Anyone who has attended a trade show in the wireless industry during the past few years has likely watched some kind of presentation on how carriers will make money from the faster speeds and lower latency provided by 5G.
Autonomous cars, remote surgery, industrial manufacturing automation—these are the kinds of things that will spur demand for 5G, according to vendors.
That may well be true, I guess.
But a recent confluence of events—the end of net neutrality and the end of the ban on sports betting—sets up what I believe could potentially be the best and most compelling 5G use case so far: real-time, high-speed sports betting.
In a report on the topic, the analysts at New Street Research laid out a pretty compelling argument for how ISPs will be able to cash in on real-time sports betting by providing high-speed links to gamblers looking for an edge: “Placing a bet does not require a lot of bandwidth. Showing the bets, placing and accepting millions of bets, calculating the odds, and doing so in a small window of the break between actions requires a high-quality network,” the analysts wrote in a recent report. “While companies offering gigabit capable networks often point to socially useful use cases, like remote surgery, to date the commercial rationale for a mass market use is more often seen with multi-player games. On-line, real time gambling is another version of such a use case that could drive payments for next generation networks. Further, ISPs have other advantages, such as a pre-existing payment relationship with the customers to facilitate transactions at a microlevel, as well as data about the kinds of programming and sporting events likely to be of interest to the customer.”
The Wall Street research firm also pointed out that the FCC’s move earlier this year to rescind its net neutrality rules could help pave the way for ISPs to score revenues from the sale of these high-speed links.
Moreover, there’s precedent for this exact type of business. For example, high-frequency trading (HFT) in financial markets uses proprietary trading strategies carried out by computers making deals in seconds or fractions of a second. And, as noted by the Financial Times, that business pushed some traders to switch from fiber optic to microwave technology in order to obtain faster trading times.
As you can imagine, 5G technology plays into this situation perfectly. It is specifically designed to support low-latency and high-volume communications—exactly the kind of connections that real-time sports gamblers might want. And it could be deployed in sports stadiums, sports bars and other venues where such betting might take place.
Additionally, carriers like Verizon and AT&T are investing in content exactly in this area. Verizon has a major investment in sports content through its Yahoo Sports ownership and its NFL deals, while AT&T is working to purchase Turner Sports owner Time Warner.
“AT&T talked in the antitrust trial about the ability to provide integrated packages for the consumer,” the New Street analysts noted. “When one considers the combination of sports programming, a betting platform, and a billing relationship, the value of the combination becomes easier to visualize. And again, if one assumes the power to discriminate against other platforms and content, the value of integrated offerings increase.”
Indeed, if I were a Verizon customer taking in an NFL game at the bar down the street, and my friend was able to place and change bets twice as fast as I could with their 5G phone and integrated sports package from AT&T, that certainly could push me to switch operators. At the very least, it might allow AT&T to squeeze an extra few dollars per month from my friend.
Of course, this scenario assumes many things: that carriers might charge more for faster 5G access; that they decide to wade into the real-time betting industry; that the sports-betting industry manages to get off the ground without any major legal challenges; and that 5G networks actually perform significantly better than today’s LTE networks.
All that said, real-time, high-speed sports betting strikes me as a far more lucrative—and feasible—business opportunity than, say, getting patients to pay extra for a surgeon to perform remote, wireless surgery on them. — Mike | @mikeddano