Every 10 years or so, the telecommunications industry ushers in a new era of mobile technology. 2G, 3g and 4g LTE, all shepherded in, increased speeds and more robust connectivity. Today, this industry stands witness to yet another innovation – 5G. But with plateauing of traditional revenue streams and heavy investment costs to offset, how can telcos position themselves to play a more central role in the economic ecosystem, instead of just being the bystanders of yet another age of better mobile offering?
As the newer slew of smartphones hit the markets, touting revolutionary 5g connectivity capabilities, telcos have had to speed up their delivery of this promised innovation. 5G, a massive evolution over LTE, is designed with a trifecta of capabilities – Extremely high-speed broadband, low latency and fully automated machine type communications.
For the layman, these capabilities merely mean faster video streaming, but when combined with IoT these abilities assume enormous significance. From futuristic remote-controlled robotics in healthcare to near real-time video analysis, 5G will unleash the full potential of the IoT value chain, in-turn providing telcos with the ability to exploit new market opportunities for their monetization.
As per GSMA, the number of global IoT connections will rise to 25 billion by 2025, while global IoT revenue will touch $1.1 trillion, with connectivity revenue only accounting for 5% of the total IoT revenue opportunity. Telcos until now have matured into a robust, reliable provider of connectivity services on-the-go, but to keep up in the future, this industry needs to take a leap forward. It needs to go “beyond just connectivity”.
At the Crossroads
To make this happen, telcos must escape the commoditization trap, seizing a more substantial role as a service creator and provider for IoT-enabled industries. As IoT devices proliferate across businesses, cities, and environments of all types, connectivity service providers (CSP) will be hosts to vast new arrays of sensors and endpoints, becoming conduits for vast swathes of data that operators will be able to collect and process. In today’s world, data is an asset, one that telcos have not capitalised on for years. From usage to location information, from wearable sensors to health information, these interconnected devices can create efficiencies, improve product designs, create new business models, and even enhance customer experiences.
From the Sidelines to Data Enablement
The potential associated with connectivity is big and promising, with a prodigious hurdle at its heart. Most companies are not equipped to handle the magnitude of data generated by IoT devices. Developing their existing infrastructure to account for high-scale data ingestion, storage, and analytics, will provide the steppingstone towards the connected end-state. Cleaning and indexing the scores of disparate datasets being generated every second through myriad endpoints for actionable insights needs to become a parallel focus to connectivity.
Do note, adopting this does not require any additional technological breakthroughs – most of this can be achieved with technology that is being perfected now. Leading-edge cloud computing and machine learning combined with 5G has the power to provide telcos with the edge to gain critical insights from these massive datasets at speeds which were previously inconceivable. Building this agility will help telcos, unlock greater value across the IoT value chain and help it make the shift from a sole connectivity provider to the powerhouse of data enabler.
Keeping this aspect for B2B aside, telcos still hold strong their ‘Trusted Service Provider’ position with the end consumer. But this digitally savvy and hyper-informed consumer too is looking to bring the added benefit of 5g to its very own domestic IoT without substantial incremental cost, creating a business case for a newer, more encompassing pricing strategy.
Overcoming the Pricing Disadvantage
A PWC research, published in 2018, shows that just one-third of Internet users would pay more for 5G technology — 33 percent would do so for 5G in the home, while 31 percent would do so on mobile. Notably, the excitement in the adoption of 5G certainly lags as compared to its 4G counterpart, given the benefits. But if the aim is to progress to provide communications and content through broadband networks, a consumer and provider mindset change is in order. Archaic pricing models, which resorted to one size fits all methodology, needs to shift to a capabilities-based pricing model.
For many customers, in the current environment, seamless connectivity equates to higher bandwidths in terms of capacity and speed than they need, hoping in most circumstances, this will enable a reasonable service level. Herein lies an opportunity for CSP’s. By encouraging users to adopt a singular access network like broadband for all their home connectivity and mobile use, they can bring about a simplified pricing model that is specifically enabled by 5g’s unprecedented capabilities.
Prioritizing A Value Creation Structure
But bringing all this to fruition needs an agile mindset that keeps up with the pace of the fast-developing industry. For CSP’s this means navigating this massive task through a framework that foremost focuses on its core competency – connectivity.
Connectivity is the foundation for increasingly intelligent mobility systems. Expanding on its existing capabilities, CSP’s need to serve a broader but targeted solution for both B2B and B2C’s. With 5G, telcos for the first time have the unique capability to slice the telecom network into an end-to-end digital infrastructure with features precisely tuned to the demands of a specific industry. This creates an opportunity for a pricing model that can be tailored by the size of the network slice they require instead of the traditional speed/data-based pricing that allows a significant proportion of network bandwidth to be allotted and yet not be used.
As they progress, telcos having mastered wider adoptability have the option to expand their ecosystem horizontally through partnerships that open lucrative opportunities. By expanding beyond their capacity provider role, CSP’s can engage in industry experience that can complement and fill capability gaps. Say in healthcare, which is perennially beseeched by lack of medical/ paramedical professionals, relevant diagnostic equipment, and timely delivery of care. Partnerships that provide real-time diagnostic, consulting, and surgery in cohort with CSP’s providing guaranteed service level agreements regardless of location can significantly expand industry verticals and provide additional monetization opportunities.
As they secure their position, they become the orchestrator, building cross-sectoral uses. A matchmaker for B2B players; integrating their offering with third-party bundles. By combining multiple offerings, they create and provide complex value at entirely additional levels. For CSP’s this will mean a digital marketplace, that will serve a fusion of vertical market needs, technology, and process applications.
All this redefines interoperability standards. But achieving the full potential of connectivity requires improvements in data-security. Data privacy, protection of intellectual property and data ownership might be the purview of policymakers, but collaboration amongst various stakeholders is certainly needed to enable the connected world vision.
Keeping challenges aside, the opportunities abound for CSP’s and companies seeking to capture the full potential of IoT and 5G, by becoming closely aligned partners. By extrapolating what we have today in our communications while opening a path to tomorrow that is based on strategic value drive proposition, CSP’s can move beyond connectivity to a create an IoT that is smart at every level.