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While 5G has been around for three years, its development speed has exceeded industry expectations. Around 240 commercial networks have launched during these three years, with the 5G customer base reaching 1 billion, accessing services through one of around 800 5G-compatible devices launched by a range of vendors.

From an industry and ecosystem perspective, 5G is therefore becoming a mature technology.

The top 20 5G operators globally saw their revenue rise on average between 4% and 6% last year, demonstrating that 5G is delivering for operators in financial terms. Compared to the 1% revenue increase registered across all operators globally, it’s clear that 5G plays a significant role in driving revenue growth.

At Mobile World Congress 2023, Huawei’s President of 5G Marketing and Solution Sales Barry Hou explained the steps that are necessary to capitalize on the strengths of 5G technology, and therefore achieve 5G business success.

Migrating Users to 5G

Hou noted that based on its own analysis, Huawei has identified four key factors for achieving 5G business success: attracting more users and traffic; increasing ARPU; driving innovations; and improving user experience. There is a level of interconnection among these; by swiftly migrating users onto new services, user experience is improved, which in turn encourages them to consume more data, thereby increasing ARPU. Hou noted that Huawei’s clients saw their ARPU rise by as much as 10%, demonstrating how 5G can provide a foundation for growing business.

To underline the importance of swift user migration, Hou said that it would be possible for an operator to achieve return on investment in less than three years if they managed to convert 30% of their data traffic to 5G quickly enough. He noted that this was an achievable goal, saying that the first step was to make devices affordable to increase the penetration rate. Precise marketing would help to identify valuable 5G users on the network, and these customers can then be targeted with attractive 5G offers designed to meet their requirements, driving uptake.

Differentiating User Experience

Once users have been migrated to 5G, the next question is how to continue monetization. Traffic filling has typically been the key method but it is important to explore other avenues. Hou said that experience differentiation is a key draw – the main avenues for this are downlink and uplink monetization, with premium downlink a particularly effective option for service differentiation, offering VIP users better speeds than standard customers. Hou noted that while many operators have already implemented such a system, there are other options for guaranteeing speeds, including 5G slicing. If for example users have an important called scheduled, personal 5G slicing solutions can offer a committed 20Mbps downlink speed at critical moments.

FWA a ‘quick win’ for monetization

5G Fixed Wireless Access is another aspect of the technology that can deliver results for operators – indeed, Hou described 5G FWA as a ‘quick win’ for 5G monetization, with 95 operators worldwide (around two thirds of global 5G operators) launching commercial 5G FWA offerings. Within two years, the number of subscribers using the technology globally reached 10 million – an incredible statistic. However, Huawei is keen to continue exploring new 5G scenarios enabled by FWA – since the tech can support a maximum of 1Gbps, it has enabled the replacement of copper across Europe.

Within the European continent, there are still around 200 million users reliant on copper access, and they receive slow speeds as a result. By upgrading from copper to 5G FWA, bit rates can be boosted to 300Mbps. In emerging markets, fibre penetration is fairly low – estimated 7.2% – but there is demand for a fibre-like experience for home internet access. 5G FWA is therefore a viable solution for home broadband access in these regions.

5GtoB driving revenue growth

Hou was upbeat about the business prospects of 5GtoB, noting that the fast development of the technology in China had resulted in the country’s three main operators nearly tripling their revenue for 5GtoB from 2021 to 2022. He noted similar success in overseas markets between 2021 and 2022, with the number of 5G private networks deployed nearly doubling year-on-year from 62 to over 120. Since most 5G operators already have very good 5G infrastructure, they can use this to their advantage to provide virtual private networks via 5G slicing technology. Also, campus private networks have been deployed to help digital transformation of many industries, including manufacturing, mining, ports, etc.

Evolving app ecosystems require 5G advances

As 5G evolves into 5.5G, it’s important to learn from its successes. With 5G, shortform video apps are exploding in popularity, and their content is generated by consumers (UGC – User Generated Content). This is a major change from the 4G era, in which video content was typically PGC (Professionally Generated Content), and as AI advances swiftly, we’re likely to see AI-generated content before long. While it is not yet clear what form AIGC will take, it will likely be video or at the very least image based, and the AI technology itself will require even lower latency and a higher data burden – around 50Mbps per user, as compared to using an app like TikTok over a 5G connection, which requires a base level of 4-10Mbps. This means that a single base station would require at least 5Gbps, which can’t be supported by current 5G technologies.

It’s clear that monetization is a key focus of 5G, and all aspects and use cases for the technology must be taken into account to achieve this. Whether this is driving consumer adoption via service differentiation, boosting subscriber numbers by introducing 5G Fixed Wireless Access, or exploring enterprise use cases via 5GtoB, operators have many paths available in the pursuit of 5G business success.

Huawei reported a plunge in profits in its 2022 financial year blaming “external environments and non-market factors”, and that 2023 will be a “crucial” year for the vendor’s “sustainable survival and development”.

In a statement, Huawei rotating chairman Eric Xu said: “In 2022, a challenging external environment and non-market factors continued to take a toll on Huawei’s operations », said Eric Xu, Huawei’s Rotating Chairman, at the company’s annual report press conference.

« In the midst of this storm, we kept racing ahead, doing everything in our power to maintain business continuity and serve our customers. We also went to great lengths to grow the harvest – generating a steady stream of revenue to sustain our survival and lay the groundwork for future development. »

Incoming rotating chair and CFO Meng Wanzhou (pictured) added “despite substantial pressure in 2022” the results were in line with forecast.

Xu also added that the vendor has “considerable pressure” ahead of it in, but remained confident the vendor will push through by maintaining its stance on investing in R&D.

“We are confident in our ability to rise above any challenge that comes our way, laying a solid foundation for sustainable survival and development, » he said.

Profit for the vendor fell 68.7% to CNY35.6 billion (US$5.2 billion), and revenue was flat at CNY642.3 billion.

Revenue in its enterprise unit grew 30% to CNY133.2 billion. The carrier business saw flat revenue at CNY284 billion, and consumer dropped 11.9% to CNY214.5 billion.

Capex was CNY161.5 billion in 2022, representing 25.1% of overall revenue and bringing its total R&D expenditure over the past 10 years to over CNY977.3 billion.

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