Many hands make light work. It is an old saying that takes on significant new meaning for mobile operators looking for new markets to recoup their multi-billion-dollar investments in infrastructure and 5G spectrum.
That will not be easy. In its first two years of commercial availability, 5G added subscribers at a rate that 4G LTE took five years to achieve, according to Omdia. By the end of 2022, 5G will have 1.2 billion subscribers and nearly 5 billion in 2026, Omdia estimates. That strong growth means a rapidly dwindling pool of consumers to upsell from 3G and 4G.
Although the consumer market will always be a major source of revenue, operators must quickly identify additional sources to pay off their 5G investments and start making a return. Enterprises are an obvious place to look because they have been a major, lucrative segment since the 2G days — a past that is prologue, to use another old saying.
The catch is that, as with the consumer market, mobile operators cannot simply focus on convincing businesses to replace their legacy devices and plans with new ones. One reason is that 5G plans are priced roughly the same as 4G, so the ARPU does not proportionally increase. Instead, they must mine the attributes of an enterprise offering to new segments and deeper depths. To be successful, that strategy requires a broad partner ecosystem.
Partners open new doors
A considerable portion of the 5G enterprise opportunity lies in IoT applications supporting use cases such as fleet telematics, Industry 4.0 manufacturing, smart cities and telehealth, to name just a few. Many operators already serve those applications with 4G, but they have only scratched the surface in terms of value they can enable.
One reason is that 5G enables them to support demanding IoT use cases that were difficult or impossible with LTE. This is because the 3GPP 5G standards include three feature sets specifically designed to enhance many of IoT’s unique requirements:
- Enhanced Mobile Broadband (eMBB) supports bandwidth-intensive applications such as 4K video for telehealth, security/surveillance cameras and product inspection for quality control in smart manufacturing.
- Massive Machine-Type Communications (mMTC) enables 5G networks to support up to 1 million devices per square kilometer, such as for sensors around a logistics/warehouse park, railyard or smart city.
- Ultra-Reliable Low-Latency Communications (URLLC) supports latencies as low as 1 millisecond, which is ideal for autonomous vehicle communications, Industry 4.0 time-sensitive networking (TSN) and other delay-sensitive applications.
But to maximize the potential of these new capabilities, operators must break from their tradition of simply selling connectivity. Instead, they must find ways to add value, so they can unleash more revenue from each enterprise segment and customer. This change is critical for success in IoT because that market, as mentioned, is notoriously price sensitive, which means operating on a basis of lower ARPU and slimmer margins.
To maximize IoT revenue and margins, operators should partner with companies that already have customer relationships in specific enterprise verticals, where they understand the unique requirements and are recognized as domain experts in their field. Other potential partners include startups disrupting those verticals with solutions so innovative that end users sit up and take notice. These partners include systems integrators specializing in certain types of applications, such as security/surveillance camera networks or specific markets, such as health care. Another type is vendors that specialize in hardware, software and services for specific verticals, such as fleet management, mining and oil/gas refining.
Why? Although potential customers likely will recognize the brand name of a Tier 1 mobile operator, that alone will not elevate it to their short list. Instead, enterprises will want to see that the proffered 5G solution can meet their unique business requirements. Mobile operators do not have that level of expertise in house, so they must partner with specialists that do. Those partners open doors and get meetings with new audiences and enterprise CIOs, CTOs and other decision-makers.
Research shows that operators recognize the importance of having a strong partner ecosystem. This 2021 Telecoms Intelligence survey demonstrates this fact:
A cloud-native BSS is key to success
A great 5G network is not enough to attract ecosystem partners. Mobile operators also must make it easy and cost-effective for partners to use that network. They must digitize and simplify the engagement process.
An ideal place to start is with their BSS. Most operators have a BSS that is rigid and complex because it was cobbled together over the decades using components from multiple vendors. That legacy hodge-podge makes it difficult, time-consuming and expensive for partners to onboard, create bundled offerings and manage their services without the need of the operators’ support — an unscalable situation. It also can undermine the value of their 5G capabilities.
A prime example is mMTC. To take full advantage of the network’s ability to support up to 1 million devices per square kilometer, system integrator partners must be able to activate and provision IoT sensors, controllers and other devices in batches of hundreds or thousands. Those processes must be highly automated to the point of zero touch because the IoT market is a scale game and notoriously price sensitive.
These kinds of capabilities do not necessarily require a forklift upgrade of the BSS. Instead, mobile operators could use a cloud-native overlay that adds automation and other capabilities to their existing BSS. A proper design extends the life of their existing BSS if they have business reasons to continue using it.
5G is a tremendous revenue opportunity for mobile operators. But to capitalize on that opportunity, they need to take a fresh look at their ROI, digitize and simplify their engagement processes and embrace an ecosystem-based approach to succeed in the enterprise IoT market. A cloud-native BSS lays the foundation for that success.
