Telecoms firms see ‘metaverse’ as killer 5G app to help recoup billions spent building next-gen networks
- Telecoms companies in China, the US and South Korea see augmented reality and digital worlds as the key to making back money spent on superfast 5G networks
- The ‘metaverse’ concept has inspired companies like Roblox, but there is no guarantee it will become the big revenue driver that telcos hope
“If you do nothing, you will stay on a flat curve revenue wise,” said Stockholm-based Pernilla Jonsson, head of Consumer & IndustryLab. “We see the potential. It will be very interesting to see how this plays out. Who will actually be the winners of the metaverse is still a very open question.”
Jonsson expects the development of the metaverse to be gradual, starting with those headsets and glasses piggybacking on smartphone connections. Cutting-edge metaverse applications are still at the conceptual stage. If they do become reality, virtual meetings and shopping online would feel like real-life activities, with digital copies of almost everything that also reflect real world changes in real time through advanced 3D image capturing.
China Mobile, the world’s No 1 carrier by subscribers, Verizon, the largest US operator and South Korean leader SK Telecom are among those building platforms based on virtual or mixed reality, a term that means blending the digital world with real-life environments.
SK Telecom wants to create a virtual economy based on its platform, said Cho Ik-hwan, SK Telecom’s vice-president and head of mixed reality development, where people not only seek leisure and entertainment, but also trade and develop businesses.
“The metaverse is our future business model. It will be our core business platform,” Cho said. “We want to create a new kind of economic system. A very giant, very virtual economic system.”
“It would be so difficult for the telcos to recoup their huge investment just by selling 5G data packages to subscribers,” said Wilson Chow, global technology, media and telecommunications industry leader at PwC China. More carriers will participate in the metaverse space going forward, he said.
While it’s tough to estimate how much metaverse-related applications will generate in the long term – much of the potential remains conceptual – early metaverse uses such as enhanced and immersive media will account for 40 per cent of the 5G-enabled application market by 2030, according to Ericsson’s research arm.
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Committed to heavy investment in 5G over the next few years, telcos would need funding partners to build these platforms and can’t pull it off by themselves, said Fuad Siddiqui, a senior partner and vice-president of Nokia Oyj’s research arm Bell Labs.
Industry alliances are already being formed. South Korea launched a group in May to develop metaverse-related technologies and ecosystems, composed of 17 companies including SK Telecom and Hyundai Motor Co, as well as eight industry groups including the Korea Mobile Internet Business Association. The Global XR Content Telco Alliance, which has a similar focus, was founded in September last year, with members including South Korean carrier LG Uplus Corp, China Telecom, Japan’s KDDI Corp and US-based Qualcomm.
Still, there is no guarantee investing in metaverse concepts will lead to much. Video game Second Life, where players had a virtual life in the game through their avatars, became a massive hit more than a decade ago before its popularity declined as users moved on to mobile-based social media. Google Glass, much touted around 2013, failed to catch on amid concerns over pricing, privacy and safety.
Though Covid-19-induced lockdowns gave these online games a boost and offered a peek into the early stages of the metaverse, the demand for such applications will outlast the pandemic, said Vincent Lam, chief investment officer of Hong Kong-based VL Asset Management.
“This is the trend for the future,” said Lam. “Covid has changed everybody’s mindset. Not only young people, even older generations feel they need to adapt to a digital lifestyle.”