4 Strategies for Monetizing 5G

In this digital age, consumers expect faster, smarter, convenient, and transformative data speeds. Many consumers can’t wait to stream movies while downloading music and managing numerous IoT devices on their smartphones. They are anticipating 5G connectivity that comes with speeds 100 times faster, huge capacity and 10x lower latency.

In 2019, the 5G NR (New Radio), the set of standards released by the ITU and 3GPP will allow higher speed, lower latency, and new M2M uses such as IoT. Learn all promises of 5G for the telecommunications’ industry.

However, before such expectations are met, crucial conservation on 5G monetization is emerging. Research conducted by ABI reveals that 5G services will emit revenue of nearly $250 billion annually. A substantial part of this revenue will go to communications service providers (CSPs). The main benefit of a 5G network for CSPs is that it will allow them to offer more services than just connectivity. CSPs will improve the offerings of 5G-enabled services to different stakeholders from consumers to companies and other stakeholders.

Identifying 5G monetization models

Stretching the Monetization capacity of 5G involves a lot. It is insufficient to have a vague idea of benefits we can get from 5G. It is also inadequate to work towards the superior performance of 5G only. The most important aspect is for service providers to have business cases and models for their offerings.

Let’s consider this case. VR will use 5G adequately. But how will be the business model for this case? Will operators charge consumers for VR devices? Will consumers pay for applications and the quality of VR data they need for their businesses? Will device manufacturers offer to pay ISPs to help them enhance the customer experience using 5G? This case offers two business models that should be understood on how to monetize 5G.

Main 5G Monetization Models for Business

  • Business to Consumer (B2C)-The B2C model will focus on the capabilities of 5G to offer consumers great service offerings such as content, various media, and fixed-wireless.
  • Business to Business (B2B)-B2B business model has great potential for growth. Service providers will monetize managed connectivity, embedded connectivity, and VNFs to increase the value 5G brings to industry verticals.
  • Business to Business to Any (B2B2X): In a nutshell, this model allows CSPs to generate revenue by charging firms that offer 5G-reliant services or products to consumers. The flexible nature of the 5G network will empower service providers to offer embedded connectivity to application and device developers to boost the market share of their goods. For example, service providers can provide VR device developers connectivity to help them manufacture superior products that enhance the consumer experience.

Strategies for Monetizing 5G

As we welcome 5G excitedly, CSPs must understand the opportunities for monetarization so that they can leverage them. Here are some of the ways CSPs will monetize 5G.

1.    Superfast 5G mobile broadband

5G is chiefly mobile technology. CSPs will garner recurring revenue from subscription fees coupled with breakneck data speeds and huge data volumes. Among the monetization opportunities include.

  • HD mobile video: currently, demand for video content over mobile is increasing at an unprecedented rate. One research reveals that by 2022, video content will account for approximately 75% of mobile data traffic. 5G networks will intensify the demand for bandwidth-hungry video streaming and ascertain consumers get a great experience. Currently, downloading an HD movie with 4G is time-consuming and frustrating. You have to wait for around eight minutes coupled with immense lag time and buffering. However, with 5G, downloading an HD movie only takes 5 seconds. Incredible, isn’t it? Consumers can enjoy HD videos regardless of the platform they use and their location.
  • New content services: Over-the-top (OTT) services are data intensive. CSPs can monetize OTT services by collaborating with OTT providers.
  • Immersive experiences: 5G will enable the adoption of 3D technologies like virtual reality (VR) and augmented reality (AR). In the case of VR, 5G’s ultra-low latency offers an immersive VR experience. VR applications are latency-sensitive, and anything above 20ms results in motion sickness and compromises the creation of “live” virtual experiences. 5G will also revolutionize the way consumers experience HD content from movies to TV, video games, and sports.
  • Deployment of specialized virtual networks: CSPs will use the higher data capacities 5G offers to deploy dedicated virtual systems for specific uses and hence generate revenue. For instance, they can provide connectivity to data-heavy services like telemedicine. CSPs can use the network slicing model to meet unique business needs concerning the quality of service, capacity, latency, and security.

2.    Internet of Things (IoT) connectivity

5G network characterized by low latency -as low as 1ms, lightning-fast speed -up to 4Gbps- and enhanced capacity will drive the growth of IoT. The consumer demand for connected homes, electronics, and cars is growing, and 5G will further facilitate this growth. By 2023, there will be 20 billion connected IoT devices according to research estimates.

