The Metaverse, a Demand Driver for 5G, is Coming to More Telcos

Deutsche Telekom is extending its pre-existing partnership with SK Telecom to include an effort to bring the latter’s metaverse platform, ifland, to Europe. SK Telecom launched ifland in July 2021, surpassed 1.1 Million Active Users (MAUs) by the end of the year and, more recently, hit 1.35 million MAUs. As part of the expansion into Europe with Deutsche Telekom, SK Telecom plans to bring ifland to more than 80 countries before the close of 2022, positioning the platform as far more than just a driver for 5G subscriptions. Many of these social metaverse platforms target younger audiences (e.g., Roblox, Naver’s ZEPETO), suggesting these types of experiences will underpin the future of social networking, adding further justification for Facebook’s pivot to Meta and the metaverse. We would be remiss, however, to simply view these trends solely through the lens of 2D to 3D and/or virtual spaces and goods. In fact, there is considerably more at work here than these virtual spaces alone.

As an agent for interoperability and change, the metaverse can be viewed as a driver to create demand for new technologies, such as 5G. This was certainly a factor that compelled SK Telecom to develop and launch ifland and a similar case for Deutsche Telekom. Other telcos like Orange, Telefónica, and Verizon have also demonstrated and implemented immersive use cases tied to 5G deployments and capabilities. Of course, these use cases and examples extend throughout the value chain with some equally compelling examples shown in conjunction with operator partners and separately by infrastructure providers like Nokia, Ericsson, Huawei, ZTE, etc.

Metaverse platforms also bring more social experiences into public spaces, including real-time communications/interactions that benefit from higher data rates and lower latencies. While these experiences are not at the same level as multiplayer location-based gaming (which in early trials required 5G and Mobile-Access Edge Computing (MEC)), they can still serve as selling points for 5G services and devices. SK Telecom considers ifland part of its AI businesses, which leads to a critical and very key point of the metaverse opportunity—the importance of digital identity, trust/customer relationships, and its impact on marketing/advertising.

SK Telecom also includes another business unit in its AI group, T Universe, which receives less industry attention, but should be viewed as just as critical to the future of the metaverse. Combined, SK Telecom’s two business units generated over US$222 million in 2021, with a target of US$1.6 billion by 2025. T Universe is billed as a “Subscription Platform for All” by SK Telecom and it hits at the heart of many ongoing industry trends around privacy and digital identity; this also speaks to potential concerns engendered by virtual spaces in the metaverse.

T Universe is essentially a subscription aggregation platform, with SK Telecom offering and bundling subscription services from partners like Amazon, Google, Wavve, Microsoft Xbox, Starbucks, 11st, Emart, About Pet, AIA Insurance, etc. As evidenced by the previous sample list, these collaborations extend to more than just digital media services and include other categories, such as shopping, food & beverage, cosmetics, flow subscriptions, pet products, insurance, nutritional supplements, and education. T Universe positions SK Telecom as a both a central hub for one’s digital life and a center of trust for its user base.

As the advertising industry moves away from third-party tracking devices, first-party data will become increasingly important. Concerns around online behavior in virtual spaces also necessitate some level of accountability and means to identify users—pure anonymity will not foster healthy and safe social environments. Combining T Universe with a metaverse platform like ifland will create that link between one’s virtual and real-life identities. Advertisers and markets will similarly need to establish and foster stronger customer relationships with their target customers. A centralized hub like T Universe allows the operator to stand in as an arbiter or filter for the user to ensure they are presented with both appropriate and targeted offers and services. As more experiences move to virtual spaces, this role will similarly apply to the metaverse as well (besides establishing that critical connection between user and digital self). The stronger customer relationship that operators will establish through these platforms will greatly increase the switching costs.

In some ways, it is valuable to view the metaverse and virtual spaces, in particular, as a repackaging of existing services and experiences. Consumers may purchase virtual goods for their avatars, but in the end, it is still about self-expression and personalizing their experiences. Working as a central hub to help customers manage their relationships with brands and services puts the operator in a position of trust, which not only strengthens the connection to its customers, but allows the operator to curate which offers, brands, and services are marketed to its customers. In this regard, operators will be able to decrease churn and monetize their work to help their customers manage their digital connections.

SK Telecom is already on this pathway and new entrants like Deutsche Telekom should similarly view the metaverse opportunity with this broader lens. One can argue for or against a future that resides in these virtual spaces, but there is no question that companies will need to put their relationships with their customers front and center. These relationships and management of digital profiles will also help address the concerns of how users will see advertisements in the metaverse, rather than a bombardment of ads or applications seeking users’ attention. Operators or other management platforms will serve as the filter to ensure users receive only approved offers and those that are both vetted and targeted to their interests and needs.

This speaks to opportunities on the technology front as well, elevating the importance of AI/ML, edge compute to process and accelerate applications as close to the user as possible, and broader data pipes to handle the flow of upstream and downstream traffic. New platforms like ifland and T Universe reflect key opportunities for 5G+ and, more broadly, operators.