With mainstream demand for Metaverse products at an all-time high, the opportunity the Metaverse presents is estimated to reach up to $13 trillion by 2030. The 5G fixed wireless access required to facilitate full digital immersion has, on its own, a predicted value of $67 billion by 2028.
Telecom companies are therefore beginning to recognize their potential to act as entry points to the Metaverse for consumers. Indeed, 50% of telcos have already launched Metaverse initiatives, and in the next few years, they aim to invest 8% of their budget in such initiatives.
Why are telcos engaging with the Metaverse?
In an industry with so many new players, consumer trust will play a key role. Telcos will be in a powerful position if they can leverage their broad existing customer bases, well-established brands, and strong customer relationships and experience.
But while taking on such a central role in the Metaverse value chain offers many economic and strategic benefits, it’ll also necessitate a lot of complex structural changes and technological advancements.
To carry out the vast infrastructural developments required for the Metaverse to function at scale, Telcos will need to form partnerships and close working relationships with companies industry-wide. And, crucially, with large cloud service providers on their heels, they must act quickly to capitalize on consumer demand.
In this post, we’ll explore how the telecom industry will be affected by the Metaverse megatrend and how it can harness this opportunity and navigate the challenges the Metaverse presents to increase revenue and retention and make efficiencies.
What is the Metaverse?
Seen by many as the future of social and business experiences online, the Metaverse is a three-dimensional digital world. It fuses virtual reality (VR), augmented reality (AR), mixed reality (MR), artificial intelligence (AI), and other advanced internet technology to enable users to connect, communicate, shop, work, learn, and play, regardless of their physical location.
The development of such a Metaverse relies on connectivity, which places telcos right at the center of its creation.
What role will telcos play in the development of the Metaverse?
At its most basic level, a Metaverse experience is characterized by a sense of immersion, real-time interactivity and data flow between users, and complete user agency. This requires high-speed connectivity, reliability, ultra-low latency, and ubiquitous high bandwidth. 5G services will, therefore, form the backbone of the Metaverse.
And the telecom industry is expected to make the move to 6G services before 2030. This means that data transfer speeds will be faster, and latency will decrease further.
Ultimately, though, the full vision of the Metaverse will allow thousands of users to interact simultaneously across platforms and devices. VR and AR devices demand a vast amount of computing power, real-time rendering power, and AI computing capabilities. Computing power is, therefore, also a critical enabler in providing a smooth Metaverse experience.
What enabling technologies will telcos need to embrace to engage in this market?
The required computational power to execute a high-quality Metaverse experience is 1000 times higher than what we have at our disposal today. Where, for example, call center operational efficiency can be supported very effectively by 5G services alone, telcos must develop their capabilities significantly and invest in persistent cloud computing capacity and data transfer to enable large populations of users to participate in the Metaverse.
Telco efforts around Mobile Edge Computing (MEC) could act as a viable solution here. Edge computing redistributes applications and data as close to users as possible. This means data is transferred more efficiently, network congestion is reduced, and latency is minimized, enabling the Metaverse to work at scale.
What opportunities does the Metaverse present for telcos?
Partnerships and collaboration
Developing close relationships with a range of companies within the Metaverse ecosystem is essential to success. Just as the best call center software for small business includes products from other SaaS providers, telcos should look to develop a one-stop-shop offering for users’ Metaverse experiences.
Partnering with device manufacturers, hyperscale cloud service providers, and over-the-top media services (OTTs) will provide critical additional revenue streams.
For example, telcos should leverage their understanding of customers and position of authority in the market to partner with manufacturers. Devices like AR and VR headsets, sensors, and wearables will be used as doors to the Metaverse. And, where these have in the past been clunky and failed to hit the mainstream, the development of the Metaverse will encourage their streamlining.
Such devices will facilitate more effective remote computer support for consumers, allowing telcos to streamline their adoption process.
Forging relationships with manufacturers will help to drive the adoption of such devices. Telcos should look to create ‘Metaverse bundles’ that include their AR and VR devices alongside existing mobile and connectivity packages. This will allow telcos both to induct new Metaverse users and secure existing ones, driving substantial value.
Also, given the significant expense associated with the required developments in their infrastructure, telcos will struggle to handle this cost without some form of investment from outside parties.
An example of a telco and AR device collaboration
Vodafone has developed a proprietary Metaverse and collaborated with Nreal MR light glasses to offer immersive AR and MR experiences. Enabled by Vodafone’s 5G infrastructure, users, after downloading the software, will be able to do anything, including watching movies, gaming, exploring social media, browsing the web, listening to music, and working using Microsoft Office.
Using a similar business model to the one we discussed earlier, Vodafone derives revenue from this venture by selling it as a subscription package for connectivity. While the app is free, Vodafone will also profit from any transactions that take place on the platform.
Advanced analytics and AI
Telecom companies’ existing experience with big data will give them the edge when it comes to deciding how to store, collect, and repurpose the large amounts of data gathered within the Metaverse. This will represent a huge opportunity.
To create new avenues for revenue and monetization, telcos must select the right analytics to draw out the most valuable insights. Telcos will also need to make use of AI to access and assimilate large amounts of data at speed. For example, they might consider making use of AI assistants.
What challenges does the Metaverse present for telcos?
Infrastructure investment
Building the infrastructure to support the Metaverse and bring it into consumers’ homes will require massive investment from telcos. They’ll need to cover the costs of constructing new data centers, invest in new tech and storage, and upgrade existing tech and networks.
Telcos are unlikely to be able to manage this sort of investment on their own. They must, therefore, approach OTTs and other companies for investment. Given their position as providers of this essential, Metaverse-supporting infrastructure, telcos should have leverage in negotiating favorable partnership deals.
Even with investment, one of the priorities shaping telecommunication businesses’ success in this sphere is balancing infrastructure expenses with revenue-generating initiatives.
Telcos will generate revenue from the basic B2C model of data sales as Metaverse users’ demand for data increases. But, they should also consider more innovative value-driving models.
For example, they could offer infrastructure-based services to other businesses in the Metaverse ecosystem that need access to ultra-low latency, high-speed connectivity, reliability, and high bandwidth.
Telcos could also collaborate with hiring technology applications to develop immersive virtual interviewing platforms where candidates are able to participate in real business situations in a virtual environment. This will allow companies to assess candidates’ suitability for roles with a higher degree of accuracy.
Security and Privacy
Just as in software development, where best CI/CD practices are adopted to take a security-first approach, with vast amounts of sensitive data flowing between users, the Metaverse must institute best practices in user data and provide high levels of security to protect users’ privacy and prevent hacking.
Telcos must leverage their reputation as trusted data custodians outside the Metaverse by continuing to guarantee privacy, identity authentication, and data management within it.
Interoperability
The Metaverse will be deployed across a variety of systems and platforms. Telcos will need to make sure they can connect and communicate across these seamlessly. Forging industry partnerships will assist in this effort.
Telcos must act swiftly to solidify their position in the Metaverse value chain
To carry their position of authority in the telco market into the Metaverse and cement their place at the center of the Metaverse value chain, telcos must prove their customer understanding and justify their customers’ trust.
To do so, they must facilitate a fully immersive, safe, secure, and seamless Metaverse experience. The Metaverse will revolutionize the telecommunications industry, but this will require significant investment in infrastructure, and their success will hinge on their ability to select the right partners, develop innovative revenue-generating initiatives, and act before hyperscalers beat them to the punch.
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