The 5G ecosystem will require greater collaboration between providers and users and more flexibility on billing options.
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Just as consumers and business are becoming comfortable with the connectivity, speeds and capabilities of 4G and LTE networks, communications service providers in every region of the world are already looking to the future of what “5G” networks will mean for service differentiation. For example, Deutsche Telekom is delivering on its plans to become an all-IP service provider by the end of next year through creating a unified infrastructure that allows all user end points (fixed, mobile and broadband) to be connected to the cloud, reducing costs and centralizing its methodology to bring new services to market more quickly.
SK Telecom in South Korea will reportedly spend $5 billion on its 5G network over the next three years and $4.17 billion on new IT infrastructure that will evolve the company from a traditional service provider to a next generation platform provider. AT&T has already rolled out its “5G Evolution” services in Austin, Texas, and Indianapolis. And while technically not quite 5G speeds (initial top speeds of 400 megabits per second), AT&T says advancements in the network could allow for theoretical top speeds in the gigabit range by the end of the year.
Yet even with all of these advancements, a reality check is in order. Over the past few years, mobile operators saw increased demand for high-speed mobile internet connectivity, much of it being driven by the consumer’s insatiable demands for social media access and streaming video on smartphones. Competitive pressures however led most operators to evolve pricing plans to support data intensive users but without undue force of pushing them to a higher price plan. Recent marketing from U.S.-based mobile operators is showing a shift back to unlimited data plans, which of course limits average revenuer per user growth at a time when increased service usage should have translated into more revenue. In Western Europe, a recent “Global Wireless Subscriber Forecast” by 451 Research showed that between 2010 and 2015, mobile ARPU actually fell from 22.12 euros to 16.39 euros per month. The decline occurred despite operators rolling out 4G throughout this period.
As mobile operators look ahead to 5G, the benefits of speed are not necessary outweighed by the potential revenue as virtually no operator has the ability to build viable 5G business cases based on network speeds. The likelihood of customers paying upwards of double or more to experience gigabit speeds on their devices is virtually nil.
Not surprisingly the future view of what 5G can offer the end user remains open and creative at this point, but is clearly tied to a new ecosystem that bring a broader array of services to market. These network investments are one piece to a much larger puzzle that must be put together successfully. We all look forward to smart cities with efficient waste management; health care services that can allow patients real-time monitoring at home instead of in the hospital; live 4K streaming of video to an end device without the needs for cable or broadband wired connections; and expanded availability of high-speed broadband services to end users that haven’t been able to take advantage of. However, none of this can happen without investments in IT that initiate, control, deliver and monetize these services.
The rapid pace of network evolution must in turn be supported by IT systems and services that can turn these newfound speeds into revenue. This will extend outwards from traditional back office systems.
Take the example of a 5G business model where a mobile operator partners with a sports media company to provide 4K or 8K quality streaming of a sporting event. In this case, the streamed event would be given dedicated bandwidth and billed based on a flat-rate price or by duration. Any delivery issues would trigger quality of service discounts as part of the business support system policy management and ensure the billing system creates rates and bills the transactions accordingly. In this case, the network provides the service, but the management platform takes on the role of service provisioning, mediation, service management, QoS and billing.
Another example would be a water utility in a drought stricken region that could leverage wireless sensors located on reservoirs and delivery infrastructure around its supply area to maximize water resources. The utility would receive guaranteed network capacity from a mobile operator to ensure each sensor remains wirelessly connected to a central management system. Through periodic data gathering or via on-demand updates the utility would gain valuable insight into current reservoir levels, help discover or prevent water main breaks before they happen, identify leaks in the infrastructure as well as link to smart meters to compare actual consumption with projected.
In this case, each download would be a billable event for the operator, yet the costs of services to the water company would likely dwarf that of a massive infrastructure repair or water purchase in the case a reservoir capacity reached critical levels. In this case, the network and service management layers are both well utilized and the value is realized.
These business examples can only be realized through the improved integration across all IT systems. Any 5G strategy must embrace an IT strategy that creates consistent data flows, makes data sharing easier, provides flexible pricing and real-time monetization and helps service providers make ongoing improvements in service delivery, especially those that require multiple channels or parties. As the digital economy continues to widen, the customer and service journeys will become increasingly multipoint and multicompany oriented, exposing the 5G service user directly to a growing number of diverse partners. Thus, management of the entire multifaceted customer experience will become even more convoluted without an effective IT management strategy that runs parallel, if not integrated to the network strategy.
Network and IT investments in 5G will ultimately prove beneficial not only the mobile industry but also provide an upside for the operator’s fixed line business and for adjacent industry partners. In fact the business cases for 5G will only be made successful by investment and support from all stakeholders in the ecosystem. That ecosystem now becomes more reliant on the joint development of service rollouts and advances in Internet services, consumer electronics, health care, automotive, utilities and others. In other words the mobile operator will be as dependent on business partners as the business partners are on them. This shared dependence will be one of the critical drivers that will unlock the true potential of 5G.
