Telcos and the metaverse: A happy marriage?
As the next phase of communications, the metaverse has huge business potential for telcos. According to Telecom Review, operators could earn up to US$712bn in revenue by 2030 if they introduce 5G applications that support the creation of the metaverse. But what are the challenges to overcome?
The aim of the metaverse is to create a parallel universe by immersing the user in a 360-degree version of the internet. Using a virtual reality (VR) headset, users can enter a digital world where they can move and interact using hand-held controllers.
Meta, previously known as Facebook, is one of the many companies making a push for the metaverse, other notable companies are Microsoft and Epic Games. However, these are not the only companies that could profit from the metaverse.
The profit for the telecommunication industry is already estimated to be substantial, with many telecom companies such as Verizon joining the mix to build elevated apps to resemble today’s social media and e-commerce in the metaverse. Verizon established 5G labs in six cities for new metaverse-related enterprises, such as holographic medical imaging.
Monetising from 5G investments
5G provides the speed needed to support this technology and is the network required for the first stages of the metaverse. Telcos have already heavily invested in 5G, and GSMA Intelligence estimates that global carriers will continue to invest around US$144bn on average per year. The slow adoption of 5G by users and the limited applications makes 5G an expensive investment, with its revenue growth slowed to 15% from 2013 to 2020.
However, the rise of the metaverse could be the saving grace of wireless operators, giving them a chance to monetise their 5G investments. Nevertheless, the development is likely to be gradual, starting with headsets that use smartphone connections.
Challenges for telcos
There are many issues to consider for telecom companies interested in investing in the metaverse. The first challenge for telecommunication companies will likely be funding and return on investment (ROI). To achieve the metaverse as theorised, the investment in research and innovation for telecoms companies would be sizable, which may require gaining outside funding from other partners. It will be hard to recoup the costly investment in the metaverse from selling 5G data packages alone. This is likely why industry alliances are already forming, such as SK Telecom and Hyundai Motor Co., to build platforms required for the metaverse.
Moreover, the internet is currently limited in its design to hold a digital space like the metaverse, and the infrastructure required to run the metaverse continuously with no pause or reset does not exist yet. However, QSFP-DD coherent technology could aid in achieving a metaverse that has almost no delay. The advantage of using this approach is that it can simplify operations by removing the need for transponders, whilst retaining long-distance transmission with little delay.
Hardware and monetary issues will not be the only challenges — a consensus will need to be agreed on when considering data protection and data security before launching the metaverse. This could prove laborious due to the entirely different structure of the metaverse compared to the traditional internet.
Until protocols and guidelines are established, the metaverse is open to cyberattacks, misinformation and radicalisation. New censorship, control communications, regulatory enforcement, tax reporting, radicalisation prevention and many other issues require review.
If successful, the metaverse could revolutionise every industry and function from healthcare to entertainment. However, its success will come down to the ability of telecom companies to provide the high bandwidths and super low latency needed. Considering this, telecom companies should think of the metaverse as an exciting opportunity to monetise on their 5G investments and future-proof their business models.
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