Diversity of Operator
5. MANUFACTURING
3.6.3 FWA economics: opportunity mapping
127 12 noon
Illustrative only
Time of day Network Capacity UsageAverage selling price in US$
12 noon Average demand
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
336.8 348.6 332.5
305.8 291.1 276.2 261.3 245.1 229.4 214.7
0 30 40 50 60 70 80 90 100
0 5
10 15
20 25
30 35
40 45
50
Household Computer Penetration
Fixed Broadband Penetration Red Ocean:
Fierce Competition
Blue Ocean:
Existing pent-up demand
Desert:
Isolated or 'Oasis' of opportunities
Micronesia (Federated States Mongolia Viet Nam
Kyrgyzstan El Salvador
Honduras GuatemalaLibya Sri LankaSouth AfricaSamoa
Vanuatu Bhutan Iraq
Indonesia Marshall IslandsDjiboutNamibia
Lao People’s Democratc Nepal ZimbabweCameroonCuba Equatorial Guinea
Ghana
India KenyaMyanmar Pakistan São Tomé and Principe
Senegal Sudan Swaziland
Tajikistan Timor - Leste Turkmenistan Côte d’Ivoire BangladeshRepublic
Solomon Islands Nicaragua
Africa Angola Cambodia
ComorosGambiaNigeriaHait UgandaZambia10 Central African RepublicPapua New GuineaCongo Republic
GuineaMali Tanzania AfghanistanBurkina FasoBenin
Burundi Congo DRChad Ethiopia
Guinea - Bissau Kiribat Liberia MadagascarMalawi Mauritania Mozambique
Niger Rwanda Sierra Leone
Somalia South Sudan Togo Yemen Botswana Philippines Ecuador
Romania Lithuania
World Americas
Arab States
Asia & Pacific CIS
Europe
Albania Algeria Antgua and Barbuda Argentna
Armenia Australia
Austria
Azerbaijan Bahamas
Bahrain
Barbados Belarus Belgium
Belize Bolivia Bosnia and HerzegovinaBrazil
Brunei Darussalam
Bulgaria Canada
Cape Verde Chile
Colombia Costa Rica Croata
Cyprus
Czech Republic Denmark
Dominica
Dominican Republic Egypt Estonia
Fiji Finland
France
Gabon Georgia
Germany
Greece
Grenada
Guyana Hungary
Iceland
Iran Ireland
Israel
Italy
Jamaica Japan
Jordan Kazakhstan
Korea, South
Kuwait
Latvia Lebanon Luxembourg
MalaysiaMaldives Malta
Mauritus
Mexico
of) Moldova
Monaco
Montenegro
Morocco
Nauru
Netherlands New Zealand
Norway
Oman
Panama
Paraguay Peru Poland
Portugal
Qatar
Russia
Saint Lucia
Saudi Arabia Serbia
Seychelles Singapore
Slovakia Slovenia Spain
Suriname Sweden
Switzerland
Syria TFYR Macedonia
Thailand
Tonga Trinidad and Tobago
Tunisia Turkey
Tuvalu Ukraine United Arab Emirates
United Kingdom United States
Uruguay
UzbekistanVenezuela Hong Kong
Palestne
Micronesia (Federated States Mongolia Viet Nam
Kyrgyzstan El Salvador
Honduras GuatemalaLibya Sri Lanka
Samoa South Africa Vanuatu Bhutan Iraq
Indonesia Marshall IslandsDjiboutNamibia
Lao People’s Democratc Nepal ZimbabweCameroonCuba Equatorial Guinea
Ghana India KenyaPakistanMyanmar São Tomé and Principe
Senegal Sudan Swaziland
Tajikistan Timor - Leste Turkmenistan Côte d’Ivoire BangladeshRepublic
Solomon Islands Nicaragua
Africa Angola Cambodia
ComorosGambiaNigeriaHait UgandaZambia10 Central African RepublicTanzania AfghanistanPapua New GuineaCongo RepublicGuineaMaliBurkina FasoBenin
Burundi Congo DRChad Ethiopia
Guinea - Bissau Kiribat Liberia MadagascarMalawi Mauritania Mozambique
Niger Rwanda Sierra Leone
Somalia South Sudan Togo Yemen Botswana Philippines Ecuador
Romania Lithuania
World Americas
Arab States
Asia & Pacific CIS
Europe
Albania Algeria Antgua and Barbuda Argentna
Armenia Australia
Austria
Azerbaijan Bahamas
Bahrain
Barbados Belarus Belgium
Belize Bolivia Bosnia and HerzegovinaBrazil
Brunei Darussalam
Bulgaria Canada
Cape Verde Chile
Colombia Costa Rica Croata
Cyprus
Czech Republic Denmark
Dominica
Dominican Republic Egypt Estonia
Fiji Finland
France
Gabon Georgia
Germany
Greece
Grenada
Guyana Hungary
Iceland
Iran Ireland
Israel
Italy
Jamaica Japan
Jordan Kazakhstan
Korea, South
Kuwait
Latvia Lebanon Luxembourg
Malaysia Maldives Malta
Mauritus
Mexico
of) Moldova
Monaco
Montenegro
Morocco
Nauru
Netherlands New Zealand
Norway
Oman
Panama
Paraguay Peru Poland
Portugal
Qatar
Russia
Saint Lucia
Saudi Arabia Serbia
Seychelles Singapore
Slovakia Slovenia Spain
Suriname Sweden
Switzerland
Syria TFYR Macedonia
Thailand
Tonga Trinidad and Tobago
Tunisia Turkey
Tuvalu Ukraine United Arab Emirates
United Kingdom United States
Uruguay
UzbekistanVenezuela Hong Kong
Palestne
There are several metrics that can be used to map the relative mass market FWA opportunity in different countries. On the supply side, home density vs.
population density provides a comparison on how costly it can be to provide mass market FWA coverage.
