What carriers should do to monetize 5G
Fortunately, carriers now have infrastructure capabilities that exceed the needs of their subscribers, and network businesses that are able to make the most of their existing bandwidth and achieve their full potential for growth. There are very few people. To successfully monetize 5G and improve the ROA of 5G capex, MNOs and carriers must immediately implement the following three strategies:
1. Understand and educate consumers about the actual network costs of 5G applications.
Telcos have historically struggled with the total cost of providing even pure connectivity services. They need to develop the ability to more accurately predict, plan, and track network costs for future 5G services. Additionally, carriers must develop a well-founded and effective plan to communicate the magnitude and nature of these costs to subscribers, regulators, and upstack application providers. This is essential to create future pricing power and counter upstack players’ demand for a “competent network” without commensurate revenue sharing.
2. Improve service management capabilities such as pricing, offer creation, and service evolution.
Operator service and offer management capabilities are not able to address the complexity of creating a profitable 5G service mix. Carriers need to significantly improve this functionality by:
- Improve market understanding and reduce time to consumer adoption of 5G apps. Today’s carriers need a new level of technical knowledge to predict tomorrow’s trends and determine which trends will provide the greatest return on investment. It may be short-sighted to wait for the metaverse to materialize while millions of intelligent devices wait for reliable and secure connectivity. Operators need to talk to their 5G ecosystem partners, including end-users and upstack companies, to understand which features of 5G are most valuable to their companies.
- Improve offer management to create an optimal service mix. Currently, pure connectivity plans are the primary service offered by MNOs. However, IoT offers a variety of opportunities for industry-specific upstack revenue that carriers have not been able to capture. As the trend of consumer adoption of his 5G killer apps accelerates, carriers will need to create and sell offers that go far beyond connectivity plans to both consumers and businesses. For example, a meaningful way to monetize gamers may be to offer subscriptions by the hour or game session, rather than by the month or megabyte.
The optimal service mix for profit growth is likely to evolve rapidly. Network slicing may allow carriers to sell guaranteed bandwidth to business customers, especially for applications that require low latency. Service innovation also requires partnerships with the best players in specific ecosystems, such as mobile payments or mobile gaming. Telcos must build the capacity to innovate and quickly update their service offerings to best serve digital consumers.
- Improve your pricing strategy. Capturing a meaningful share of 5G revenue requires more than just properly evaluating network access. Operators also need to convince the mobile ecosystem that the prices they set are justified. Pricing power and customer value perception are closely intertwined. To assert their value, carriers must go on the offensive in marketing their services. We need to better understand subscriber pricing trends and thresholds based on the type of 5G application. FWA has obvious pricing limitations. IoT can offer a variety of possibilities when it comes to pricing, as long as offers are created that adequately respond to the consumer’s or business’s IoT needs. Since gaming and metaverse companies are not likely to easily cede revenue share for their applications, carrier pricing capabilities should evolve significantly to address these complexities.
- Foster stronger industry partnerships and enabling technologies. Telcos need to implement profitable revenue sharing models with cloud service providers, gaming companies, and over-the-top media services that deliver meaningful benefits to all parties. One of the keys to doing so is clearly quantifying carrier participation in the partnership so that carriers are not perceived as mere “dumb pipes.”
Carriers will need application programming interfaces (APIs) to streamline the user experience and bill accordingly, but this functionality does not yet exist. These APIs also need to be consistent across carriers, requiring consortia to standardize them and enable apples-to-apples comparisons. In fact, monetizing 5G more fully will require increased cooperation between carriers and the many brands that rely on their networks for services. To achieve this growth, MNOs must work on building stronger corporate partnerships.
3. While waiting for the metaverse, consider FWA with richer IoT services in the short term.
Providing FWA only makes sense if significant excess capacity is available within the 5G infrastructure. FWA should be powered by IoT connectivity, especially for use cases that require low data rates and latency requirements. Telecom operators should take advantage of this time lag to improve planning and pricing of their future high-bandwidth 5G services.
