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Ringside Challenges

Business Models challenge

Business Models challenge

5G will not only transform industries and the lives of consumers. Operators themselves will also transform as they seek to find their optimal position in the 5G value chain.

The stakes are high, and network operators must decide now where they want to play in 5G: do they want to maintain the status quo of being a bitpipe provider, albeit one that provides connectivity between machines as well as humans?

Or, do they want to move up the chain and become a trusted services provider, not just for consumers, but for enterprises looking to tap the IoT?

The latter requires operators to evolve their business models, overhauling their go-to-market strategies and in some cases adding new capabilities in systems integration and customer relationship management.

The pay-off for a successful evolution promises to be considerable, but it places operators not just in competition with one another, but also traditional IT services providers and Web-based service providers too.

As a result, telecoms operators are under pressure to form a coherent strategy, and make the necessary changes – painful as some of them may be – in order to secure their place in the 5G value chain.

Business Models challenge

New business models are emerging and evolving

Ericsson together with Arthur D. Little has addressed this challenge by dividing the market for 5G-based business services into nine application-based clusters. These clusters are: augmented reality; autonomous robotics; remote operations; smart surveillance; hazard and maintenance sensing; connected vehicle; monitoring and tracking; enhanced video services; and real-time automation.

These clusters span multiple industry verticals, and represent a larger revenue opportunity than any single use case. By dividing up the market in this way, Ericsson is helping operators to understand how they might need to evolve their business models and operating structures in order to gain a foothold in 5G-based enterprise services.

Ericsson and Arthur D. Little have also identified and analysed examples of operators all over the world that have already begun evolving their business models in a bid to establish themselves in some of these clusters.

Connected Venues from Telstra is an example of a B2B2C proposition where Telstra builds services for the stadiums to resell to consumers, from connectivity through to ordering food and finding a parking space.

Meanwhile, Telia's Sense connected car service is a two sided business model: B2C for the device and connectivity sale to the consumer, which turns cars already on the road into connected vehicles, and a B2B2C model that is building a whole ecosystem around the connected car.

This ecosystem includes enabling insurance companies to sell differentiated packages to customers, and car park owners offering space-finding services, for example.

These early movers, as identified by Ericsson, have taken the first steps to evolve their organisations and make them fit-for-purpose in the age of 5G.

“Ericsson is helping operators to understand how they might need to evolve their business models and operating structures”

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