Metaverse – Finding telecom’s space within the next internet

The metaverse is having a moment. Coined in Snow Crash, Neal Stephenson’s 1992 sci-fi novel, the term refers to a convergence of physical, augmented, and VR in a shared online space.

One day soon, we will all be hanging out in an interactive virtual reality world, complete with games, adventures, shoppingm and otherworldly offerings, just like the characters in Ready Player One . Instead of OASIS, it is called the metaverse.

The metaverse is different from today’s virtual reality, where clunky headsets offer siloed experiences and few chances to cross-play with people who own other gadgets. It is a huge undertaking that would require standardization and cooperation among tech giants, who are not prone to collaborating with competitors – though it has not stopped many from saying the metaverse is just around the corner.

What is metaverse? The prefix meta means beyond and verse refers to the universe. Think of it as an embodied internet that you are inside of rather than looking at. This digital realm would not be limited to devices – avatars could walk around in cyberspace similar to how people maneuver the physical world, allowing users to interact with people on the other side of the planet as if they were in the same room.

But for a robust virtual universe, everyone needs to want and afford VR headsets. The technology would need to be stylish and minimal enough to interest more people, and sophisticated enough to work seamlessly. That has not happened yet.

How does metaverse work? In theory, you would log on to the metaverse similarly to logging on to the internet. Only you would use a head-mounted display, not a screen, to view content and a form of motion tracking, like Facebook’s wristband, to grab objects.

To be a full universe, no single company could run the metaverse, similarly to how no one owns the internet. It will be an embodied internet operated by many different players in a decentralized way. But companies may try to monopo­lize their respective corners of the metaverse, just as a handful of large tech companies dominate online content today. Firms could do this similarly to how they make money off apps via subscription services, shopping carts, and ad­vertising. It would be a collection of technologies, backends, and experiential frontends that all play nicely together.

Several large tech companies are chasing down the metaverse. Facebook bought Oculus in 2014 with this metaverse vision in mind. Facebook should be known as a metaverse company, CEO Mark Zuckerberg said in July on an earnings call. The goal, he said, is to populate this virtual world by enticing new users with cheap headsets.

Facebook moved closer to this vision revealing a virtual reality (VR) workspace for remote workers. The company is also working on a smart wristband and VR goggles that project the wearer’s eyes. The company is investing billions of dollars into the effort.

Zuckerberg’s announced intention to build a more maximalist version of Facebook, spanning social presence, office work, and entertainment, comes at a time when the US government is attempting to break his current company up. A package of bills making its way through the Congress would potentially force the company to spin out Instagram and WhatsApp, and limit Facebook’s ability to make future acquisitions – or offer services connected to its hardware products.

Eventually, Zuckerberg hinted, this robust user base would prove an advertising boon: “hundreds of millions of people” in the metaverse “compounds the size of the digital economy inside it.” But some in the space worry that an ad-based business model will create haves, who can afford to pay for an ad-free headset or metaverse experience, and have-nots who can’t, replicating inequalities present in the real world.

Facebook is not the only company betting heavily on metaverse. In May, Microsoft CEO Satya Nadella said the company is working to build an enterprise metaverse. A month earlier, Epic Games said it had raised USD 1 billion to spend on its metaverse plans. And in June, venture capitalist Matthew Ball helped launch an exchange-traded fund so people can invest in the metaverse space, including companies like graphics chipmaker Nvidia (NVDA) and gaming platform Roblox (RBLX).

Last year, Spatial released a free augmented reality (AR) app allowing avatars to appear within a user’s real-world environment. Meanwhile, Snapchat has been moving in this direction for years, introducing custom avatars and filters that overlay the world with digital content. Apple also has longtime AR ambitions. Magic Leap was one of the earliest companies to draw attention to the space when it released an AR app in 2011. Today, it mostly sells to businesses, according to its website.

However, as recently as September 9, Chinese shares seen with links to metaverse, slumped after their recent surge raised regulatory eyebrows and prompted state media to warn against investing in them. This was a day after the Shenzhen Stock Exchange sent a letter to Zhejiang Jinke Tomcat Culture Industry Co., urging the mobile internet firm to substantiate its claim that it has the customer base to develop metaverse products. The bourse also asked if the company – whose share prices surged roughly 35 percent a week before – played a part in boosting its own stocks with the hot concept. Wondershare Technology and Wahlap Technology both slumped over 10 percent, while Goertek lost over 8 percent. AVIT Ltd. tumbled 13 percent, while Perfect World shed 5 percent.

Recognizing the business potential, telcos ranging from China Mobile Ltd. to Verizon Communications Inc. and SK Telecom Co. are jumping into the fray alongside the online-game developers to build a killer app that could resemble a blend of today’s social media and e-commerce, but on steroids. The telcos are building platforms based on virtual or mixed reality, a term that means blending the digital world with real-life environments. “The metaverse is our future business model. It will be our core business platform,” said Cho Ik-hwan, SK Telecom’s vice president and head of mixed reality development after having just launched Ifland, a new metaverse platform, designed to maximize user experience through diverse virtual spaces and avatars. “We want to create a new kind of economic system. A very giant, very virtual economic system.”

