In the three years from 2022 to 2025, telecommunications companies are projected to pump some $600 billion into 5G infrastructure, according to McKinsey, a huge figure that confronts those companies with a pressing question: Based on their struggles to recoup investments in 4G, how are they going to monetize their 5G investments?
As a starting point, they’ll need to be open to shifts in mindset and approach. As McKinsey posits, “the key to monetizing 5G is for telcos to reimagine their role, evolving from network providers to solution orchestrators.”
For some telecom companies, the evolution is already underway. Singtel, for example, recently launched an intelligent edge aggregator solution that relies on 5G and multi-edge computing to enable enterprise customers - particularly those in the manufacturing and logistics sectors - to add cloud functionality and computing capabilities to their back-end processes, including applications for automated quality checks, defect detection and last-mile delivery robotics. Singtel also recently rolled out an airport 5G network program in Singapore to explore air-side use cases such as aircraft ground operations, ground handling and line maintenance services. Projects involving the use of 5G tele-operation of autonomous vehicles and the secure ground transfer of critical flight data between airline and aircraft are already underway.
The rollout of 5G provides telecom companies with new opportunities to deliver greater value to their customers, regain market share and increase revenue. McKinsey sees a value pool that could easily exceed $100 billion over the next five years for companies that successfully evolve into a solution orchestrator role built around 5G. And in my view, two areas appear particularly promising for them to monetize their 5G investments and unlock the value embedded in that role within the 5G economy: private networks and network services on a public network.
PRIVATE NETWORKS are an area where telecom companies can really build a solid business case with enterprise customers across various verticals. They can position it as an alternative to Wi-Fi or cabled networks, with 5G supporting the Internet of Things connectivity that’s crucial to gathering and analyzing real-time data to manage assets, monitor the movement of goods and resources, and make process improvements, not only within an enterprise’s own operations but along its supply chain, too.
Credit: SAP
Airports, seaports and similar hubs represent a strong use case for private 5G networks, because they tend to be sprawling indoor-outdoor environments where WiFi can be less reliable and a fiber-optic network can be expensive to implement and maintain, and because they include multiple tenants who could benefit from 5G. With their expertise in managing the complexities of a network and edge platforms, telecom companies are in an excellent position to deliver value to enterprises in this kind of use case.
The same goes for supply chain use cases for 5G. Telecom companies could manage the complex connectivity and communications requirements involved in tracking and tracing goods as they move from a port to a warehouse, factory, and distribution center, crossing public and private networks along the way.
A U.K government 5G program highlights the myriad potential private network use cases that could support enterprises in a wide range of verticals, where 5G can be bundled on a single platform with other services. Funds from the program will be used to roll out 5G for port operations, high-capacity uplinks for on-location filming, wireless connectivity along transport routes, advanced manufacturing technology, smart energy grids, sustainable farming and more.
Thanks to their 5G investments and to factors like the GSMA Open Gateway initiative, telecom companies also are well positioned to assume a key role on PUBLIC NETWORKS as application service providers.
Those opportunities mostly center around the APIs being developed through the initiative to enable developers to gain universal access to 5G networks. They include a “Quality on Demand” API where developers request stable latency and high throughput for their applications. Telecom companies also are looking at monetizing 5G networks through such services as “Carrier Billing - Check Out,” “Device Location” and “SIM Swap.” Telecom companies can offer these APIs not only to direct customers but also to aggregators.
Public or private, 5G-focused use cases like these raise unique and very real monetization challenges that will require telecom companies to be on-point with their revenue-sharing, data-mediation and enterprise billing capabilities to help ensure these types of 5G services are sustainably profitable.
They’ll need sophisticated, transparent enterprise billing capabilities so they can bill for subscription-based business solutions and business outcomes that bundle hardware, software, support, and services, including those from third parties. These bundled, API-based services can really complicate pricing, usage-tracking, billing, settlement, reconciliation, receivables processing and other key financial and accounting functions involving partners, vendors and customers. They also will need tools to manage partner revenue sharing and settlement in complex 5G ecosystems where a telecom company could be collaborating with platform partners, content providers, app developers, device suppliers, advertisers and public entities. Partner settlements will need to accommodate commissioning and back-to-back service delivery as well. The ability to fully converge invoices for customers will also be an important differentiator. And behind all these capabilities, companies also will need to be strong with their data mediation, with the ability to process massive volumes of data from various sources - disparate network slices, the edge, transport, central data centers, and applications and APIs from partners - in real time, so they can analyze 5G operations and transactional data to make more intelligent decisions.
These are the kinds of strong, configurable and integrated billing and settlement capabilities that telecom companies are going to need if they are to evolve into solution orchestrators and get their fair share of a $100 billion opportunity in the 5G economy.
