Monetization is the most pressing challenge in the industry—for operators and for most ecosystem players—but also a stubbornly elusive target. Network capacity and coverage have expanded significantly, supporting a sustained increase in traffic and subscribership. Over 70% of people worldwide have mobile connectivity (GSMA); on average, each subscriber generates 19 GB per month (Ericsson).
Facing reality: Revenue growth is low in a mature industry
Despite these impressive achievements, service revenues are essentially flat, with at most a 1-3% yearly increase, a trend likely to persist for the foreseeable future. The rapid growth rates of the 1990s (over 30%) or the early 2000s (10-20%) are typical of an emerging industry and are not sustainable in the long term. Telecom, both fixed and mobile, has become a mature industry with growth rates comparable to utilities and lower than fields like data centers or semiconductors. On the positive side, telecom is not a cyclical sector like travel, and we should expect it to remain largely unaffected by economic fluctuations.
Operators must adjust to this new normal. Technological advancements from 5G and the future 6G will enhance network efficiency but are unlikely to reverse the service revenue stagnation, as the trend is driven not by technology but by macroeconomics. Operators can't control macroeconomic forces, but they have considerable control over network efficiency, profitability, and capturing more value from existing network assets.
Indirect monetization: Moving beyond ARPU
Subscribers value connectivity and depend increasingly on it, but they resist paying more for it, even as their user experience improves. Many willingly pay for content and entertainment—but those revenues flow primarily to content providers, not network operators. We saw this clearly with 4G and 5G, and there is no reason to expect that 6G will be any different.
Emerging growth areas, such as private networks, sensing, and satellite-based NTN, offer some potential, but the operator's share of these revenues may be limited.
Is it all lost? Not if operators shift from focusing solely on ARPUs toward indirect monetization. This requires increasing network efficiency, automation, and functionality to reduce operating costs and make network capabilities available to third parties.
Abandoning the dumb pipe mindset
Wireless networks are extremely sophisticated, valuable assets critical to society, safety, and economic productivity. They demand substantial investment and unique, hard-to-duplicate skills. Yet, in chasing subscriber revenues, operators have engaged in destructive price competition, eroding profitability and fostering a perception of their networks as mere dumb pipes. They overlooked revenue opportunities from their existing network assets and have not been as aggressive as they could have been in optimizing their networks.
However, this is beginning to change. Exposing network capabilities through APIs allows operators not only (or primarily) to generate revenue from API access but also to build an indirect monetization strategy that benefits both application developers, who can improve the quality of their services, and operators, who can earn revenues and increase the efficiency of their network.
For example, coordinating video traffic with video service providers through APIs enables a more efficient use of network resources by dynamically adjusting video quality that is more appropriate for the device, content, link conditions, and traffic load. Improved efficiency means operators can extract more value from their deployed networks, reduce their per-bit opex, and increase their profitability. They can serve more subscribers and defer capital expenditure for network expansion.
Focus on what you can control
Operators cannot dictate subscriber spending, but they have control over how to make their network more efficient.
They have a wealth of historical and real-time data that they can use to optimize network resources with the essential contribution of AI and automation. For instance, dynamically predicting network traffic distribution may enable better content delivery, reduce power consumption, and improve service prioritization and management.
Increasing network efficiency and monetizing network assets does not require a significant investment in infrastructure, but it does require effort that starts with a candid assessment of their existing capabilities and operations. There's no magic wand: each operator has to identify its specific requirements, and find a unique path to address them. Not only does this unlock indirect monetization opportunities, but it also enables operators to differentiate from the competition.
Extracting more value from existing network assets
The industry needs a new approach to monetization that is not tied to unrealistic ARPU growth expectations or to the hype of the latest technology. Recognizing telecom as a mature industry, operators can achieve sustained profitability by increasing indirect monetization efforts, optimizing network utilization, and expanding automation and real-time traffic management. Rather than accepting the dreaded dumb-pipe role, operators can transform themselves into smart pipes and capitalize on the often underestimated true value of their sophisticated networks.
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