seize Unending Possibilities

We are living in one of the most exciting and innovative times. Every day, there is a new technology taking over the inventions that the world thinks are paramount. The human race is testifying to the fact each day that technology and innovation are true, limitless. Another such technological revolution escalating quickly towards engulfing the existing innovations is the ‘5G network‘.

The approaching 5G smartphone upgrade cycle can prove to be a mixed blessing for telecom operators in the current market. This migration from the fourth generation to the upcoming fifth-generation is vital to enable expansive 5G network experiences globally. Yet it is presumed to be costlier than previous consumer hardware shifts, the majority consisting of smartphones.

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It is quite evident that smartphone prices have skyrocketed and related expenses have strained the margins of operators who cannot afford to take over the financial burden of upgrading their smartphones continuously. Within the telecom world, 5G (fifth generation) technology is generating sufficient hype. It could provide faster wireless speeds by manifolds as compared to its former 4G (fourth generation) technology.

How will this 5G revolution take place?

Sprint’s, an American telecom giant, management indicated that the carrier views its 2.5 GHz spectrum as low band for 5G and hopes to determine 5G mobility deployments within subsequent successive years. To extract maximum value from your smartphones an E2E (end to end) life cycle management approach is crucial. This argument is also backed up by various experts.

If executed seamlessly, the E2E device life cycle approach can accrue better financial incentives for operators, upgrading both earnings before interest (EBITDA) and customer lifetime value (CLV). This approach also helps in cutting costs and growing through the addition of new layers of subscribers.

One way for smartphone operators to boost up their revenues can be by increasing the attachment rates for insurance, connected devices, accessories, and other services. Many operators have started offering a completely branded insurance plan that is also bundled with additional value-added services like cloud storage and password protection. On the one hand, they could specialize in simply expanding coverage with the existing network and incrementally augmenting their existing equipment. On the other hand, they can easily replace their equipment.

Globe, another telecom giant headquartered in the Philippines, invested a sum of $400 million into its IT systems with capabilities extending beyond just business support and billings. Customer analytics and usage tracking allowed the firm to gain much-needed valuable insights into when, where, and how customers were constantly using their smartphones. This proved to be a key competitive advantage for them in the long run.

The Growth of Smartphones and why 5G revolution matters?

Global smartphone sales experienced dire stagnance in the year 2019, with sales plateauing around plateauing at around 1.4 billion units. This was followed by a sharp decline in the sales of smartphones worldwide in 2020. These are due to factors like higher penetration levels, longer and more intensive upgradation cycles of consumers, a convenient shift from simply hardware innovation to subdued software advances, and establishing a stagnant secondary marketplace for used smartphones.

The top mobile manufacturers on the planet include Samsung, Apple, Huawei, Xiaomi, Oppo, LG, and Motorola.

However, most experts estimate that the 5G revolution will reverse this trajectory and push new smartphone sales growth for top-tier Original Equipment Manufacturers or OEMs by a strong margin. Smartphones already occupy up to half of a subscribers’ telecom wallet share and this money is spent by the customer on both wireless services and the devices themselves, hence, transferring more cost to the customer isn’t a very viable option by all means.

Smartphone Insurance- Another fast-growing market

Smartphone insurance particularly is also a fast-growing market whose share in the market is estimated at around $10 billion to $15 billion and growing rapidly at over 10 percent a year. This growth needs to be supported by the premium price tags that come along with the introduction of 5G smartphones as many buyers seek to mitigate their risks. Most operators are already versed with managing this growth, having outsourced most insurance-related workload to specialized providers.

But even under an outsourced model, there is much room for innovation. Putting it to perspective, a South American operator in collaboration with its insurance provider partnered up with a state network of repair stores to repair 65% of smartphones within just a few hours to avoid expensive smartphone exchanges and bring down the insurance costs by 25%. Telecom hubs like South Korea, China, and the United States of America are hence the countries that lead the world in creating and deploying the much anticipated 5G technology. This has led to telecom operators around the world including AT&T, KT Corp, and China Mobile being in a contest to create the fifth generation (5G) of wireless technology and bring about a revolution.

Siddharth Kulkarni
Siddharth is an incoming FMV Analyst and B.Com Hons graduate from Delhi University. Siddharth holds several positions of authority at a college level at various societies namely The Young Entrepreneurs Society and The Hult Prize. He is an enterprising youngster who is passionate about learning and growing as a person with each successive day. He is a hardworking and self-confident individual who possesses zeal and grit and loves to work with details. Being a sportsperson as well as an academic achiever, he love to surround himself with healthy competition.






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