Spectrum choice (mmWave vs. 3.5GHz) determines the size of the cells for FWA coverage and the resultant cost of covering a given area.
But the demand side provides more helpful metrics to assess the addressable FWA market opportunity. As a broadband proposition to stationary and nomadic uses, FWA will be ‘competing’ with: 1. non-consumption of home broadband; and 2. alternative home broadband services.
For (1), the proportion of households with a computer is a good indicator of an appetite for home broadband.
Customers who can neither afford computers nor decide against having a computer are unlikely to be willing FWA customers. For (2), in households with computers, the level of fixed broadband penetration in each country will show the level of pent-up, addressable demand for FWA.
Figure 3.6.5 charts 160 countries on household computer penetration and fixed broadband
penetration, and shows that for FWA, most markets can be categorised as either Red Ocean, Blue Ocean or Desert. However, regardless of which category a country is in, there will always be ‘oasis’ of opportunities for FWA.
128
3.6.3.1 Mostly ‘Blue Ocean’ markets
Operators should explore playing in these markets Blue Ocean markets present a sizeable, and relatively uncontested, mass market opportunity for home broadband (i.e. analogous to a peaceful-looking blue ocean). These are markets with at least 40% household computer penetration but less than 20% fixed
broadband penetration.
These markets are attractive for 5G FWA because affordability and usability for residential customers is high. Likewise, the enterprise opportunities for FWA, especially for SMEs, will broadly mirror the consumer market opportunity.
Good examples are found in Middle East countries such as Saudi Arabia (69% household computer penetration;
11% fixed broadband penetration) and Kuwait (84%
household computer penetration; 3% fixed broadband penetration).
3.6.3.2 Mostly ‘Red Ocean’ markets
Operators should only play in these markets for broader strategic reasons
Red Ocean markets present a fiercely competitive opportunity for home broadband (i.e. analogous to a bloody, shark-infested ocean). These are markets with household computer penetration of over 40% and over 20% fixed broadband penetration.
Although these markets are sizeable to be addressed by FWA, they are highly competitive because either the fixed broadband ARPU is already at a price that
makes FWA pricing uncompetitive or the existing fixed broadband providers will fight to defend their market share. However, FWA, as a backup broadband for enterprises could provide attractive.
Examples of Red Ocean FWA markets are in most developed markets in Europe, North America and North East Asia.
3.6.3.3 Mostly ‘Desert’ markets
Operators should seek out and play in ‘oasis’
opportunities in these markets
Desert markets offer only a small, mass market FWA opportunity because of low affordability and usability (i.e. analogous to a dry, barren desert with isolated
‘oases’ of greenery). These are markets with household computer penetration of less than 40% and less than 20% fixed broadband penetration. Customers in these markets will likely stick to using their smartphones for internet access, and as a hotspot for computer internet access.
However, there will be selected residential and enterprise opportunities, especially in affluent
neighbourhoods and business districts which can prove particularly lucrative. Operators in these markets should focus on making a compelling FWA proposition to customers in these locations early, else these customers will seek alternative broadband solutions for their needs.
Examples of Desert FWA markets are in many developing markets in Africa and South East Asia.
5G Value Creation and Capture THE 5G GUIDE
129
The Enterprise Opportunity
5G Value Creation and Capture
3.7
KEY TAKEAWAYS
• 5G will bring new capabilities and the flexibility to serve the specific needs of different enterprise customers. This could be worth $400 billion per annum to operators by 2025.
• There are broadly four enterprise offerings by operators: basic connectivity; differentiated connectivity; beyond connectivity and managed solutions.
• Operators should seek ways to capture incremental value from commoditised basic connectivity; hence the need for differentiated connectivity (e.g. network slicing).
• Operators can sell more third-party products as part of beyond connectivity; they can also work as co-innovators with their customers to build customer-relevant solutions.
• 5G will be a key enabler of the 4th Industrial Revolution, as technology is seamlessly embedded within society and especially in commercial and industrial processes.
130
5G will bring new capabilities and the flexibility to better serve the specific needs of different enterprise customers. Operators can leverage these new capabilities to unlock a sizeable new revenue opportunity that GSMA estimates could be worth up to $400 billion per annum by 2025 (including the IoT segment).
To fully capture this opportunity, operators will need to tailor their value propositions to large organisations (including municipalities and government agencies) as well as small and medium enterprises (SMEs). While operators are primarily purveyors of connectivity products, they can offer enterprises four different offerings positioned around the core connectivity offering as shown in Figure 3.7.1.