Telcos seek AR/VR opportunities beyond 5G monetization

27 Apr 2018

Telecoms operators are becoming interested in virtual reality (VR) and augmented reality (AR), viewing VR/AR not only as a path to monetizing 5G systems but also bring growth opportunities in connectivity, content innovation and service platforms, said research firm GlobalData.

“Telcos have a key role in enabling VR/AR services as providers of broadband and mobile network services, but we see them beginning to explore revenue opportunities in VR/AR that are beyond 5G data and connectivity,” said Ozgur Ayta, director of research at GlobaData.

Already, a number of leading telcos have forayed into key segments of the VR/AR supply chain in the past two years, he said.

Verizon, for example, has made acquisitions in VR/AR content platforms, while SK Telecom is building its own. AT&T, meanwhile, is investing to develop compelling VR experiences and AR apps and Orange is taking steps to increase its participation across the board in devices, platforms, services and original content.

But the research firm also indicated that the rising demand for VR/AR experiences will place “formidable pressure” on the capacity of telcos’ networks.

“While smartphone AR apps such as Pokémon Go can be handled by the existing mobile broadband infrastructure, immersive experiences demand much more bandwidth capacity,” Ayta noted.

Industry executives interviewed for the report, however, varied widely in their expectations for the impact of VR/AR on telco network traffic, with only 7% expecting VR/AR to result in a minimal traffic demand increase - 10% or less – by 2025, while 16% expect an increase of more than 80% over that time [see chart below].

GlobalData noted that telcos are upgrading their networks and testing 5G systems to take advantages of the next-generation VR/AR gears and apps.

Ayta said telcos need to have a long-term vision in order to tap the growth opportunities and new revenue streams generated from AR/VR.

“Telcos interested in gaining ground in the space must be prepared to demonstrate their network readiness in order to satisfy the bandwidth demands of VR/AR experiences, and meet the speed and latency requirements,” he noted.

“Cross-industry partnerships will be key to driving user volume and content creation in the VR/AR space. Telcos should work with partners in delivering high-quality VR/AR experiences, content and tools.”

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