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The hottest topic in telecommunications is the pending arrival of 5G wireless, and with it faster speeds, lower latency, and an explosion of connected devices. At least, that’s the theory.

But will it pay off for AT&T (T), Verizon Communications (VZ), and other carriers?

Moffett Nathanson telecom analyst Craig Moffett raises that question in a new report Thursday. The bottom line? He’s not sure where the carriers will find the revenues to support the 5G buildout.

“Most of the use cases we’ve heard don’t make sense, yet the capital requirements for densifying networks are very real,” he writes. “Simply using more data at higher speeds—we’ve all heard about the dream of downloading a full season of Game of Thrones in seconds before boarding a plane—has up to now been a dry well for wireless revenue generation.”

In the report, Moffett shows that over the past nine years, data consumed per wireless device has increased 89-fold, while average revenue per device has dropped 12.6%. In short, he writes, “the carriers have failed at extracting additional revenue from additional data consumption.”

If the pattern holds, the carriers aren’t going to get a big revenue boost—or maybe any revenue boost—simply from offering faster speeds. So, as Moffett asks, where will the money come from?

It isn’t that there aren’t multiple opportunities. With 5G you get super low latency—a delay in a transfer of data—and the ability to support huge number of simultaneous connections. Hello, Internet of Things!

Moffett writes that he often hears predictions of how 5G will drive the emergence of smartcars and smart factories and smart logistics and smart cities, as well as virtual reality and remote surgery. But he adds that “the glass half empty view is that there are important reasons for skepticism about each of these applications.”

The only market with a tangible revenue opportunity he sees is wired broadband replacement—competing with cable. For everything else, he fears, there are better or cheaper alternatives.

Factory of the future? Sure, they’ll be connected, but there’s no obvious reason why the carriers will be involved. Remote surgery? Moffett doesn’t see why that would be a 5G service, unless the surgery is taking place in a cornfield. And driverless cars? He’s a skeptic.

“It would be insane to build a car where the life-and-death functions of steering, setting speeds, and braking were dependent on a ubiquitous wireless network,” he writes. “The car can’t drive off the road when it gets to a rural area, or even a routine dead spot (there are also terrifying security risks associated with cars that could be remotely commandeered). Having on-board sensors and cameras is therefore a necessity. But if these critical sensors are on board, connected alternatives will be at best back-up systems.”

Moffett walks through a few other examples. Wireless pet collars? He thinks there are lower-cost options than 5G. Smart-cities applications? He worries that governments will lack the resources for implementation.

“We aren’t saying there aren’t use cases, and we’re certainly not saying that there won’t be eventually. Of course there will be,” he writes. “But with most currently identified use cases of somewhat dubious merit, we do expect that getting to a dense and ubiquitous 5G network, and more importantly, a robust 5G ecosystem of networks and use cases, will take longer than people think.”

Write to Eric J. Savitz at eric.savitz@barrons.com