If most 5G-Advanced capabilities are aimed at the enterprise, can telcos still discover new consumer revenue? Do they need to?
Here’s the problem for operators (it’s nothing new): The smartphone market is saturated — they can’t sell more monthly subscriptions, and they can’t, in many cases, reasonably charge their current subscribers more. So, how do they make more money? Will 5G-Advanced (5G-A) help? Will 6G?
“Mobile operators need to create premium services for customers that will pay premium prices, or their revenue will stagnate,” argued Mobile Experts Founder and President Joe Madden. “The industry needs to use 5G-Advanced and 6G to focus on enterprise use cases, guaranteeing QoS [Quality of Service] for customers that will pay much higher prices for every gigabit of data.”
Enterprise does seem to be the key to monetization, mostly because the 5G-A capabilities getting the most attention from telcos all have a big enterprise play. RedCap, for instance, does have a consumer broadband angle as it will make Fixed Wireless Access (FWA) more accessible by lowering the cost of customer equipment, but ultimately, it’s a large-scale IoT technology, which means that at the end of the day, it’s best suited for the enterprise. Integrated sensing and communications (ISAC), too, has more potential in business-to-business (B2B).
“A lot of what you see in terms of the use cases aligns with B2B monetization,” said the Head of GSMA Intelligence Peter Jarich, adding that telcos are fully aware of this. When asked by the GSMA what their 5G-A focus is, he shared, they say things like increased IoT support and Ultra Reliable-Low Latency Communication (URLLC). “So, the stories align, which is always a good place to start,” he said.
He continued: “The question now is can they execute on that? 5G-Advanced is delivering more capabilities to do what they wanted to do in the first place — which you could look at in a negative way and say well does that mean regular, old 5G was never going to give them the capabilities to deliver what they said they were going to? I’m not saying that.” (But someone could.) “I think the message is: 5G-Advanced is going to give them more capabilities to execute on what they know has always been the opportunity they have been trying to get to with 5G,” he stated.
From Madden’s perspective, the idea of 5G-A or 6G delivering faster speeds for consumers isn’t even worth discussing. “We need to develop technology that has a true market need. We don’t need 5G-A or 6G to give us higher speed. We do need it to focus on extremely high reliability for robotics and other automation. We need integration of private cellular networks with operational enterprise use cases,” he said. “The entire market needs to pivot away from radio features and start looking more closely at the integration of software with other systems to make wireless useful to the enterprise.” Easier said than done, of course, because the enterprise is a new play for telcos — at least at the scale the market demands.
Monetization beyond FWA
Consumers account for 70-75% of most operators’ revenues, according to the GSMA. This means two things: 1) Their largest business segment is relatively stagnant; and 2) Even as they continue their enterprise push, telcos must continue to serve the consumer market because again, it’s the largest piece of the pie. With 5G-A, they largely intend to do this with enhanced Fixed Wireless Access (FWA), which has emerged as the most reliable way to monetize 5G. The GSMA, though, highlighted the following additional strategies being used by operators to drive monetization:
Speed-based pricing — While faster speeds is not as much of a focus as some of 5G-A’s other capabilities, it is expected to enable higher uplink and downlink data rates. Therefore, it creates an opportunity for operators to offer speed-based tariffs to better address specific customer needs. “A further potential benefit from speed-based tariffs is improved management of data traffic. Speed-based tariffs can help smooth the peaks in network traffic — for example, by reducing live or peak-time streaming bitrates,” wrote the GSMA. “At the same time, speed-based tariffs provide opportunities to better moneti[z]e the higher throughputs available with 5G-Advanced networks, offering better alignment of data traffic with ARPU growth for mobile operators.”
Network APIs — By exposing the 5G-A capabilities to developers, telcos can further monetize higher speeds or better network performance. “In particular, quality-on-demand APIs enable application developers to modify the network configuration of users of the application to provide specific download or other network quality features,” said the GSMA, adding that key use cases include gaming and streaming. “A consumer’s willingness to pay extra for a better user experience would result in the application tapping into the network for a higher QoS, which in turn would be billed back, with a resultant revenue uplift.”
Bundling and zero-rating — While nothing new, bundling mobile connectivity with other services will continue to be a potential path to monetization in the 5G-A era.
Customer segmentation — The GSMA says 5G-Advanced will enable operators to develop more advanced segmentation strategies, including speed boosts for certain application segments like gaming or streaming, as well as the ability to offer time-limited data bundles for specific locations or points in time such as a live performance or sports event.
