Reports of attractive 5G revenue forecasts, impressive trial results and eye-catching use cases are appearing everywhere, but clear business plans and defined routes to revenue are noticeable primarily by their absence. That’s because there are so many options, dependencies and uncertainties. At the very heart of that uncertainty is how exactly 5G can be monetized. What’s the business case?
At the Huawei Global Mobile Broadband Forum in November 2017, outgoing BT CEO Gavin Patterson suggested that the 5G business case still needs to be built, and while Deutsche Telekom’s CTO Bruno Jacobfeuerborn agreed, he was positive it would emerge.
“The only certainty is that one use alone case won’t define 5G, and neither will a single monetization model. However, new monetization models are not something that mobile operators have succeeded with in the past," said Jacobfeuerborn.
Operators have been effective in turning connectivity and traffic volumes (minutes, messages and megabytes) into revenue, but attempts to monetize other capabilities and services have resulted in expensive failures, such as experiments into app stores. This means the 5G business is surrounded by as much trepidation as excitement.
The two most advanced 5G use cases – enhanced mobile broadband (eMBB) and fixed wireless access (FWA) – are not only the most technically advanced, they are also the use cases with the most certain routes to monetization.
eMBB is promising
eMBB is a continuation of the 3G and 4G mobile broadband evolution. It is widely expected to be sold in the same way as its predecessors. As with 4G, 5G eMBB will provide the opportunity for CSPs to win market share from competitors. However, there is serious doubt about whether CSPs will be able to charge a premium for 5G, and even if it is possible, it will be a short-term policy.
A more significant revenue uptick is expected to come from the greater usage that 5G’s increased performance will encourage. As such, eMBB in its most basic form does not require major changes in revenue assurance and billing systems.
Low-hanging FWA fruit
5G FWA monetization is following a similar path in the fixed environment. CSPs can reach the low-hanging fruit by targeting underserved home broadband subscribers with fiber-like performance because 5G can reach remote locations that fiber can’t, either physically or economically. However, this can require the integration of fixed and mobile business support systems (BSS) which is challenging, especially if the CSP doesn’t have a strong fixed business to leverage.
Qatar-based Ooredoo faced this issue when it launched a home access fiber service. Renowned as a mobile operator, Ooredoo created an FWA service using virtual CPE. However, take-up was slow. The company knew it had a plethora of 4G customers with high home usage who could benefit from the service, but it didn’t have the ability to access network data and match it against the customer experience to identify and target them. Fixing this type of issue and ensuring that it doesn’t become an onerous manual process full of delays will be an integral part of maximizing the 5G FWA opportunity.
5G FWA is a revenue growth opportunity that CSPs cannot ignore, and in the US mobile operators are pushing towards commercial launches in Q4 2018. Verizon Chairman and CEO Lowell McAdam explained his company’s strategy like this: “Our strategy is to get digital content out there over the fastest pipe we can at the lowest cost and that’s why 5G makes so much sense.”
Yet fully monetizing the FWA opportunity will take more than deploying the technology and pricing to compete with fixed alternatives. As the recent TM Forum Catalyst project CEM/OSS for hybrid networks predictive analytics & dynamic offer migration showed, for a mobile operator to maximize a fixed opportunity, it’s necessary not only to integrate the fixed and mobile BSS but also to integrate BSS and operational support systems (OSS). Only then can new offers be dynamically created and offered to the customer.