Verizon is also exploring metaverse opportunities. It has 5G labs in six cities where it invites companies to flesh out some imaginative enterprise and consumer use-cases for 5G, such as holographic medical imaging. A Verizon spokesperson said, “The purpose is to provide access to our 5G service and our edge cloud computing service (developed with AWS and Microsoft) to various partners in a variety of industries and support them as we build killer apps for consumers and businesses that run on 5G.” The metaverse might end up being the best opportunity for killer apps.

The metaverse phenomenon will give wireless operators the chance to monetize their 5G investments. With super-fast 5G – and later 6G – people will be able to participate in metaverse by using AR headsets or glasses.

The development of the metaverse is expected to be gradual, starting with those headsets and glasses piggybacking on smartphone connections. Cutting-edge metaverse applications are still at the conceptual stage. If they do become reality, virtual meetings and shopping online would feel like real-life activities, with digital copies of almost everything that also reflect real-world changes in real time through advanced 3D image capturing. In the future, the metaverse may include immersive experiences via holograms. And, although the metaverse phenomenon is starting with entertainment, it could evolve to include other activities, such as online shopping, where shoppers would feel like they are actually in a store.

5G is poised to turn that metaverse experience into something that reaches out into the daily life. Operators could earn a third more in revenue, potentially reaching USD 712 billion by 2030, if they introduce such innovative 5G applications on top of just laying pipes, according to a research by Ericsson AB’s research arm Consumer & IndustryLab. While it is tough to estimate how much metaverse-related applications will generate in the long term – much of the potential remains conceptual – early metaverse uses, such as enhanced and immersive media will account for 40 percent of the 5G-enabled application market by 2030, says the research arm.

In 2020, 113 mobile operators across the world launched their 5G networks in 48 countries, according to industry research platform GSMA Intelligence, which predicts that global carriers will spend USD 720 billion on the networks between 2021 and 2025, or USD 144 billion a year on average. Slow adoption of 5G by users and lack of a wide range of applications mean a long slog to recover the hefty costs.

In China and South Korea, two of the earliest countries to commercialize 5G, average revenue growth at the six dominant operators has slowed to 15 percent in the seven years through 2020, versus almost 50 percent in the previous four years. For instance, China Mobile spent more than 102 billion yuan (USD 15.7 billion) on 5G last year, but revenue from 5G businesses was just 87 billion yuan in the period, according to Bloomberg calculations.

“It would be so difficult for the telcos to recoup their huge investment just by selling 5G data packages to subscribers,” said Wilson Chow, global technology, media and telecommunications industry leader at PwC China. More carriers will participate in the metaverse space going forward, he said.

Committed to heavy investment in 5G over the next few years, telcos would need funding partners to build these platforms and cannot pull it off by themselves. Industry alliances are already being formed. South Korea launched a group in May to develop metaverse-related technologies and ecosystems, composed of 17 companies including SK Telecom and Hyundai Motor Co., as well as eight industry groups, including the Korea Mobile Internet Business Association. The Global XR Content Telco Alliance, which has similar focuses, was founded in September last year, with members including South Korean carrier LG Uplus Corp., China Telecom Corp., Japan’s KDDI Corp., and US-based Qualcomm Inc.

The digital world could potentially generate trillions of dollars in earnings for new computing and content platforms. But building the mixed-reality space is likely to take decades and require thousands of companies to chip in resources, including hardware, software, and content.

Framework for the metaverse. According to venture capitalist and former Amazon Studios chief strategist Matthew Ball, this digital space can never be paused or reset, but will continue indefinitely.

Ball reckons that the metaverse requires infrastructure that currently does not exist, and the current form of internet is limited in its design to hold the digital space. The space will need a broader and more complex set of standards and protocols than traditional internet. This means large technology companies like Amazon, Google, and Facebook will need to prepare for cross integrating their systems.

However, the interoperable metaverse could also raise questions of data protection since industry-wide consensus on data security and persistence will be harder to establish. And other issues, such as misinformation and radicalization, could worsen in the metaverse, too. “The metaverse will need altogether new rules for censorship, control of communications, regulatory enforcement, tax reporting, the prevention of online radicalization, and many more challenges that we’re still struggling with today,” he noted in the blog post.

Ball is tracking the emergence of metaverse around eight core categories, which can be thought of as a stack. They are hardware, networking, compute, virtual platforms, interchange tools and standards, payments, metaverse content, services and assets, and user behaviors. Each of these buckets is critical to the development of metaverse. But ultimately, how these many pieces come together and what they produce is the hard, important, and society-altering part of any metaverse analysis.

Based on precedent, however, we can guess that metaverse will revolutionize nearly every industry and function. From healthcare to payments, consumer products, entertainment, hourly labor, and even sex work. In addition, altogether new industries, marketplaces and resources will be created to enable this future, as will novel types of skills, professions, and certifications. The collective value of these changes will be in the trillions.