Fifth generation wireless systems (5G) are not expected to be generally available until 2020. But 5G has already been deployed on limited levels – such as at the 2018 Winter Olympics in South Korea – and smart telcos have been investing significantly in order to prepare for the all-important deadline. On the regulatory side, the EU agreed in the spring of 2018 to open the 3.6 GHz and 26 GHz frequencies for 5G, and the UK has already concluded a spectrum auction for the 3.4 GHz frequency.
So why all this interest and preparation? It’s because 5G telecommunication offers not only higher speeds and increased bandwidth, but also new and increased revenue streams for those who are ready for 2020.
What is 5G?
Put simply, 5G telecom standards represent a revolution. Based on millimeter wave band, multiple input multiple output (MIMO) and mid-band 5G technologies across a range of frequencies from 600 MHz to 60 GHz, 5G speeds can reach 20 gigabits per second. Compared with 4G technologies, 5G will mean a tenfold increase in the speed of data transmission.
The biggest networks – including Verizon, T-Mobile and China Telecom – have been investing in these technologies, while tech firms such as Samsung, Nokia and Intel have all put time and money into their development. Such major players don’t make this kind of commitment lightly or without expectation of significant returns. It’s clear that there’s 5G money to be made in the very near future.
5G monetization in telecom industry
While it is true that 5G telecommunication will have a great impact on voice and data services, its real revolutionary power lies in the Internet of Things (IoT). CSPs might have very little wriggle room in terms of increasing revenue from their traditional services, but 5G will certainly put them in a position to monetize the IoT. This is because 5G telecom allows the kind of simultaneous connectivity that would have been impossible on 4G. Smart homes, smart cars, smart city infrastructure and smart health services are all expected to proliferate as 5G develops, and every device involved will be part of the global IoT.
How to monetize 5G? Telcos need to take several things into account
First, they need a clear understanding of what 5G means for their customers. Smart cars, for example – always on the move – need the kind of complex interconnectivity that updates automatically every fraction of a second in order to keep our roads safe. Smart street lighting systems, on the other hand, might require a relatively less complex – though equally reliable – kind of connectivity. And smart health services will have yet another focus – ensuring, for example, precision-guided deployment of services, rapid emergency response times and robust failsafe assurance for devices. The telco that understands the needs of their partners in specific industry verticals will be well-placed to increase revenues by offering the right kind of service.
Understanding customer needs is important, but so is responding to those needs. One of the huge advantages of 5G telecommunication is that it will allow telcos to deliver very specific services to different entities, even within the same vertical. This is where virtualization and automation play important roles; a CSP can essentially build a single service based on small, highly customizable and scalable elements, and deploy software-defined networking (SDN) and network function virtualization (NFV) to deliver that service in a manner that is already tailored to the needs of a given customer.
To take this further, CSPs looking to 5G monetization would do well to investigate the options around network slicing. Basically, increased bandwidth and higher speeds give telcos a bigger network “cake” – and the bigger the cake, the more slices it will yield. There’s no reason why a telco can’t offer partners their own slice of this cake, which would be theirs to manage and operate, over which they would have full autonomy in terms of the services they want to deliver and how.
Network slicing and highly-tailored services will also change the way billing and cooperation work for CSPs in this new 5G telecom reality, which in itself represents an opportunity for monetization. First, there must be clear differentiation between the basic service provided (and remember, “basic” can mean different things to different industry verticals) and the value-added elements that can prove extremely lucrative in terms of increased revenue streams. Here, a good example is the automotive industry. Clearly, there must be a basic service common for all smart cars, if only to ensure safety and meet regulatory requirements. But there are also many extras that operators can offer, and which customers will be charged extra for. It’s worth remembering here that in modern “unlimited everything” models, customers don’t expect per unit billing; they pay for an inclusive service. Second, services provided by a partner over their slice of a telco’s network means that both parties can reach new sources of revenue. A software company with expertise in developing real-time multi-player online games might have a great product to offer, but they need the telco to deliver this to the players. The telco, on the other hand, might not know the first thing about developing this kind of game to offer to its customers – but it does have the speed and bandwidth of a 5G network. Whichever way you look at it, this is a win-win situation for the CSP and the software house in terms of potential revenue.
Finally, 5G money is there for the taking for operators who can deliver the full monty. In terms of 5G and the IoT, this means taking a holistic view that encompasses every aspect of a service provided. For example, a telco might offer not only connectivity for smart home applications, but also the device, management, billing and app elements that come together to facilitate all “smart” industries. This should be a no-brainer, but if you are offering the full package and your competitors are offering only certain elements, where is the customer most likely to end up?
For telcos that have not already begun to prepare for 5G, there’s very little time to get on board with a technology that is going to turn the whole world of communications on its head. There’s no doubt that the incredible speeds and bandwidth capabilities of 5G will open up rich new seams in terms of revenue and different 5G monetization models. CSPs must be ready to mine those seams if they want to survive in the new reality – and to do so they must have a clear understanding of what their customers expect from 5G telecommunication, and how best to deliver it. Contact Comarch to find out how our solutions can provide you robust support that connect all these elements in a customized installation tailored for you.