Communication service providers need to think and act in extraordinary ways to make the most of the new capabilities and business opportunities of 5G. But what exactly does that look like? There are already plenty of real-world examples that operators can learn from and replicate
In our research on the megatrends affecting the telecoms industry, we saw several instances of strategic thinking from service providers who transformed their services, infrastructure and processes in response to disruption and change. Some of those same operators are now breaking into 5G — and the creativity and inventiveness they’ve shown with their strategic pivots will put them well ahead of the pack in the 5G era.
Diversifying the business
Many successful service providers are on a constant lookout for opportunities to diversify their portfolios (and their revenue streams). Those opportunities will grow enormously with 5G, which enables a broader range of use cases across a greater number of industry verticals.
One of the keys to diversification that we’ve identified is building an ecosystem of like-minded partners. AT&T has teamed up with hospice provider VITAS Healthcare to explore ways for augmented and virtual reality (AR and VR) to help reduce pain and anxiety in patients receiving end-of-life care. Finland’s TeliaSonera is working with telephony provider ABB on 5G-enabled smart factory applications such as real-time visual monitoring and analytics.
South Korea’s SK Telecom signed an exclusive deal with Microsoft to test a streaming gaming service for 5G subscribers. Deutsche Telekom is also looking at 5G gaming, working with software developers — including the company behind Pokémon Go — to make sure its network can handle multiplayer 5G gaming. And Verizon is leveraging its Yahoo! and AOL media assets to bring down the costs of developing new AR content.
One of the biggest examples of telecoms disruption we’ve seen to date was Reliance Jio’s launch of the world’s first 4G-only network in 2016, which turned India’s mobile market on its head with a game-changing cost structure and service capabilities. Now Dish in the U.S. is aiming to build the first fully virtualized 5G network by 2023, taking greenfield disruption to a whole other level. And it plans to do so at a record-low price point. By going virtual-only, Dish will pay just $10 billion to launch a network covering 70 percent of the U.S., compared to the $25 billion Reliance Jio spent in India.
How can incumbent service providers counter these disruptive new entrants? One way is by focusing on multi-play experiences that converge broadband, wireless, telephone and television services. Globe Philippines is using 5G fixed wireless access (FWA) to drive its quad-play strategy. With 5G FWA, Globe can offer wireless connectivity at the same speeds and same prices as fiber — but deployed much faster and at lower cost.
5G presents a strong opportunity for service providers to pump up average revenue per user (ARPU). In fact, the average ARPU for unlimited 5G data plans is 3.5 times higher than that of today’s 4G offerings. Increasing that even further will require some out-of-the-box thinking, as shown by Finland’s Elisa. Instead of using traditional volume-based pricing, Elisa sells its 5G offerings based on speed. Subscribers can choose from 100, 300, 600 and 1,000 Mbit/s service tiers. Because 4G maxes out at 600 Mbit/s, the upper tier makes sense only with 5G — which Elisa hopes will dramatically boost 5G data and service usage.
As all of these examples show, 5G can’t be thought of as just “4G+1”. Because it offers extraordinary new capabilities, extraordinary thinking will be required to capitalize on its opportunities. The type of strategic thinking employed by today’s high performing service providers is a good place to start. By following their lead, service providers can implement powerful transformative strategies now that will become even more powerful in the 5G era.
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