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10 things operators need to do to make money from 5G

5G will serve operators in two different ways. First, it will enable continued cost reductions per transported GB of existing internet connectivity services. Second, it will serve as a growth vehicle for new service revenues. Here are 10 examples of the potential operator value that would result in increased revenues.

10 things operators need to do to make money from 5G

1. Increase the understanding of how 5G user needs evolve

The user needs for 5G are more complex and diversified than they are for 4G. The customers driving offerings are both consumers and enterprises. Within the consumer segment we see different technology maturity driving new microsegments beyond pure age brackets. On the enterprise side, we see a large number of industries with an ambition to leverage 5G… but in different ways. With a growing diversification of needs, understanding your customers in detail is vital. Operators are likely to make more effort to understand their customer’s needs in detail, and in turn use their insights to come up with improved value propositions.


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2. Increase the scope of network services offered beyond raw broadband connectivity

Superior network services are built on more attributes than just internet connectivity peak rates and traffic volumes. Offerings can be tailored toward more specific and multi-faceted needs, with business models decoupled from the amounts of bits and bytes transported.

3. Split the market into microsegments to discover latent user and industry needs

The potential for microsegmentation is largest in markets with a low level of service differentiation toward users. And you can argue that the mobile broadband market today – with unlimited data or unlimited everything – has approached the lowest level of possible segmentation. Operators with a keen understanding of users and high granularity in terms of available network capabilities might try a new game: the game of targeting over-served, under-served and un-served market segments with tailored value propositions.

4. Increase the number of use cases addressed with a customized value proposition

Mobile broadband has developed around one primary use case: internet connectivity to smartphones and tablets. Driven by consumers and adopted by enterprises, this has created a great wave of IT consumerization. The future will be shaped by a greater variety of use cases – some consumer driven, many enterprise driven. Operators that understand these new use cases are likely to enjoy a stronger position in the value chain, resulting in a bigger financial share of the actual value created.

5. Increase differentiation in network service pricing to meet each microsegment’s business needs

With finer user segmentation, it becomes interesting to think outside the bucket. Centering the business model around data buckets of varying size is not always correlated with user value. GB is not always the most appropriate metric. Business models tied to more relevant service level agreements can be explored when not all traffic is traveling in the same lane.

6. Increase the leverage of global ecosystems

The next network wave is part of a broader digital transformation wave sweeping across multiple industries, where the value of linking into strong global ecosystems is more important than ever before. An operator can transform its local and regional strength by becoming a prime player in the global ecosystems shaping digital industries. Here’s an area with winner-takes-all characteristics. Especially for ecosystems demanding more advanced connectivity solutions.

7. Increase development efforts for local ecosystems

Not all digital ecosystems are global. And operators have a role to play as ecosystem anchors in local ecosystems as well – either by taking an active role in developing the local opportunities, or by taking a risk that this business will be served by the competition. There’s a need to develop operator propositions for these local niche markets, and an opportunity to become a big fish in many small ponds.

8. Increase support in building customer business cases

Operators can play a leading role in advising enterprises on how to build their business cases. Leaving the job to other stakeholders often tends to undermine the role of connectivity-enabled services. There is no reason for the central connectivity services not to attract a substantial share of the total service revenue pie. You just need to be able to offer a solution bundle where connectivity is combined with value-added enablers higher up in the stack.

9. Reduce operators’ dependency on best effort connectivity as the sole source of mobile data revenue

Broadband data services will remain the principal revenue driver for mobile network operators for the foreseeable future. But as markets reach mobile broadband saturation, operators can either engage in price wars for market share or grow the business with each customer. With operators engaging in a differentiation game, a variety of different routes can be pursued, creating a combination of value and price simplification in the market.

10. Reduce price erosion on mobile broadband connectivity services to smartphones

The price erosion for mobile broadband bytes has been in line with the demand for increased capacity. As the mobile broadband market becomes saturated, operators shift their focus to keeping customers and leveraging cross-selling opportunities. It is hard to maintain revenues and growth with a significant decline in core business. And market discipline is a good way to keep markets attractive and to generate enough cash to fund 5G network and business development efforts.

My predictions for the future:

  1. Operators have an opportunity to grow their service revenues, but this will not be possible without a concerted effort.
  2. Growth will require differentiation beyond basic connectivity services, as well as business model innovation for smaller market segments.
  3. The largest new market segments are enterprise segments, with a strong coupling with global and local ecosystems.

We recently expanded our 5G portfolio to includes new FDD radio capable of supporting 4G/LTE, 5G and Massive MIMO. Let us show you how to increase the network capacity with up to three times, and boost the user throughput with up to five times, using today’s mid-bands spectrum, serving needs and demands of today’s video intense lifestyle and be ready for 5G.

You can also join our Massive MIMO webinar October 4 at 9am CEST or 4pm CEST to learn more.

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