How 5G redefines the game for communication service providers
At the TMF Digital Transformation World 2018 event, during Wipro’s demonstration of 5G catalyst related to planning and optimisation, the discussion veered towards the topic of how service providers could use different techniques beyond dynamic network changes to increase their resource utilisation, and how they could play a major role in strategic resource optimisation, writes Vinay Devadatta, the practice head of Innovation & Industry Relations at Wipro.
5G promises a high levels of flexibility , substantial increase in bandwidth and drastically reduced latencies, apart from other features. This could dramatically enhance user experience. However, more importantly, it opens new avenues of business as different industry verticals can use 5G to change their ways of working as also business models. However, all this is possible if the network resources of communication service providers (CSPs) are efficiently deployed and cost benefits are passed on to the consuming industries. Industrial communication, through IoT or any other future means, covers a wide variety of communication needs and is not constrained by human daily lifecycle-related constraints – suc as at the 9am peak hour. This lays the foundation for efficiencies which were not possible earlier when the communication was solely between humans.
One of the suggestions that came up during the discussion was on looking at using platform business model, that has been successfully deployed by the likes of Uber, Amazon and others to ensure that the most optimal resources are made available at all times for a given purpose. In today’s world CSPs are contending with over-the-top (OTT) players, and have already started co-opetition in different ways, such as via tower sharing and spectrum sharing when permitted by regulations. Hence, participating in a platform model, where they dynamically, on need basis, buy/sell/lease/rent the network connectivity is just a step away.
A major concern that one of the service providers vocalised was with regards to OTT players also participating in the open marketplace, which are essential to the platform business model. If OTT players can also take advantage of the open market to consume network connectivity, are we not back to the starting line where in the first place we were trying to compete with the OTTs? This brings up the question on whether OTT players are the competition that one needs to contend with in the 5G world.
Let’s look at the OTT arena. Over the last few years as the internet penetration increased, OTT players like Netflix have grown by leaps and bounds. These players deliver voice and media content over the internet without the involvement of CSP in the control and distribution of the content. As per Frost & Sullivan’s, Frost Perspectives, OTT players are also reaching saturation levels as far customer coverage is concerned. Their focus is on the human subscribers who have also been the traditional mainstay of CSPs over the past century.
The communication service they provide is heavily inclined towards video-on-demand and other non-life critical or business critical services. Currently CSPs are losing out this market as OTT players have aggressively pursued the same using their hold on the media content. We are seeing CSPs trying to augment their communication service offerings with high quality content through multi-billion dollar mergers to take on the OTT players. So in the current market scenario OTT players do pose serious competition to CSPs for customer dollars
Multiple industry studies have shown that 5G will enable CSPs to enter the multi trillion-dollar market. However, this is not the traditional market of human communication but an enabler of transformation across industry segments. This market is expected to dwarf the traditional human communication services. Also, with every passing year, CSPs are plagued with constantly declining revenue from subscribers in spite of significantly increased volumes and improvements in the service quality. Considering the above situation of deteriorating returns from traditional market and opportunity to get into new market of industrial communication, it is advisable that CSPs should focus their attention on potential new markets.
3GPP has approved a set of 5G specifications for use along with other industry applications, communication services which focus on providing enhanced mobile broadband, another service to ensure, ultra reliable low latency communications (URLLC),and yet another service for massive machine type communications( mMTC) and further specifications are expected for regular communication as well. The services specified for industrial communication, come with many service level guarantees, that are required for deployment, The above reflect that 5G communications services will have to be specifically designed to meet service quality and band width constraints that are aligned specific industry needs.
Each of these services require a well provisioned network resource with a clear backup strategy. This will enable consumers of these services to build their own mission critical services and business models which can rely on CSPs fulfilling the agreed service under all circumstances. As the requirements are more likely to be fluctuating than steady and constant, CSPs will have to design for spare capacities that should also be gainfully deployed. These spare capacities may be deployed for a less critical application, with a possibility of being acquired for a more critical requirement.
In a platform business model, CSPs can participate in all the three roles of producers, consumers and curators – match-making between what is produced and consumer needs. Moving to platform business models where CSPs cooperate and pool their resources and consume the most appropriate resources will bring in significant efficiencies. However, the efficiency can be increased further if the spare capacities are consumed by those applications which need only best effort services. The OTT companies playing predominantly in areas in which best effort is all that is required and are built to make use of such quality of service can effectively mop up the spare capacities whenever available, thus driving higher levels of efficiencies.
With the advent of 5G and new business models, many of the traditional business rivals – whether within or from outside the industry – will start co-opetition, as a new Nash Equilibrium gets set. The rivalry in the era of industrial communication will no more be between traditional producers of communication services and those who transparently use them – OTT players – but will involve overcoming the resistance to utilise communication services for transformation in other industries, and the ability to innovate. It took decades before Amazon used the internet in a way which is transforming every industry vertical. CSPs can shorten this time radically by focusing towards enabling the usage of 5G by other industries.