Revenue potential of 5G is being held back by telcos

(Image credit: BearingPoint//Beyond)

Digital platform company BearingPoint//Beyond has released a new study that reveals telcos are failing to come up with business solutions which are critical to the commercial success of 5G. 

BearingPoint/Beyond’s research was carried out in Europe, Asia and North America. The results identified a huge rift between what telcos want to sell and what business customers want to buy. For example, telcos want to sell 5G hardware, whilst businesses want to buy complete 5G solutions. 

Despite this, the telecoms industry still agrees that 5G will have its biggest impact on business customers rather than consumers. The research supports this belief, finding that three-quarters of enterprises believe 5G will be important to their businesses, thanks to faster speeds enabling more advanced products and services.

They must move quickly 

"“Businesses want to buy 5G, CSPs want to sell 5G. The problem is that CSPs want to just sell connectivity and standardized ‘connectivity plus infrastructure’ products."

Angus Ward, BearingPoint//Beyond.

It’s growing clearer by the day that telcos need to provide broader technologies rather than just communications in order to meet the needs of their business customers. Collaboration is required to co-innovate and produce products that businesses will be happy to buy. 

“Businesses want to buy 5G, CSPs want to sell 5G. The problem is that CSPs want to just sell connectivity and standardized ‘connectivity plus infrastructure’ products, while businesses want to buy more sophisticated, complete solutions that better fit their needs and require the integration of multiple technologies from multiple players,” says Angus Ward, CEO, BearingPoint//Beyond.

“CSPs must learn the art of ecosystem orchestration if they want to monetize 5G at scale,” cautions Ward. “Businesses don’t want to build these solutions themselves. And while the vast majority would happily work with CSPs, they’re not waiting around - businesses are already partnering with other companies to solve their business problems. They must move quickly.”

5G isn’t 4G 

BearingPoint//Beyond’s research also found that operators in Europe still appear to be pinning their 5G success hopes on 4G business models. However, it’s important to consider that this is the first time that mobile technology will have a bigger impact on businesses than on consumers. Therefore, old telco business models need to be completely restructured. 

“In 5G B2B terms, CSPs are pushing at an open door. 98% of European businesses, 92% of Asian businesses and 87% of North American businesses are willing to buy advanced solutions from their CSP. But these must be solutions that address their specific business needs. The only way CSPs can achieve this is orchestrate ecosystems of partners to co-create compelling new solutions that embed 5G,” continues Ward.

“If CSPs continue to define their role too narrowly, they will miss out entirely on the high margin opportunities in B2B 5G. Connectivity represents a tiny portion - as low as 5% - of the revenue for each use case.” Concludes Ward.

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(Image credit: Future)
Fiona Leake

Fiona discovered her love for investing and making money from a young age. Since then this interest has grown and now she loves writing about investing and business, and follows the 5G market closely. She is also a technology enthusiast, and so they tend to be her favourite investments.