5G ROI: Extracting value from 5G investments by shifting to value-based/outcome-based business models?
By Shaun Lim
Like an exuberant kid waiting for the arrival of Christmas morning, many consumers are eagerly anticipating the availability of 5G in their country, perhaps with some justification.
After all, 5G purportedly offers faster speed, the ability to handle more devices, more immersive viewing experiences, and generally promises to transform the way people live and work.
Notwithstanding the fact that many countries are a long way away from rolling out 5G services, Ericsson has predicted the number of 5G subscriptions to exceed the one (1) billion mark in 2022, before surging to 4.4 billion by 2027.
What does this mean for service providers, and how can they turn the 5G hype into sustained revenue streams?
5G monetisation requires collaboration and innovation
To answer this question, service providers need to understand the different business approach 5G requires, compared to its predecessors.
APB+ spoke to Jennifer Kyriakakis, Founder & CMO, MATRIXX Software. She maintained: “5G monetisation is the ability to deliver differentiation to specific customers in an effort to evolve and sustain more dynamic, value-based business models. This is in stark contrast to the commodity connectivity model available with 3G and 4G.
“For the first time, service providers are able to tailor network resources and behaviour to cater to specific devices, services, and customer demands.
“What is needed for a connected water meter is very different to what is needed for a virtual reality headset or a drone. Therefore, products and services for those devices should be packaged and priced very differently depending on how customers are using them.”
MATRIXX delivers a cloud-native converged charging system (CCS) to support 5G monetisation for some of the world’s largest operator groups, regional carriers, and emerging digital service providers.
The company is also committed to helping shape the future of industry open digital standards that ease the monetising of next-generation services.
Last June, MATRIXX joined the TM Forum to further invest in helping operators build sustainable models for monetisation as they move to standalone 5G. Building on its engagement with open source and 5G standards bodies, MATRIXX is now playing an active role as a TM Forum member to shape the standards that will enable communication service providers (CSPs) to harness the full potential of new monetisation models.
Before they can do that however, CSPs must overcome a number of challenges, as Kyriakakis pointed out. “Connectivity has begun to underpin nearly every product and service, expanding ecosystems and creating major implications for how value is exchanged across the evolving 5G supply chain,” she said, adding that as a result, services that rely on connectivity and data are primed for a massive shift in commerce models.
“Additionally, regulatory changes and product innovation are enabling entirely new, non-telco competitors, to address these needs independently. In practice, this means that the defensible borders that CSPs used to be able to rely on are dissolving.”
Reimagining the CSP value chain
Besides providing a digital commerce platform that gives CSPs the business agility they need to effectively monetise emerging services, devices, and business models, and take a larger role as the enabler and orchestrator in the 5G value chain, MATRIXX has also prepared a checklist that identifies some of the most promising 5G monetisation opportunities.
- Configuration-based pricing that can be changed in minutes to create segmented offers without new codes or a vendor change request.
- Pricing and policy in a single configuration where customers can upgrade and downgrade their service level on-demand.
- Flexible promotions based on usage thresholds, application detection or other network triggers to upsell users with tailored offers.
- All-digital journeys including user onboarding, ordering, ID check, delivery, activation, and up-sell.
- Card payments via native integration to external payment vendors to support recurring subscriptions and on-demand purchases.
- Web-scale resilience and elasticity with cloud-native applications delivering high availability under load and infinite scalability.
- New era economics by massively reducing the cost-to-serve each transaction to cater for enterprise, Internet of Things (IoT) and other demand drivers.
- Stand-up, tear-down philosophy using agile teams to launch functionality quickly and encourage more service experimentation.
- Sharing at scale using proven database technology to handle high volume concurrent requests while processing business rules to enforce limits.
- Business-to-business-to-consumer (B2B2C) model flexibility to implement new models that will develop as markets embrace the potential of 5G.
Describing a “complete reimagining” of the CSP value chain, Kyriakakis said, “Extracting the greatest value from 5G investments, while maximising 5G ROI, is the single greatest challenge that CSPs currently face.
“Success will be determined by how effectively they unlock value that is currently not available today by shifting to value-based and outcome-based business models.”
According to MATRIXX, digital leaders are already putting in place key capabilities to leverage on the monetisation opportunities that are emerging.
For instance, providing enhanced mobile broadband allows consumers to access the fastest network speed when they need it most, for example, downloading a 4K Ultra HD (UHD) movie in seconds before they get on a flight. In the home, broadband on-demand provides an all-digital experience that provides customers with rapid delivery, no contracts, and better app-based care.
Content creators can also benefit through new content distribution models that allow them to find audiences and acquire customers through sponsored connectivity as an alternative to advertising-based models.
“Achieving the goal [unlocking value] will require CSPs to transform their commercial models and adopt a new approach to monetisation that is less like telco and more like a technology company, or ‘techco’,” Kyriakakis concluded.
