How 5G Creates New Business Opportunities for Operators and ICT Players
[UPDATE: This article was written in 2018. I encourage you to read the 2019 update at Mobile Service Provider’s Guide to 5G Business Opportunities]
I’ve been writing about the potential of 5G for a few years now. In each post, I’ve talked about 5G as if it were a magical new world, just beyond our reach. It’s always seemed years into the future. I’m excited about this post because it’s the first time I’ve deliberately typed “how 5G creates new business opportunities for operators” in the present tense.
5G is no longer a fantasy played out in the minds of bright-eyed, optimistic futurists. 5G is now (finally). Yesterday, in a tweet from Ericsson Network, I even learned that my city, Atlanta, would be one of the first cities in the US to get a 5G mobile network.
The rollout of 5G in other parts of the world has already started happening. And yes, it’s before the availability of 5G devices. But that will change soon. TechCrunch resolves this conundrum by declaring it’s a “chicken and egg problem.”
In this post, I’ll focus on how operators (and other ICT players) can take advantage of the new business opportunities and revenue streams created by 5G.
I’ll use the 2nd edition of Ericsson’s report “The Industry Impact of 5G” to explain. It has insight about the role of 5G from 900 decision makers at large companies across 10 industries.
In order to understand how 5G creates new business opportunities for operators, you have to first flip your thinking upside down.
I’ve read several blog posts that talk about the new business opportunities for operators that come with 5G, but what makes 5G different? I always read those posts and wondered why there’s so much focus on 5G. Why is there more opportunity for operators now than there was with 2G, 3G, 4G and even 4.5G?
The answer lies in the ICT ecosystem. 5G is the mobile broadband piece of a whole that includes big data, IoT and new cloud technologies. We can expect around 100 billion connected devices by 2025. Each of us in the industrialized world will probably have 10–12 connected devices by then. All of these new IoT connections will be fueled by 5G.
Another thing to keep in mind is that 5G is “things focused.” It’s only when you look at the ecosystem as a whole that the new business opportunities start to become crystal clear.
And lastly, in order for operators to take advantage of these opportunities, they’ll have to change the way they do business. We are already seeing the leading operators in this space making their digital transformation. The old infrastructure model needs to be replaced with something new (i.e. an all-cloud strategy).
As I’ve written before, the journey will undoubtedly be long and arduous at times. In a nutshell, think “cloud-based everything.” This is no easy transition, which is why operators are encouraged to get started as soon as possible (if they haven’t already).
As McKinsey puts it, operators need to learn how to successfully reinvent themselves. In their post “A Future for Operators: The Keys to Successful Reinvention,” McKinsey boldly states that mobile operators could double their cash-flow conversion within 5 years.
Next, please take a moment to download the 2nd edition of Ericsson’s report “The Industry Impact of 5G.” I’ll be referring to it often for the duration of this post.
For this report, Ericsson asked 900 decision makers in large companies across 10 key industries about:
- The role they expect 5G to play within their sector
- The problems they expect 5G to solve
- The extent to which they’d be willing to pay for 5G services
According to Monika Bylehn, 5G Marketing Director at Ericsson:
We have found that by 2026 there is a USD $619 billion dollar revenue potential for operators addressing 10 specific industries with 5G — manufacturing, energy and utilities, public safety, healthcare, public transport, automotive, media and entertainment, financial services, retail and agriculture.
This corresponds to an additional 36% revenue growth potential on top of current operator service revenues. This is unarguably a substantial revenue pool. But to capture this opportunity will require a lot from the companies pursuing this path.
Ericsson also touched on this point during Mobile World Congress 2018.
As you see in the infographic above, manufacturing comprises the largest revenue opportunity for operators. Energy and utilities is in second place and public safety is in third. But there are revenue opportunities in all 10 sectors. Operators need to look at each of these industries on a case-by-case basis to determine the best fit.
This report provides useful insight for any operator looking to capitalize on the new business opportunities and revenue streams that come with 5G. It focuses on 5G revenue opportunities that are above and beyond the services offered today. It also goes into the competitive landscape and barriers to entry. It will help you think about the operator’s role in the value chain.
In the “15 Minutes with 5G” podcast, Monika talks about how 5G will contribute to industry digitalization — and how operators can take advantage of the new opportunities that come along with that.
When asked, “What do operators need to do now to capitalize on these new opportunities?”
Operators need to consider what roles to take in the value chain and expand and move up the value chain to be able to capture these opportunities. Not surprisingly, they can achieve larger growth if they embrace every step of the value chain: connectivity provisioning, service enablement and application provisioning. Operators will need to change and focus their organization’s engagement, operation and production models to succeed.
They need to consider what industries to address, what use cases to do, and what business model they want to use. They need to start thinking about proof of concepts, what industry players to partner with, etc.
If you’d like to discuss these findings and all of these things in more detail, it’s just a matter of scheduling a workshop with Ericsson to have this discussion. Just contact your Ericsson sales representative and schedule a workshop.
According to Peter Linder, an Ericsson 5G marketer, here is a list of 10 things operators need to do to make money from 5G.
To read his full blog post with detail for each point, click here.
- Increase their understanding of how 5G user needs evolve
- Increase the scope of network services offered beyond raw broadband connectivity
- Split the market into micro-segments to discover latent user and industry needs
- Increase the number of use cases addressed with a customized value proposition
- Increase differentiation in network service pricing to meet each microsegment’s business needs
- Increase the leverage of global ecosystems
- Increase development efforts for local ecosystems
- Increase support in building customer business cases
- Reduce operators’ dependency on best connectivity as the sole source of mobile data revenue
- Reduce price erosion on mobile broadband connectivity services to smartphones
You can download the Ericsson report that focuses on the revenue opportunities for operators at The 5G Business Potential.
5G creates new business opportunities and revenue streams for operators and other ICT players, but it won’t happen arbitrarily. It will require a concerted effort and a laser-focused vision on what the future of 5G holds for all of us. Thank you for reading my post. Please visit the relevant links below.
Download the Ericsson Report that shows the role 5G will play in each of 10 sectors — The Industry Impact of 5G
Download the Ericsson Report that focuses on the revenue opportunities for operators — The 5G Business Potential
Take a peek at this blog to see demos and find out what’s going to make the biggest difference to customers in 5G, IoT and digital transformation — Ericsson’s Mobile World Congress 2018 Blog
Learn More about Seizing 5G Opportunities — 5G Will Rock the World