5G Monetization – a future reality check

5G monetization

With the promise of faster and more consistent connectivity, 5G networks are generating a lot of buzz among both consumers and businesses. A lot of resources are being pooled into rolling out 5G services across the globe. By 2030, telecom service providers around the world will have spent around USD 4.5 trillion per year on 5G-enabled technologies. Now, the question that service providers are asking is: how can we monetize our 5G investments?

This article explores the business models being adopted to monetize 5G investments while highlighting the trending use cases, major roadblocks, and the key factors for success.   

What is 5G monetization? 

5G monetization is the idea of earning revenue from 5G investments. Several new business models and applications have emerged with 5G, including network slice monetization and network as a service (NAAS), IoT monetization, and new business models for B2B2X services. 

More than 90% of telcos believe that network as a service (NaaS), including network slicing, will drive 5G monetization. For telcos to maximize the benefits of NaaS, they should focus on automation led by AI and machine learning. 

IoT-enabled services, such as smart homes and factories, are other ways to monetize 5G. However, this is just the beginning. All these use cases are likely to see rapid technological advancements in the near future. In addition, we can expect more 5G/IoT use cases to emerge soon, which will offer telcos more monetization opportunities in their B2B and B2C offerings.

Market outlook for 5G monetization

The global 5G services market is estimated to be worth USD 250 billion by 2027, growing at a CAGR of nearly 50% between 2021 and 2027. The rise of 5G is transforming the telecom industry through new use cases and business models. To thrive in this new environment, telcos need to upgrade their monetization systems. 98% of telco service providers plan to modernize their Business Support Systems (BSS) to support future 5G applications.

Enterprise offerings to drive revenue growth

Although telcos continue to spend on retail customer services, the highest 5G revenue growth will come from enterprise offerings. The retail market will always remain the telcos’ core business. But, as they gear for a shifting customer environment, they will be planning to increase their offering ahead of these fundamental connectivity services. Enterprise services will be a major avenue for growth, including enterprise IoT and Network-as-a-Service (NaaS) slicing services. 

New business models will emerge

Telco service providers expect that around 60% of new revenue will be from B2B2X models and not from the conventional B2B or B2C models. This means that partner environments will play a vital part in CSP’s revenue growth.

Network slicing

Organizing network slices brings another level of complexity to monetization systems. Telcos should be capable of creating these services effortlessly and effectively and then charge for them using dynamic monetization models. In fact, 65% of telecom service providers say they plan to follow this by 2024.

New pricing models to emerge

Pricing options have always been the main aspect of how telcos monetize the network. With the shift to 5G, telcos are more than likely to provide more innovative pricing options. The most preferred models, however, would be driven by the quality of service and usage metrics made possible by the dynamic and highly automated nature of the 5G network, combined with the network slicing capabilities.

Real-time charging will be key

66% of telcos believe that real-time charging is critical to 5G monetization. The charging method is frequently viewed as the heart of a monetization system, so it is no surprise that this is where priority should be placed. Converged charging is a priority for CSPs across regions and tiers.

Cloud-based systems will be crucial

Developing a 5G-ready monetization architecture requires a cloud-based system. In order for telcos to understand and satisfy their customers’ expectations, this system offers many advantages. The majority of telcos believe that deploying BSS in the public cloud is the best option. A solid platform for AI and analytics, as well as low-latency edge computing capabilities, are just some of the benefits of doing this.

Read more: How edge computing and 5G will impact enterprises in the coming years

Factors enabling future 5G monetization 

To meet the demands of B2B and B2C customers and to maximize the benefits of 5G, telecom service providers will need to focus on these four major enablers:

Platform-based business models

Using the 5G network for the next generation of services and applications, telcos will need to adapt their business models to operate as platforms that link producers with customers. With this model, telcos will be able to develop a variety of business models based on utilization, use of common infrastructure, customer journey, etc. The platform business model will also enable telcos to create digital networks. 

Robust partnership environment

5G possesses transformative capabilities when it comes to service provider collaborations, thus supporting B2B2X ecosystems. Together with IoT, it can create business prospects at various stages with business models such as distributed infrastructure, revenue sharing, and connecting various devices on an exclusive network. Telcos can monetize collaborations based on SLAs and QoS, quantities, product or service type, stocks, infrastructure usage, API and service utilization, etc. They can also execute payments and transaction-based models, charging customers based on their consumption.

Customer-driven innovations

So, how do telcos make money out of CX? A major part of this is guaranteeing easier pricing options. Providing asset-light business models is particularly valuable to businesses, where telcos can deliver core IT and charging infrastructure to companies. This allows the companies to be in control of the services they provide to their customers without having to spend on their own infrastructure. Monetization styles can be centered around parameters depending on the applications, such as UE or MAC address for IoT applications, and infrastructure usage.

