Monetising 5G calls for reinvention … And the time to start is now – Part two
These days, we are witnessing many telcos preparing for the next generation of mobile communications, putting a lot of hope into the promise of growth offered by 5G technology. However, there are still numerous opportunities for growth to exploit today, offering a significant promise for telcos’ business. Moreover, overlooking these opportunities and putting all the eggs in the 5G basket is not only missing an opportunity today, but it also can impact preparations for 5G monetisation.
Following is part two in a two-part series (part one) looking at steps service providers can take now to maximise monetisation, today and tomorrow.
Beyond mobile – Service bundling
Mobile services will continue to be the core business for mobile network operators. But in saturated markets, there isn’t much room to achieve organic growth by adding more mobile customers or increasing those customers’ mobile ARPU. To overcome that challenge and maintain growth, CSPs should also explore the option to diversify their offerings as well as expanding toward convergent ones.
CSPs can glean a few strategies for doing so, and one of the most well-known ones relates to mergers and acquisitions. In such vertical integration, as seen in the AT&T–Time Warner and Sky-Comcast mergers, CSPs look to extend traditional services beyond just being a “dumb pipe” and, instead, gain a share of ownership of the content flowing through the pipe.
Another strategy is to partner with media and OTT providers. In this scenario, both parties benefit from such partnerships: CSPs earn a margin on the revenues generated by traffic flowing through their pipes, and OTTs experience high-converting acquisition channels and increased traffic. Currently, a majority of these partnerships are in video and music streaming; however, 5G capabilities such as VR/AR allow CSPs to move into additional areas, such as eSports. This can be seen in South Korea, for example, where SK Telecom recently launched three 5G AR and VR services to offer a more realistic and immersive experience for eSports games.
Beyond consumer – Enterprise opportunities
While CSPs have traditionally focused on building their consumer business, the continual erosion of revenues in that segment has increased interest in the enterprise space, and technological maturity allows further expansion in their portfolio. Furthermore, the shift from bare-metal infrastructure to an everything-as-a-service (XaaS) model puts telcos right at the centre of this value chain by enabling connectivity.
Specifically, services like software-defined wide area network (SD-WAN) and unified communication services hold a great deal of potential. CSPs also have additional bundling opportunities with services like security, hosting, device management and IoT solutions.
The potential for CSPs in the enterprise segment is significant with both 4G and 5G, whether offering more traditional services or enterprise IoT. To increase monetisation, CSPs need to ensure they are more than just the connectivity vendors, but rather the solution vendors.
Massive IoT and enterprise use cases present specifically good opportunities, provided that CSPs collaborate with partners to build and offer a holistic solution, rather than allowing others to establish more significant relationships with their customers.
As enterprises require tailor-made and customised solutions with a high level of support, which is typically better delivered by a telco than their OTT competitors, CSPs are well-positioned to reap that opportunity. Furthermore, when it comes to information security and privacy, telcos tend to have a better reputation than OTT service providers as well.
Opportunity on the horizon
It’s undoubtedly true that across the telecoms industry a great deal of hope is pinned on 5G. However, the bright and shiny object that is 5G may be blinding some CSPs to the roadblocks in their path to success. And while 5G may bring new types of services and products, the opportunities are much closer than just focusing on the technology to be enabled by 5G.
CSPs can achieve market and revenue growth now by leveraging their core competencies and assets wisely. Doing so simply requires attention to be focused on dynamically evolving forces while also embracing new strategies for service offerings and customer acquisition.
The author is Shay Assaraf, CMO, Optiva