Augmented reality (AR) and virtual reality (VR) are poised to become the next major platforms after the PC, web and mobile eras. While standalone AR and VR applications have existed for some time, recent advances in hardware, software and networks are making broader adoption possible. These technologies are set to change how consumers interact with the physical world and how enterprises operate, enabling new experiences, increasing efficiency and unlocking productivity gains.
Augmented and virtual reality: Distinct but complementary technologies
In simple terms, AR overlays digital content onto the real world, while VR immerses users in a fully imagined or replicated environment. Both use intuitive gestures and visual graphics to create new modes of interaction. VR delivers a sense of presence inside a simulated world, allowing people to travel, shop, create, communicate and collaborate in ways that feel real despite being virtual. AR, by contrast, adds digital information to the user’s real-world view, enabling simultaneous interaction with both physical and digital elements. Together, AR and VR form complementary immersive platforms likely to coexist and evolve side by side.
A whole new realm of opportunities
We are still early in the AR and VR revolution, yet the potential to transform numerous industries over the next five to ten years is clear. These technologies can change how we interact with our environments, unlock new consumer experiences, and improve productivity in business settings.
Major technology companies and device makers have already invested heavily. Facebook’s acquisition of Oculus in 2014 and its subsequent purchases of over ten AR/VR firms are notable examples. Google has introduced Cardboard and Daydream and invested in projects such as Glass and Magic Leap; Microsoft developed HoloLens; Apple purchased AR software company Metaio; and Samsung has explored multiple AR/VR concepts through its in-house C-Lab, including PC-viewing glasses and VR home-furnishing experiences.
Telecom operators were initially cautious, but many in developed markets have begun exploring AR and VR. Examples include Telefonica’s Wayra incubator supporting AR/VR startups, SK Telecom’s 360-degree VR live broadcasting, and BT’s efforts to enhance sports viewing with VR telecasts.
Challenges to becoming the next major platforms
Even with hundreds of companies, thousands of employees and over $4.5 billion invested in the sector, AR and VR remain emerging technologies. Analysts project the market could grow to $80–100 billion by 2025, but several critical hurdles must be addressed before mainstream adoption occurs. These challenges fall into four main categories:
- Bulky and expensive devices: While inexpensive options like Google Cardboard and Daydream exist, many full-featured headsets remain costly and physically cumbersome (for example, HTC Vive, Oculus Rift and early Google Glass models). Heavy, wired equipment limits mobility and can be impractical for dynamic or hazardous work environments where freedom of movement and safety are essential.
- Scarcity of killer content and applications: AR and VR need widely popular, compelling applications that drive mainstream adoption. Gaming and video have dominated early use cases, but a breakthrough “superstar app” that makes AR/VR indispensable for a broad audience has yet to emerge.
- Limited penetration of technically capable devices: Top-quality AR/VR experiences demand high-resolution displays, powerful processors, ample memory and long battery life. Many current smartphones and devices do not meet these technical requirements; fewer than 10% of the world’s roughly 2.8 billion smartphones are compatible with platforms like Samsung Gear and Google Daydream.
- Insufficient network speed and latency: Smooth, fully immersive 360-degree streaming requires high bandwidth—often 25 Mbit/s or more for basic experiences and up to 80–100 Mbit/s for HD content—and very low latency to prevent disorientation or motion sickness. Global averages for speed and latency fall short: average fixed-line speeds and mobile latency are well below the levels needed for consistent AR/VR performance.
The rapid rise of Pokémon Go in 2016 illustrates both the potential and the practical limits of early AR. The game reached more than 100 million downloads within a month and generated over a billion dollars in revenue, proving that location-based AR can achieve huge user engagement without specialized hardware. Yet Pokémon Go also exposed device and network constraints: the app demanded long battery life, GPS and compass functionality, and created heavy session loads on mobile networks. Although it represented a small fraction of total data traffic, the game accounted for a disproportionately large share of network sessions, causing congestion in certain areas and highlighting the strain mass adoption can place on infrastructure.
The role telecom operators can play
Telecom operators can help address many of the technical and commercial barriers holding back AR and VR. Operators’ strengths—network infrastructure, device distribution channels and billing relationships—position them to be key enablers. If AR and VR eventually reduce the prominence of smartphones as primary user interfaces, operators have an opportunity to reclaim relevance beyond raw connectivity and move into platform, application and content roles.
Operators can pursue four practical roles in the AR/VR ecosystem:
- Device distributor: Resell or finance AR/VR devices and make them affordable through subsidies, leasing or installment plans—similar to established smartphone sales models.
- Connectivity provider: Invest in last-mile networks and intelligent traffic management to deliver low-latency, high-bandwidth experiences. Technologies like 5G and initiatives such as the Telecom Infra Project will be critical to deliver high-resolution video and immersive content. Operators must evaluate whether increased data usage and premium service offerings can sustainably monetize these investments through differentiated tariffs, quality-of-service tiers or boost add-ons that justify the cost.
- Open enablement platform: Act as the glue that connects developers, device manufacturers, content creators and end users. An enablement platform would combine network features (QoS management, content delivery and compression) with developer tools—APIs, SDKs, billing, analytics and reusable AR/VR building blocks—that make it easier for third parties to create interoperable applications and accelerate adoption.
- Application and content provider: Partner with industry players to produce AR/VR-specific apps and content across sectors—sports, video, gaming, retail and manufacturing. By delivering unique experiences, operators can explore direct app-based revenue models, revenue-sharing with developers, and indirect benefits such as improved customer retention and higher data usage. Examples include Korea Telecom’s AR/VR suite for major events and BT’s work on immersive sports viewing.
In summary
AR and VR remain emerging, but adoption will grow as hardware costs decline, device capabilities improve, compelling content appears and network speed and latency rise. In the short term these technologies may stay relatively niche, but their mid- to long-term potential could be transformative.
Operators face a choice. A passive approach—limited to ongoing network modernization such as rolling out 5G—will support AR/VR growth but may offer limited monetization and further constrain operator relevance to pure connectivity. By contrast, proactively positioning as a platform enabler or application/content provider requires early investment in network capabilities, new competencies beyond connectivity, and collaboration with technology and content partners. Operators that invest wisely can leverage AR/VR to reposition themselves in the broader digital ecosystem and capture new revenue streams.
The telecom industry has not consistently excelled at innovation over the past decade, often missing chances to capitalize on unique assets. Still, many leading operators are signaling intent to play a larger role in digital services. AR and VR offer a promising avenue for operators to regain strategic relevance and lead in a new generation of immersive technologies.