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Cutting through the complexity of 5G monetisation

David McGlew, marketing director at Openet.
(Image credit: Openet.)

Earlier this year, industry analysts Omdia predicted that the biggest challenge facing service providers in 2021 will be effectively monetising 5G. It’ll be a challenge, no doubt, but it’s a challenge that will be significantly eased by the roll out of 5G standalone (SA). Some commentators predict we’ll see 5G standalone towards the end of this year; some believe it will take a little longer.

Why is the introduction of 5G standalone pivotal to service monetisation? It’s purely because the currently available non-standalone variation lacks a 5G core network and is built on a 4G base – it therefore offers faster speeds, but lacks the true capabilities to offer what 5G promises – ultra-low latency connectivity and massive machine communications. Selling 5G purely on faster speeds will only contribute to the mobile data commoditisation we have seen since the launch of 3G. Mobile operators have invested significantly in 5G – they must raise their expectations if they are to realise a meaningful return.

Enterprise provides excitement

Real 5G monetisation excitement will come from standalone enterprise applications and services. In January, the CTO of Dutch service provider KPN discussed 5G use cases. This included a 5G coverage on-demand service – an opportunity for enterprises to order additional 5G coverage in poorly served areas. This could be in a factory, where 5G is important for connected devices. KPN provides coverage to a specific area and charges per square metre of additional coverage, where the cost per square metre is between 10 and 25 cents.

"Thanks to building 5G charging solutions on microservices, configuration over customisation is now the norm in monetisation systems."

David McGlew, Openet.

This could be just one of many new pricing rules that service providers will need to provide for as they get creative with 5G monetisation. What is certain is that service providers will need to be able to apply pricing rules that they had previously not even imagined – and they’ll have to apply them quickly and by themselves. If a service provider wants to rapidly launch a new service with a new pricing model, then the last thing they need is a lengthy and expensive approach to changing pricing rules. The good news is that, thanks to building 5G charging solutions on microservices, configuration over customisation is now the norm in monetisation systems. This brings new levels of agility and automation, so service providers can quickly react to new opportunities.

Pricing criteria complexity

With regards to different pricing criteria that we could see in 5G, data volume will still exist but mostly for fair usage and roaming. Some service providers have different prices for different speed tiers and different bundle prices dependent on the content and other services included. However, as we see more 5G standalone services and a wider variety of devices, we’ll also see new pricing rules and a massive list of different pricing variables. These could include quality of service, latency, location, customer lifetime value, number of devices connected, on-demand pricing, groups (e.g. different pricing rules for sports clubs, etc), recurring fees for different content or service purchases, pricing based on service level agreements with partners, special time sensitive offers (e.g. weekend sale), special pricing for different services based on holidays, time of day, third party application fees, customer loyalty, tiered pricing for different apps (e.g. game levels). These really are just a sample.

In other words, many, many new capabilities allowed for by 5G combined with some that were possible in 4G – but now much more manageable. Plus, there are countless enterprise applications and there will be many more that we haven’t even thought of yet.

A blend of business models

"As many 5G services will involve third parties we’re also going to see a lot more partnerships and revenue sharing models."

David McGlew, Openet.

Just to add extra complexity into the mix, pricing variables and policies could change dependent on the business models being implemented. Some services may be zero-rated and paid for by the government (e.g., home schooling, education and healthcare), some may be delivered “free of charge” and the service provider or third party generates revenues from targeted advertising. As many 5G services will involve third parties we’re also going to see a lot more partnerships and revenue sharing models. These will contain many different variables, for example SLAs for customer network experience, SLAs for thresholds, and so on. Then there’s also in-app purchases and direct carrier billing and charging where the service providers charge their customers on behalf of others and take a percentage of the revenue.

We have also seen growing demand for the 5G network as a service (NaaS) business model, whereby the service provider sells on-demand 5G connectivity to partners. Think of a gaming company launching their own 5G gaming service with 5G connectivity built in. This could be charged by the gaming company as a monthly fee to customers, of which the service provider gets a share for delivering on-demand 5G connectivity. Could the service provider allow the gaming company to charge for this service using the service providers’ charging and billing systems and open a new revenue stream? This is another option that needs to be considered when looking at 5G monetisation models.

Monetisation of 5G services will get more complex. Service providers will not just be selling data anymore. The opportunity is to sell much, much more and embrace new business models – this will be the key to monetising 5G, and it will only get moving when we see 5G standalone start to be deployed. Then the floodgates of creativity will open, and we will see 5G networks move beyond providing connectivity to be the foundation on which many new business models are built, and new revenues streams created.

David McGlew is Marketing Director with Openet with 20+ years’ experience in the telco’s industry. Based in Dublin, Ireland David is a B2B marketing specialist, with particular expertise in Digital marketing, Demand Generation and Brand development.  Having spent many years develop and launching Mobile proposition for both consumers and Businesses, he now helps Openet support such Telco’s to develop winning proposition for their customers.