Nevertheless, the 5G speed with not be that crucial for IoT because the current 4G speed already supports them. The 4G network has adequate speed to support IoT because currently, people can monitor their homes remotely. The main addition of 5G to IoT is the ability to support many simultaneous connections with low latency. CSPs will benefit from connecting millions or even billions of IoT devices and gaining significant recurring revenue.

The low latency nature of 5G will be beneficial for the deployment of innovations such as driverless cars, trucks, and drones. Additionally, it will allow for the IoT scenarios like the near real-time updates on traffic, emergencies, and crimes. This is possible through the use of higher bandwidths, denser networks, and more connected devices to get accurate location estimates.

Although the automotive and manufacturing sectors lead the way in the adoption of IoT, the future may be different. CSPs can increase their 5G monetizing revenue by leveraging other sectors like healthcare and agriculture to embrace digital transformation.

3.    Fixed Wireless Broadband

The revenue recurring scenarios we have mentioned above will not be deployed when industry standards have been developed. However, fixed wireless broadband presents the shortest route to 5G monetization because it is already operational. A majority of 5G scenarios target mobile devices but fixed wireless targets stationary locations like homes and businesses. The good thing about this revenue-generating case is that a growing market for super-fast broadband already exists.

The pioneer in this kind of wireless broadband was Goggle in 2011. In partnership with Google Fiber, Google introduced an ultra-fast internet service -one gigabit per second- in Kansas City. Following Google’s footsteps, other internet providers have deployed gigabit fiber in different US cities. Among the significant advantages of fixed wireless broadband are fast speed and low cost of deployment. The low cost of deployment emanates from its wireless nature. Therefore, you don’t incur the cost of wiring and physical cables. Instead, fixed wireless broadband employs radio frequency to transmit broadband connectivity.

Regrettably, fixed wireless has one major shortcoming. Radio waves in fixed wireless broadband are easily affected by trees, rain, and snow. Also, penetration through walls is a huge problem. All involved stakeholders should strive to resolve this weakness to foster monetizing 5G.

4.    Conduct Phased Trials

Since 5G monetization is relatively new, telecommunication service providers can gain from phased roll-outs immensely. Phased roll-outs -also called trial roll-outs -can offer invaluable insights to service providers on what works and what does not regarding monetizing 5G.

Nevertheless, the process of conducting phased trials is not 100% efficient, and mistakes can be costly. Service providers can establish network slices and unleash services in a phased manner in certain territories. They can use the rolled-out services to gain the reaction of the market in an area. The feedback can be used to inform the process of monetizing other services before venturing into more significant markets.

4 Strategies for Monetizing 5G

Challenges to Monetizing 5G

Although 5G network monetization seems to be a lucrative opportunity for telecoms, it is not devoid of problems. The main challenges include;

  • Huge initial investment in IT infrastructure, network density, radio access network, among other necessities. Research by IDC affirms that service providers will spend around $57 billion to roll out 5G.
  • Telecom operators must design practical monetization opportunities to attain maximum ROI.
  • 5G monetization requires adjustment and transformation of telecom operations.

Looking Forward

5G has disruptive potential for virtually all sectors and society as a whole. Although there is much uncertainty surrounding 5G and numerous technical issues need to be addressed, one thing is sure; 5G is the next big thing. When 5G becomes mainstream, the globe will be more connected. Not just people connecting to other people but people to machines and machines to machines.

The success of 5G will involve collaboration and cooperation CSPs, OEMs, content providers, and vendors to share delivery, duties, and revenue. As providers of this remarkable network, CSPs can garner plenty of new revenue when they capitalize on business opportunities and create practical use cases. However, for providers to get returns from their investments in 5G, they must think holistically about the monetization opportunities.

Providers must outgrow the perception of charging consumers more money because they are getting faster data. They must think out of the box and discover other 5G attributes like higher reliability and lower latency that are monetizable. 5G network has the potential to create new service offerings, business models, and revenue opportunities. Importantly, for telecom operations to thrive in the 5G landscape, it has to prove itself as a relationship builder with customers.

In 2019, the 5G NR (New Radio), the set of standards released by the ITU and 3GPP will allow higher speed, lower latency, and new M2M uses such as IoT. Learn all promises of 5G for the telecommunications’ industry.

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