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Pricing, service and partner innovation in 5G

  • 3 minute read
  • Published by Anna Kurmanbaeva on 25 Mar 2021
  • Last modified 6 Apr 2021
5G and cloud computing offer communications service providers (CSPs) an opportunity to rethink services, pricing strategies and approaches to partnering. In doing so they can revolutionize telecommunications in the same way that public cloud providers have revolutionized computing.

Because of promising features such as ultra-low latency, high availability and vastly improved coverage, 5G is changing the way mobile operators think about their networks and the services they can offer businesses and consumers.

Communications service providers (CSPs) need flexibility across their businesses as well. Most mobile operators are experimenting with 5G use cases in multiple verticals, but developing services and capabilities that can be monetized is a different matter altogether.

One of the first steps CSPs must take is deciding whether to price 5G differently from 4G, meaning at a premium. Research firm Omdia has been tracking the 5G pricing strategies of 73 mobile operators. As of Q2 2020, most of them were sticking to LTE pricing models.

Make it simple

Most CSPs have been transitioning to simpler pricing plans. By reducing the number of plans and moving to all-inclusive pricing, mobile operators are transitioning to softwareas-a-service (SaaS) pricing models used by brands such as Netflix and Spotify. While this provides a simpler,
more predictable monthly bills for consumers, it also risks “capping” the amount customers spend monthly.

New partners & bundles

According to Omdia, as of Q2 2020, 17 operators were bundling rich, 5G-optimized services into their package tiers. The focus this time is on services that require a fast connection such as enhanced audio and video, cloud gaming, augmented reality (AR) shopping and virtual reality (VR).

Experiment first, strategize later

Many operators believe that experimenting with potential customers and co-creating services is necessary to figure out which services enterprises need, whether they can deliver the services and whether the services will be profitable.

This process of experimentation is inevitably resulting in operators identifying many potential approaches that they will need to consider before settling on a way forward. They must evaluate:

  • Their skills & capabilities
  • Which vertical sectors to target
  • Which services customers want
  • Which services to offer
  • Potential partners
  • Which commercial models customers prefer

Testing the waters with MPNs

Mobile private networks (MPNs) are gaining popularity. Most use LTE technology, but some enterprises are beginning to experiment with 5G because of promised features such as ultra-low latency and high availability.

For mobile operators intent on expanding into the B2B market, MPNs represent both a risk and an opportunity. The risk is that many enterprises will secure their own spectrum and work directly with systems integrators and network equipment suppliers to build their own access and core networks. The opportunity lies in understanding what enterprises want from MPNs
and being able to craft service options for them.

This is an excerpt from the recent TM Forum report Pricing, service and partner innovation in 5GDownload it now for the full insight.

Download report