How IoT and Big Video Make the Case for 5G Investments
Harness the Cost Savings of 5G
Although 5G networks still remain some years away from commercial deployment, pilot projects and extensive testing are well underway and it is clear that the technology will be deployed globally within a decade. Naturally, this will be an enormous task and cost billions but it will also be a different type of network technology rollout than those that have come before it. It will certainly be unlike the rollout of 3G wireless networks, which were deployed in the hope that demand would eventually emerge, yet, the 5G opportunities that exist are so extensive it becomes challenging for service providers to define a crystal clear business case.
However, 5G inescapably requires the telecoms industry to gear up for another round of intense investment in network equipment and spectrum as there are numerous business opportunities for service providers to exploit.
These fall into two broad categories:
- The apps and services delivered by service providers to consumers
- The capabilities service providers deliver to other enterprises to enable services to be delivered to their own consumers
Both can be monetized effectively if the expected efficiencies of 5G are achieved.
Beyond Consumer Capacity
The more familiar model for service providers is in providing additional network-enabled capabilities to consumers. In the case of 5G, this will result in service providers being able to support demand for greater bandwidth for big video services, such as 360-degree video, and immersive experiences such as gaming, augmented reality and virtual reality.
These aren’t just cases in which service providers can sell more bandwidth and generate more revenue based only on selling simple network access. The access itself is commoditized so service providers will rely on 5G to bring down the cost of bandwidth provision while simultaneously opening up new monetization opportunities if they can prove that they are delivering additional value.
5G then has the potential to enable service providers to monetize higher quality service provision such as low latency capacity as a premium subscription for services such as multiplayer gaming. For users to willingly pay a premium for such services, service providers will need to provide service level agreements (SLAs) that ensure customers receive the quality of service they pay for. For service providers offering such SLAs, it will be important that the service level offered is assured if they are to avoid having to pay compensation for not meeting the quality of service (QoS) mandated in the SLA.
Similarly, they may be able to sell enhanced network access, like for sharing video from a busy event, by levying a one-time charge. Again, this will require service assurance to make sure that the video service quality offered is what the user receives.
Into the Enterprise
The second category of serving other enterprises represents a newer territory for service providers in which service providers can be the enablers of other organizations’ digital transformations by utilizing 5G to support the latency, reliability, coverage, capacity and security requirements of the applications and services of other industries.
In the Internet of Things (IoT), 5G will be a critical enabler of service in market segments such as smart grids, smart driving, smart manufacturing and mHealth. The value chain in these markets isn’t set and service providers can have a central role in enabling the offerings of many different players by enabling real-time services such as power generation monitoring and management for energy companies or assisted driving applications for car makers or road operators. Service assurance will be the critical technology that underpins service providers' abilities to charge premiums for the additional functionality. For life-threatening services, such as heart monitoring in mHealth, the stakes are raised and enterprises will want to be able to prove the extent to which they have gone to ensure services are of high quality and uninterrupted. Service providers' capabilities to assure such services will be more deeply analysed as enterprises seek to prove their regulatory compliance and risk minimization in the event of an incident.
However, getting to that point from here is highly complex and involves many discrete challenges that will require substantial service provider investment, including learning of new skills and adoption of new processes. 5G will be the first network technology to be deployed in the virtualized era so service providers will need to master management of virtualized infrastructure and self-organizing networks. In addition, new technological approaches such as network slicing will need to be learned and deployed in order to enable maximized capacity utilization and for 5G cost efficiencies to be harnessed.
The dynamic nature of demand coupled with the wide variance in requirements of different types of applications, services and enterprises will mean that service providers will need to devote resources to understanding the needs of other industries in order to serve them effectively. Service providers will need to focus on their network and business analytics to understand the impact of specific services on the network, to learn the demand profile and behavior of users and to report accurately to customers that pay them a premium.
By becoming the guide and enabler of other enterprises’ digital transformations at the same time as they support consumers’ more individualized needs, service providers can redefine their role in the digital value chain and generate sufficient revenue to fully support the 5G business case.
~ Written by George Malim. George is a freelance journalist who covers the telecoms and internet markets.
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