Status of 5G Use Cases:

• Multi-access Edge Compute (MEC) remains relatively intangible, and is likely to be fiercely competitive (hyper-scalers/cloud services, and even tower operators, likely better positioned).
• IoT similarly has not demonstrated material revenue upside potential for carriers.
• Private 5G networks may not include carriers at all; and when they do, it is unclear that carriers will achieve attractive revenue splits with the (many) other participants in the value chain (systems integrators, software providers, hardware providers, security providers, hyperscalers).
• Fixed wireless access has emerged as a “consolation prize,” with incremental revenue but at very low revenue/bit, potentially significantly taxing network resources in a way other 5G applications do not.

Editor’s Notes:

The URLLC use case envisioned by the ITU does not exist because the 3GPP Release 16 URLLC in the RAN spec has still n not been completed and the ITU-R M.2150 recommendation uses 3GPP Release 15 URLLC which does not meet the ITU-R M.2410 performance requirements.

Also, the true 5G features, such as network slicing, automation/virtualization and security, can only be realized via a 5G SA core network for which there are relatively few.

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Telco incumbents always believe the answer is to “move up the (protocol) stack”… but they face much better-equipped competitors in the cloud service providers (Amazon, Microsoft, Google etc.).

Summary and Conclusions:

In our view, the broadband slowdown appears to owe more to a broad market deceleration than to significant shifts in market share…
• Cable broadband churn is at all-time lows
• TelCo broadband gains have not accelerated
• A significant portion of FWA appears to be market expansion

…so pricing and capital intensity do not appear to be at significant risk.

Footprint expansion initiatives are likely sufficient to keep broadband net add growth at least narrowly positive.
Wireless is now Cable’s Act III

Reference:

Moffett Nathanson Oct 2022 Slide Deck (subscribers only)