Telcos believe there’s more to VR/AR than monetizing 5G: report

Telcos are becoming interested in the potential revenue streams related to virtual and augmented reality (VR/AR) because it’s not only a vehicle for 5G monetization, but can also bring growth opportunities in connectivity, content innovation and service platforms.

That’s according to GlobalData, whose new report says that despite robust momentum on the supply side, the VR/AR market is still nascent, with the penetration of VR/AR headsets very low relative to other computing devices.

“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, with some leading players entering key segments of the VR/AR supply chain in the past two years,” says Ozgur Aytar, director of research at GlobalData.

For example, she explains, Verizon has made acquisitions in VR/AR content platforms, while SK Telecom is building its own, AT&T 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.

However, the rising demand for VR/AR experiences will undoubtedly place formidable pressure on telecom networks, Aytar added. While smartphone AR apps such as Pokémon Go can be handled by existing mobile broadband infrastructure, immersive experiences demand much more bandwidth capacity.

According to the GlobalData report, interviews with industry players showed a wide range of expectations on VR/AR’s impact on telco network traffic, with nearly half expecting a traffic increase by more than 40% by 2025. This is driving telcos to brace for the impact with aggressive network upgrades and 5G rollout initiatives.

Aytar says VR/AR represents an opportunity for telcos to increase their digital services imprint and explore new revenue streams, but success in VR/AR will require a long-term vision.

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