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The metaverse is set to become a virtual reincarnation of the consumer society in a digital format. And ultimately it will solve the limitations of a two-dimensional virtual world. Our screens, even with the latest augmented reality technologies and high-end visual effects, still remain flat. And people only interact with their eyes. The metaverse, however, will add hands to a person, perhaps a body, and also movements that can reflect thoughts. This means that “behavior” in this environment will become more natural.
On the other hand, technological limitations reduce the current metaverse to an extremely poor reflection of the real world. But that said, in this era of COVID-19 driven lockdowns, fears and anxieties, people have certainly become more reliant and receptive to remote communications, which includes early exploration of the metaverse. For businesses, those who move quickly and get ahead of the adoption curve, it means excellent opportunities to create new revenue streams.
A battle for the metaverse soul
One of the big questions is whether there will be one global metaverse universe or several? At the moment there are several versions of the metaverse and all of them are pretty basic. As such, several formats will fight for dominance in this new technological revolution. In the 1980s VHS won out over Betamax. Then there were CDs and DVDs, and mpeg/mp3. Each time, the format struggle was simply the battle between competing companies. We see the same with smartphones, for instance, with iOS and Android. The metaverse will be no different.
Facebook’s move to the Meta rebrand and the metaverse is a signal of how big this space is going to be. But Facebook certainly won’t dominate it. Competitors will appear soon. Given that we are in the very early stages of metaverse development, there is an opportunity for telephone companies/telecommunications services (telcos) to regain lost opportunities and get deeper into the network side and delivery of metaverse services, and also recoup some of their capital investment in 5G. And some are already moving in this direction.
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But strictly speaking, 5G and the metaverse are not connected in any way. In the era of converged and heterogeneous networks, there is no difference at what point the client is connected and what transport is used to transfer information from point to point. 5G is just one of the technologies that is developing quite slowly across the globe. And it is only one element in a wider connectivity solution. Other elements include the cost reduction of fixed channels, the creation of mesh networks and so on.
That said, we will definitely see the advent of 6G, and even 10G, because digital advancements such as the metaverse tend to accelerate change in technology formats. That said, the speed at which new technologies will emerge in telcos, for instance, is partly in response to the growing need for traffic consumption and the growth of data-intensive content, including augmented reality and virtual reality, which is the stuff of the metaverse.
But there is also a reverse loop. When infrastructure is improved it makes it possible to develop new products and new ways of using technologies. This extends beyond virtual content; for instance, self-driving cars and the idea of developing roads that facilitate this, were not possible when we were using 3G networks.
Today, there is a chasm between the hype of the metaverse and its reality. If we look at today’s technologies and the construction of new infrastructure that will drive and create a feature-rich metaverse that accurately simulates real life, the situation is not particularly promising. There are also other factors such as consumers not ready to pay more for the price of access for data-intensive traffic that is required for the metaverse.
Further, governments don’t invest in private companies, so operations such as private telcos are hampered by the fact that capital expenditure into new infrastructure doesn’t provide a quick return on investment. There is very little immediate income growth and it can be decades before telcos, for instance, see any substantial returns.
Yet the metaverse is the next great connectivity and network infrastructure challenge in the evolution of the internet. In a world where the graphics will have to be rendered on-screen in direct response to where someone is focusing via their headset, things will need to move an order of magnitude faster, which requires single or low double-digit millisecond latency. This is going to require vast enhancements in capacity and fundamental shifts in how networks are architected and deployed, which in turn will mean a huge industry-wide collaboration spanning tech companies, mobile network operators, policymakers and everyone in between.
As we have seen, by looking at telcos generally, we’re nowhere near this yet — which is why Meta (Facebook) has invested in everything from subsea cables and satellites to autonomous internet-beaming drones. Though we may see the metaverse as applications, it’s actually infrastructure.
Early day partners
We’ve seen Meta partner with telecommunications giant Telefónica to build something they call the Metaverse Innovation Hub in Madrid. The aim is to accelerate network and device readiness through various trials and testing initiatives. As well as provide local startups and developers with access to a 5G laboratory, where they will be able to utilize a metaverse end-to-end testbed on Meta and Telefónica’s network infrastructure and equipment.
That said, many companies who can influence metaverse development are simply not there yet. Telefónica is large, has deep pockets and needs to invest in the future. Others are also making moves. China Mobile, Verizon and SK Telecom have moved quickly to build platforms founded on blending the digital world with real-life environments as they look to recoup 5G investments, but it’s early days.
But it’s impossible to get back 5G investments through traffic fees alone. Consumers are not willing to pay for traffic any more. Moreover, regulators generally do not support the rise in prices for basic services, and internet access is a basic need now. Telco operators definitely need to look for new business models and business streams to return their investment in 5G. Perhaps alliances with ecommerce companies can help. After all, Facebook, Amazon and eBay are now paying nothing for their consumers to access their marketplaces. This could possibly change as virtual reality becomes the new reality.
New income reality
The built metaverse infrastructure should generate income from new business streams. That is, ROI shouldn’t result from shifting part of the income from the old infrastructure to the new one, but rather from creating a new pattern of consumption. A simple example is the creation of a road for self-driving cars with users paying for traveling on the road.
For instance, a metaverse could have a paid registration in which users sign up for a membership. In this case, revenue is generated for the investor in the infrastructure, and not for the content owner in the metaverse. The fee for guaranteed data speeds, in a business conference, for instance, should also go to the owner of the infrastructure, and not to the operator of the communication platform. There are many other examples, too.
The question for telcos is whether they will attempt to regain control over both consumers and services that access the metaverse network. And of course, this depends on how early they are into the market and what foundational work they might invest in to help develop the metaverse.
Vlad Dobrynin is a founder & CEO at Humans.
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