5G monetization hinges on CSP, enterprise and ecosystem readiness
So far, consumer-facing efforts at 5G monetization have been largely limited to providing home internet service with fixed wireless access (FWA). We have yet to see things like bespoke service tiers for cloud-based mobile gaming or a take-off in 5G-connected PCs deliver meaningful new service revenues.
On the enterprise front, the North Star of digital transformation of verticals promises to help operators monetize the billions spent on deploying 5G via private networks, a tsunami of internet of things connections, and selling customized network slices against service level agreements. That promise, however, has yet to turn into a reality at scale, and the reality for operators today is that 5G monetization is an imperative as ARPU and ARPA are in a period of stagnation, 5G has yet to live up to the world-changing hype, and we’re already starting to talk about 6G.
So why are we here, and how do we get out of the trough of disillusionment? “To put it at a very high level, I think it’s about the industry’s readiness,” Oracle Senior Director of Product Marketing and Strategy Anil Rao said. That includes the telecom sector’s readiness to deliver 5G, as well as enterprise readiness to consume 5G, and the broader ecosystem’s ability to support comprehensive solutions.
“Consumers are not going to move the needle for 5G,” Rao said. “It’s got to be the enterprises. That creates sort of a big dependence on are the enterprises ready to adopt 5G?” Then there’s the question of ecosystem readiness, devices for instance; if one your goals as an operator is 5G monetization as a function of selling private networks to manufacturers, then you need device OEMs to build ruggedized devices that deliver the features and functionality manufacturers need.
“Real 5G” and the move to 5G Standalone
In terms of operator readiness, Rao further specified both technical readiness and business case readiness. On the technical side, “Most of the 5G we have in the world is not real 5G…There’s a reason why we need 5G Standalone in that all the new capabilities that you talk about—network slicing in its true form, or even the IoT, like massive machine-type communications, or even ultra low latency use cases—all of those are going to be really well and truly supported by 5G Standalone. And 5G Standalone is still not widespread.”
What does this delay in 5G Standalone mean? Well, it gives more time for the buy and sell side of the equation to get ready to buy and sell 5G, respectively. Rao noted that private 5G is positioned to help operators with 5G monetization efforts. “There’s definitely more appetite in the industry, in the enterprise sector, to embrace private 5G as opposed to the macro 5G. It’s all fully self-contained. You treat it as any other enterprise IT capability…Private 5G will probably get a head start in all of this…If there is an early opportunity that will bring new revenue to CSPs, I think it’s private 5G.”
Further on private 5G, one plus is it can be sold and consumed as a service–“Telcos can take the as-a-service model to enterprises, and telcos are actually pretty good at as-a-service models,” Rao said. “It makes it easy for [enterprises] to transition to whatever the next big thing is.” He added that private 5G implementations, some of which use on-prem or near-perm dedicated 5G Standalone core infrastructure, can be further subdivided into slices. While public macro networks aren’t quite ready for slicing at any kind of scale, private networks may be. This could help operators further evolve the private 5G business model to include revenue from slices.
When you look at when the 5G hype cycle kicked in, where the industry is today, the more-gradual-than-expected transition to Standalone, and how early looks at 6G rough drafts suggest a relatively niche appeal, has the historical 10-year cellular generational upgrade cycle been broken? Maybe.
Per Rao: “I think the real 5G hasn’t even started.” Rather than the typical decade, this cycle could last “even more than 15 years,” he said. “The positive effects of real 5G are going to be felt longer than 15 years…I think 5G is going to be a much longer cycle because 5G is so tied to the cloud as well. Cloud for telcos is also actively evolving. I think cloud plus 5G is going to be a story for awhile to come.”
Returning to the core considerations impacting 5G monetization efforts and operator ROI, Rao sees the move to 5G Standalone as “open[ing] up a whole raft of use cases and, for that, enterprise readiness is going to be critical. Probably that’s a silver lining in all of this delay.” That move to Standalone encompasses CSP and enterprise readiness, so that leaves the ecosystem angle.
Rao said operators and enterprises have ongoing relationships that can be tweaked to help both sides fully leverage 5G. Then, “You build an ecosystem of partners and you offer the ultimate service.” This is where Oracle slots in; “sort of a matchmaking between CSPs and enterprises,” he explained. In fact, Oracle has opened Industry Innovation Labs to provide fora for all parties to achieve readiness.
“The idea is…we still have to figure out a lot of things. We are doing this. That’s the main spirit of these labs. We bring together friendly CSP customers on one side and potentially our own enterprise customers…As Oracle, and with these labs, we are uniquely positioned to bring telco customers and enterprise customers into this controlled environment and help enable these use cases.”
