CSPs Hold The Key To Unlocking 5G’s True Potential

CSPs hold the key to unlocking 5G’s true potential

10 September 2019 | Kamal Bhadada

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Kamal Bhadada

Blog Author | president of communications, media and information services (CMI) at Tata Consultancy Services

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The race for 5G is heating up with communications service providers (CSPs) bringing 5G services online in different countries seemingly every week.

The promise of 5G to drive a technology revolution for consumers and businesses is much touted: faster speeds will lead to new and improved communications services, as well as more innovative applications such as internet of things (IoT) technology for smart cities.

However, the benefits for CSPs are much less frequently explored. According to some reports, the global 5G market is expected to reach $277 billion by 2025, but there’s a risk that unless CSPs innovate effectively, they will get stuck at the ‘commodity end’ of the ROI spectrum.

There’s actually huge potential for CSPs to disrupt diverse industries through technological innovation. 5G provides the flexibility to control and steer data traffic based on end-user applications, opening up new product niches and changes to generate ROI. The building blocks of future innovations – speed and security – are already embedded in 5G, and will be relevant for many different sectors of the economy, from financial services to logistics, manufacturing or IT.

How CSPs can start making a difference

Innovation is happening everywhere. Manufacturing giants like GE and Siemens are leading the way in enterprise IoT: GE launched a new IoT business worth $1.2 billion at the end of last year, while Siemens has developed a new operating system specifically for IoT products and services. In consumer technology, Facebook is reported to be working on building video streaming into its Portal device, and Google is bringing augmented reality into its search results. 5G is a critical technology underpinning all these exciting new trends.

It stands to reason then, that in an age where every device in our lives relies on 5G connectivity to function effectively, there will be a huge opportunity for CSPs to transform their roles, from merely providers of connectivity into guardians of customer experience, providing the security, privacy and trust that consumers are looking for.
A key first step for CSPs is to reassess their monetisation models. Currently, the majority focus purely on speed, but with 5G there are new ways of doing business.

Content owners, streaming companies and consumer device manufacturers will all be heavily reliant on the connectivity CSPs provide, putting CSPs in a unique position at the crossroads of the interests of all these businesses. There is an abundance of opportunities on offer for CSPs willing to take risks with business model innovation. These opportunities can be summarised in two different models CSPs can look at, both of which enable them to take advantage of this new reality in different ways.

Monetising the network

The first model looks at additional ways CSPs can monetise the connectivity services they provide. As connectivity becomes more central to the lives of consumers and the success of businesses, it makes a lot of sense to look at more sophisticated payment models based around plans guaranteeing specific quality of service, reliability or latency.

CSPs could also look at creating new tiers of services based on specific B2B or B2C use cases. For example, ensuring broadband connectivity in particularly challenging areas or extra guarantees on reliability or speed where it is business-critical.

In the past, communications technology centered around voice and data, whereas today CSPs need to respond to consumer and business demand for pure data in ever-increasing volumes. Against this backdrop, reviewing business models and payment tiers is sorely needed.

Unlock the value of ecosystems

It’s easy to get hung up on consumer devices and broadband connections when thinking about 5G, but there are broader effects as well. For example, 5G will have a huge effect on the manufacturing industry, as enhanced connectivity allows IoT technology to become more integrated into the production process. The media and entertainment industry, increasingly dominated by internet streaming services, is another industry that will be profoundly affected by the rise of 5G.

Beyond providing connectivity, CSPs have the potential to unlock real value, building on their role by playing the role of central hub in a wider ecosystem. Currently consumers and businesses are frozen out of getting the best deals and services through the fatigue of having to liaise with individual suppliers. By shifting their gaze outwards and harnessing the power of partnerships, CSPs can start to aggregate services from different industries and unlock the value of these potential ecosystems. This provides a clear benefit to end-users, who are provided with a single point of interaction for multiple services, rather than having to simultaneously juggle several different relationships.

By pivoting their role towards that of ‘ecosystem convener’, CSPs will also be able to ‘bring the outside in’, partnering with businesses working with leading technologies such as blockchain, cybersecurity and big data to offer improved services to customers. 5G will be the currency CSPs use to negotiate and nurture these partnerships.
According to recent research from TCS, the telecommunications sector is more prepared to adopt innovative behaviors than other sectors: 44% of CSPs surveyed said that they operate a business model that drives exponential value, compared to a 36% average for other sectors. This is encouraging, but there is so much more that CSPs can be doing to innovate their business models and prepare for the changes ahead.

Using the wider ecosystem to drive mass personalisation will be the key to CSPs putting themselves at the center of the new digital customer experience. This is no small feat: it requires strong leadership to balance investments in the core traditional business with more new technologies that enable these different business models. The companies that achieve this fine balance will be well positioned to enjoy exponential growth in both customer satisfaction and, as a result, their bottom line.