After
the 5G spectrum auction took place in early 2020, telecommunications operators
have accelerated their investment in 5G networks covering all 77 provinces
across the country, especially in cities that are the potential areas for 5G
services, in order to compete for leadership within the realm of communication
technology. The bidding price for the 5G spectrum, which is averaged at THB30
billion per operator, will drive telecommunications operators to quickly
generate more revenue from the launch of 5G services to compensate for the huge
investment. In the context of economic slowdown, the expansion of 5G service
for the corporate segment alone may not be sufficient to create demand for 5G
services. Therefore, although telecommunications operators have not yet begun
to provide comprehensive 5G services, they are preparing to capture the
consumer market to expand the 5G user base. KResearch believes that the
expansion of the consumer market to increase 5G demand shall start with a focus
on creating 5G experiences based on services that are popular and familiar to
consumers, especially services related to online mobile entertainment. In 2019,
the average gross revenue of telecommunications operators from mobile
entertainment services was approximately THB128 per mobile entertainment user, at
an increase of approximately 8% from THB110 in 2017. In the next stage, the 5G
market will gradually expand into Internet of Things (IoT) services.
In
the first stage of launching 5G services on the consumer market, online mobile
entertainment services will be the first market where consumers turn to 5G
technology to enhance their entertainment experience. As online entertainment
providers tend to improve the quality of their media content to
high-definition, the demand for more stable and faster data transmission is
rising, especially for online games that require both resolution and
competition among online players. 5G technology will meet such demand better than
4G can. At present, Thailand has more than 27.8 million online game players,
and the online mobile game market is worth about THB16 billion, which is
regarded as a new market with the potential to expand revenue generation
channels.
Consumers
who tend to stream videos through mobile phones, especially those who like to
watch ultra high definition content, may become one of the consumer groups that
switch to 5G services, as they often experience interrupted and unsmooth video
quality when viewing content in public areas where the network is used
intensively. In addition, some telecommunications operators provide virtual
reality content (VR Content) services through 5G networks. This will be another
market where operators strive to create new experiences that are different from
the traditional services of the 4G era. This will not only generate revenue
from stimulating the use of 5G services but will also earn additional revenue
from the sale of VR headsets and charging monthly service fees for watching VR
Content.
KResearch
expects that 5G services will expand into the market related to the Internet of
Things (IoT) technology, especially smart home devices, in the next 4-5 years.
At present, developed countries are still developing related technologies and
services. Thailand has started to develop this technology as well, but usually only
as a device with the basic function of being controlled through the internet,
making it still not necessary to use 5G technology. However, as smart home
technology evolves in the future and requires stable communication between
multiple devices, 5G technology is expected to play a key role in the IoT
market, and the expansion of the IoT market is expected to create a sustainable
income stream for telecommunications operators.
KResearch
believes that telecommunications operators will face several important
challenges at the beginning of the expansion of 5G services to the consumer
market, including 5G service pricing that cannot be too high in the midst of
weakening consumer purchasing power given the economic situation, and the
introduction of 5G smartphones at affordable prices, such as THB10,000 baht or
lower. The long-term expansion of 5G services may help telecommunications
operators transform their business model from focusing on obtaining revenue
through data communication services to mainly obtaining revenue through the
provision of 5G services to consumers. Therefore, telecommunications
operators need to develop more types of 5G services and create differentiation
from 4G services by emphasizing network speed and responsiveness features as
important factors to attract users in the future.
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