How enterprises understand, interact with, and derive value from their networks is being redefined. 5G, IoT, and the edge are working together to position CSPs, enterprises, and consumers to benefit, says Blue Planet’s Kailem Anderson.
Telcos should be both excited and cautious about the future of 5G networks. The technology has unprecedented game-changing potential for mobile network operators (MNOs) and communication service providers (CSPs), but it will require new business models and an agile, automated infrastructure to monetize it effectively. The question is, what kinds of services will recoup infrastructure investment? And how can that new infrastructure be used to build powerful revenue streams that will propel future business?
One thing is certain: Innovation can’t stop at the network layer. Even with 5G, connectivity will become a commodity when broadly deployed worldwide, just as 4G/LTE is today. Instead, CSPs must integrate services that use communication as a platform for connected experiences rather than simply offering the communication capability alone. They must not let themselves be relegated to mere connectivity partners, shouldering the infrastructure investment while over-the-top (OTT) providers use it to scoop up higher-margin revenues.
Network Slicing Is Key to Monetizing 5G
Network slicing is key to this transformation. This 5G technology enables operators to logically partition network resources for different applications, use-cases, or customers. In doing so, it creates opportunities to cut bottom-line costs and increase top-line revenues through new services.
On the cost savings side, network slicing minimizes capital expenditure because it allows operators to reallocate resources on demand over common infrastructure when a specific end-user, human or machine, isn’t using them. Beyond that, it also offers the opportunity to increase revenues from tailored services that address specific customer segments. Rather than offering a single class of service that not all customers will find useful, operators can offer differentiated services on a per-customer basis that enterprise and residential users will find more appealing.
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Smart CSPs will use network slicing along with the unique properties of 5G networks—such as speed, density, and ultra-low latency communications—to find new use cases.
PwC advises telcos to do this by partnering with OTT providers, recasting themselves as solution enablers who bundle and resell third-party services to customers (Source: PwC, Making 5G pay, February 2019). Operators can also use these partnerships to become solution creators, integrating third-party offerings to create entirely new propositions for customers. New services such as virtual reality bundled with unique content might be the way to squeeze more revenues from specific consumer groups, such as gamers, rather than simply offering faster or cheaper connectivity.
On the other hand, enterprise customers have already bought into 5G. According to Deloitte, 86 percent of networking executives believe that advanced wireless will transform their organization within three years (Source: Deloitte, Enterprises building their future with 5G and Wi-Fi 6, June 2020).
In the near term, the path forward focuses on providing 5G services to businesses that rely on them for improving services to their own consumers and business customers, which is a strategy PwC calls B2B2X.
The Future of 5G Is on the Edge and IoT-Based
Where can CSPs use 5G to add value in a B2B2X relationship? One promising area is realized with the combination of edge cloud and connectivity.
Enterprise applications can be more responsive when they’re hosted and processed at the network edge, near the point of creation and consumption. This has special relevance in highly latency-sensitive use-cases, such as autonomous driving where a campus-based automated vehicle network might rely on roadside sensors and edge computing to function properly and safely, for example. 5G’s URLLC slice capabilities are an important part of this service proposition.
In many cases, companies may need to move data between edge, near-edge, and central infrastructure, depending on the application’s profile and security requirements. This offers rich service opportunities for CSPs in the form of data transfer and transformation services for enterprise customers.
Another 5G capability is communication between large numbers of devices in a small area, known as massive machine-type communications (mMTC). This lends itself especially well to IoT environments. Once again, this can be useful where low latency is critical. Examples could include industrial drone-powered monitoring for oil and gas operators or electrical utilities, or in a construction or factory setting where “smart” sensors help make decisions about how to operate based on data collected from the production line.
It’s clear that revenue-generating use cases overlap for 5G operators and their customers. Edge cloud and IoT often go hand in hand, meaning that both will provide telcos with differentiated service opportunities.
Where to Begin
Network slicing is a powerful technology that will transform the network in different places and at different rates. It will eventually cover the Radio Access Network (RAN), the core, and the transport network , but each of these components will evolve to support the technology at its own pace. The transport network has evolved to support this technology today, thanks to its adoption of software-defined networking (SDN). Next will be the core, which is speeding towards adoption. The RAN will bring up the rear. CSPs should take advantage of the transport layer to serve customers on their own networks today while they wait for full 5G rollouts.
There’s no doubt that 5G offers plenty of opportunities for MNOs/CSPs to boost revenue. This is imperative, as they have already invested significant amounts in rolling out the infrastructure. MNOs/CSPs who understand the exciting new set of services that 5G opens up will be better positioned to design and implement a service strategy around this evolving network technology. They will also be better prepared to make the underlying technical innovations that will support it.