The potential of faster and reliable connectivity has created a buzz around the expected speedy adoption of 5G networks among consumers – individuals, and enterprises. Keeping this in mind, telecom companies are investing heavily to roll out the service in their target regions. According to a 2019 Morgan Stanley research, global telcos’ CAPEX in building a 5G network will touch $872 Billion by 2030. But the big question is how soon they will see the desired ROI. What are they doing towards ensuring 5G monetization?
This blog will explain a few critical measures telco CFOs, CIOs, and other key decision-makers need to take to reap financial benefits from their 5G investment. In simple words, we will explore how to ensure an assured 5G monetization model to let the revenue flow.
Leveraging 5G in digital transformation
Telecommunication companies are dealing with a declining average revenue per user. That’s why they need to earn more, given their heavy investment in building 5G networks. For them, 5G provides ample opportunities to make more money by going beyond the traditional connectivity-based revenue model. They can target businesses into segments, including connected cars, supply chains, AR-powered multi-user gaming, and others, to propel their digital transformation process.
So, how can telcos go about it? They can achieve this by moving to the cloud. This strategically essential move is a significant first step for telcos to rapidly roll out and deploy 5G services. The cloud’s Service Oriented Approach and native computing capabilities allow telcos to efficiently build, run, and maintain an array of 5G-enabled application ecosystems. Thus, they can cater to the need of a wide variety of organizations looking to digitize their end-to-end operations while delighting their end users. In this context, telcos can work with trusted and expert solution partners to migrate their entire IT topology to the cloud.
Adopting 5G for business outcomes
As 5G evolves, from introducing new services and applications to monitoring and maintenance – everything will have its unique requirement from the network. Concepts such as Network Slicing, Elastic Network, Multi-Access Edge Computing (MEC), and Closed-loop Automation are essential to delivering secure services per the SLA while avoiding and addressing network congestions. All these will become a lot easier with autonomous networks. Plus, it can glean information from the lower layers and use it to self-optimize the process.
The above use case represents sufficient possibilities for telcos to monetize their 5G investment. This is where telcos need to critically examine their existing monolithic OSS/BSS strategy. As we are getting ready to witness a surge in the industry-wide adoption of 5G-enabled services, telcos must bring in transformational change in their OSS/BSS approach to meet those demands and support newer business models. In simple words, a well-thought-out change in OSS/BSS plan is crucial for 5G monetization.
Ensuring a MEC monetization model
With MEC, as Edge IaaS/PaaS/NaaS model, telcos can ensure optimal computing and storage capabilities are available to their customers at the edge of the communications network. Additionally, MEC allows telcos to offer Dedicated/Distributed Edge hosting to their customers for secured, reliable connectivity. It makes MEC a viable option for industries across segments as they can enhance customer experience by enabling them to offer new services.
By helping businesses with embedded computing and storage services at the edge of their network, telcos can empower their customers to run applications in milliseconds or in real time. This is what exactly offers an out-and-out opportunity for telcos to identify and open new revenue streams with their investment in MEC. Let’s look at the wide range of use cases – controlling and monitoring machines, powering autonomous vehicles, speeding up AR and VR-powered games.
While telcos are yet to take a firm decision on whether to have MEC or not, it is advisable to go for it at the earliest. It will help them gain the much-needed competitive edge. For this, telcos also need to rely on third-party solution partners to develop a MEC testing lab and deploy the required infrastructure to develop the proper application. Speaking of MEC monetization, in case you would like to know more, Persistent’s recent joint report on MEC with TM Forum is here.
The way forward
For telcos, 5G monetization is the foremost concern. They will have to create new revenue streams beyond connectivity to address this. With new business models, they need to make necessary changes in their core capabilities to meet the requirements of industries, including manufacturing, healthcare, gaming, automotive, etc. They need to modernize their tech stack to roll out robust 5G services to accelerate the monetization process. In short, differentiation will be the key to staying relevant and witnessing the desired ROI. At Persistent, we assist telcos in building robust MEC environments to modernize their application to stay ahead of this game of 5G monetization.
Sources
https://www.morganstanley.com/ideas/5G-telecoms-share-price-drivers
