Across the region, operators are grappling with declining ARPU and the consumerization of data. Faced with a slow or stagnant growth, 5G is an opportunity for mobile network operators in Asia Pacific seeking new revenue streams, particularly in the more lucrative and profitable enterprise segment.
How to monetize 5G is a challenge all mobile operators across Asia Pacific are grappling to solve quickly, before others beat them to it.
It does not help that mobile network operators have been plagued by legacy practices that encourage a short term and narrow focus, unrealistic projections, a silo approach to partnerships and solutions and suboptimal technology strategy planning. Compounding matters, 5G is coming at a time when customer experience is becoming a key performance metric and a top challenge.
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In a way, 5G might be just what mobile network operators need to address customer experience woes. Choosing to embark on the journey towards 5G will bring about new ways of thinking and working to develop end-to-end, customer-centric services. The prize is the ability to regain competitiveness against fiber players and to get back on a growth trajectory.
Meeting customer needs
There are three things to note if you are seeking to crack the monetization puzzle:
First, if you don’t really understand customer needs, monetization in the 5G era is only going to get harder. There is a lot of data out there that is only now starting to get processed.
Bit by bit, we are starting to really understand customers. Instead of building solutions so that they will come to you, you need to go to them. The mobile business is no longer just about enabling communications between people. It is now about enabling industry growth through solutions built through partnerships to meet the needs of the customer.
Second, if you can’t do scale, you can’t do 5G. 5G requires leveraging scale. Unless you are after the wholesale market for 5G, unique niches and leveraging government support to drive initial volumes might be the way to fund initial investments in 5G.
Existing partnerships can be leveraged holistically to expedite innovations to market. Operators will need to revisit long standing partner relationships as well as business models, and co-create more than ever before. Capitalize on the edge that 5G will provide. Monetize and grow your customer base through new 5G services such as AI processing, and help verticals to digitalize faster to meet their needs and solve pain points such as revenue leakage.
Third, the enterprise segment will become important for 5G monetization. Not having a strong enterprise segment service offering is never a good idea. You will need to reformulate your enterprise segment strategy, taking into account that the current technology ecosystem is not geared for the next generation of enterprise service offerings. You will need to foster an open dialogue to create a platform to support all current ecosystem players including OEMs, vendors and managed service providers, and future ecosystem players. Digital services, software defined virtualized infrastructure and security will become the three key pillars for 5G. You must evolve your technology strategy roadmap around these pillars.
Collaboration key to 5G monetization
Overall, 5G will play a key role in modernizing and transforming digital businesses in a digital environment. Understanding local demands and needs as well as industry collaboration are key to 5G monetization. Trials by mobile operators together with equipment suppliers are addressing this and increasingly helping with business model formulation.
Successful end-to-end solutions require synergistic partnerships and co-creation. For this to happen, the necessary partnerships must be forged and workable business models and end-to-end solutions need to crystalize. As with other disruptions, regulations must also catch up with new 5G use cases. Regulators must understand and be open to new rules for the intelligent digital age.
For mobile operators to tap on the opportunities, much planning will be needed. Will you take up the challenge?
Quah Mei Lee is an industry principal analyst at Frost & Sullivan
This article first appeared in Telecom Asia 5G Insights November 2018