SBA core-driven networks

Service-Based Architecture (SBA) along with 5G core and cloud infrastructure are major facilitators to the network, which help in launching sophisticated services such as URLLC and network slicing. Network slicing will transform how networks are utilized and monetized. While having shared network resources means a more efficient infrastructure utilization, it also needs to be supported by new charging systems for it to be compatible with the latest use cases. One slice may need a low latency QoS, while another might need more speed, whereas the third one might need a better bandwidth. To be able to monetize these types of network slices, there must be a dynamic, instantaneous charging and policy control in place. 

Network-as-a-Service (NaaS)

Another prospect for 5G monetization is in the B2B space. Telecom service providers make use of Software-Defined Networking (SDN) and 5G networks to provide exceptionally new subscription services to enterprises with improved scalability and accuracy. NaaS is a popular offering in the B2B space. Businesses can fundamentally use network services as and when the need arises. To be able to do this on a larger scale across industries, telecom service providers will need to build a scalable network as a platform with the help of which they create, launch, and alter their offerings instantly.

Collaborations

As telcos discover a greater number of applications for their 5G networks, they will feel the need to collaborate with industry partners to focus on delivering value-added services. A recent survey found that 33% of telecom operators around the globe will use collaboration as a strategy to grow into new industry verticals. Service providers can work with their partners to produce rates and build charging models for a variety of value-added services in different industries.

Dedicated network slices

If a business demands fixed wireless access with superior protection, a dedicated slice of the 5G network can be of great help. Slices are exclusive network sections enhanced for applications such as drone surveillance and gaming. Network slicing will enable telcos to discover better pricing models for applications, business collaborations and even NaaS. In the beginning, there may be few slices, but the number will increase as standards mature. Each of these network slices can be built on precisely modified parameters such as network priority and quality of service.

Improved enterprise mobility

The easiest way to improve enterprise mobility would be to place 5G as an essential update for workforce mobility. More than 70% of frontline employees will be supported with mobile devices and connectivity by 2022. A few telcos view 5G fixed wireless access (FWA) as another approach to generating revenue from businesses that adopt remote and hybrid or both workstyles. Apart from FWA, telcos can tap into cloud-based automation which can be scaled, and this will allow them to handle several private networks at once and thus increase the revenue prospects.

Similar packages as 4G

The simplest way to create revenue out of 5G is to present it as an extension of 4G. More than 75% of telcos already provide 5G as an option based on the current 4G/LTE plans. 5G-specific pricing plans will offer a direct channel for the telcos to drive revenue growth if they invest adequately in marketing and inducements to convince customers to shift to 5G. Telcos will have to recognize market segments that know the worth of this shift and are ready to spend more. These customers may be few but the possibility for revenue growth is much better.

Unlimited data

Over 65% of telcos across the globe offer unlimited 5G data plans as another easy way to monetize 5G. These packages are generally designed for customers who use a lot of data. Telcos can charge appropriately if they can deliver added value to customers who use data-heavy applications. These higher-priced customers may be tech enthusiasts who are early adopters of new 5G devices and applications. Telcos may gain an upsell opportunity in the long run by convincing them to pay more now.

Speed based pricing

Another approach to creating revenue is to provide plans based on various 5G network speeds. Customers who prefer high network speeds may be convinced to pay more. This approach has just been implemented by 18% of telcos globally. One reason why so many telcos prefer to provide speed-based pricing at present is that this model facilitates more flexibility and added value to the customer. This will require fine-tuned control over the network, which will be possible only through automation.

Customized service packages

The most sophisticated monetization strategy for the telcos would be to focus on individual hobbies, interests, or lifestyle inclinations. This strategy demands accurate insights into their customer base to create attractive service packages. As telcos collect more data about subscriber choices, they can shift to a flexible utilization model, with customized deals for each customer. 16% of telcos around the world at present provide these types of packages.

The 5G monetization will be largely led by monumental changes in all aspects of how digital services will be delivered to the market and utilized by customers. Telcos will need to adapt to these changes to be able to make the most returns on their 5G tech investments. The 5G economy will be more dynamic in nature and will call for a high level of flexibility and responsiveness from monetization systems so that telcos can monetize more service dimensions efficiently. At present, only a small percentage of telcos possess sufficient BSS that support 5G monetization. These systems are awfully unqualified to monetize 5G which is why telcos must invest in and develop their 5G BSS architecture. To do so, they will need to modify systems that can rapidly adjust and react to the ever-shifting business and customer demands. 

Netscribes supports telecom companies in achieving excellence through custom data and insights services. Contact us to know more.

Based on insights by Rupesh Jasud – Manager, TMT team, Netscribes

Connect with us
X
  • I agree to receive updates on the latest industry trends, products and services from Netscribes.
  • We respect your right to data privacy and security. You may unsubscribe from our communications at any time. For more information, check out our Privacy Policy.

>>>>>>>>>>>>