Telecom companies around the world are on a mission to leverage lightning-fast 5G networks to revolutionize their business operations. They are relying on its capacity to optimize operations, drive continuous integration, and enable agility at scale. The potential of 5G technology is vast for Telecoms, to not only create and offer innovative services such as smart factories and autonomous vehicles, but also to capture new customers and generate additional revenue streams.
However, with any new technology, 5G is a complex capability that requires significant investments across technical, financial, and operational domains. One of the biggest challenges is successful early adoption, everyone will eventually move to 5G, but being a leader and harnessing the potential early can increase the odds for success. To speed up adoption, organizations will need to crack the code on profitable business models and monetization opportunities.
“Any time there’s new technology coming into the marketplace, there’s always the [question of] how to put together the business case, return on investment, etc.,” Jeff Cortley of Orion Innovation said. “With 5G, a lot of potential lies in the enterprise. It changes the way carriers go to market, and it’s a much more complex solution proposition in terms of moving the enterprise applications from private data centers to TelecomEdge Computing capabilities.”
For a successful 5G and Edge implementation, organizations need to identify killer use cases, create solid business cases, and employ those strategies to drive revenue and growth. This requires a deep understanding of the market, the needs of customers, and the ins and outs of the technology itself.
The State of 5G: Expectations vs. Reality
The 5G rollout has been the subject of much hype and anticipation, with telecom giants looking to be pioneers in a new era of faster speed, seamless connectivity, and unprecedented opportunities. However, the reality is that implementation has been slower than anticipated.
5G adoption is still relatively low—GSMA predicts it will only reach about 17% in 2023. In fact, over half of the audience surveyed during our webinar admitted that they are still in the planning phase of implementation. However, the adoption rate is expected to grow significantly in the coming years, going up to 54% with 5.3 billion connections by 2023.
Telecom industry veteran Amrita Gangotra attributes this slow rollout to the complexity of the technology. She explains, “[With 5G], the ecosystem has become so complex—API-based, service modular, and cloud capabilities are all coming in. With that comes complexity, interoperability, and all those challenges. So, it’s going to take time for the whole architecture to settle down. But when it does, it’s going to be much more innovative.”
Infrastructure needs to keep up too. Cloud and Edge expert Tony Scarfo shares, “Organizations are producing trillions of records of data that you process in almost real time, and you want to adjust the network capabilities to handle that. [It’s crucial] to improve the fronthaul and the backhaul infrastructure that’s required to support 5G.”
On top of everything, 5G is not the only technology revolutionizing the telecom space right now. As highlighted by Cortley, there are multiple concurrent changes such as network openness and cloudification that are reshaping the industry.
The full operationalization of 5G and Edge will take time, but as adoption continues to scale, the need to capitalize on their potential will become even more pressing.
Monetizing 5G: Invest in Killer Use Cases
There are various ways telecom companies can capitalize on these cutting-edge capabilities, but while some use cases are likely to generate immediate value, others may not be as practical given the tech’s current state.
Gangotra emphasizes the importance of “finding near term killer use cases”. For example, one of the most promising applications of 5G is autonomous vehicles, but it may take years for the market to mature enough to generate significant revenue. Organizations should get the ball rolling with business cases that have a more immediate impact in terms of ROI.
Cortley recommends investing in Edge Analytics for faster decision making. With its capability to handle a vast number of IoT-connected devices, 5G enables powerful real-time analytics. Telecoms can gather data from diverse sources in real time, which can then be analyzed on the spot—leading to more efficient and impactful outcomes across operations, product development, and customer experiences. This real-time decision-making capability can translate into business value —improved network efficiency, reduced downtime, enhanced customer satisfaction, and ultimately, increased revenue.
5G also takes cloud computing to the next level by introducing ultra-low latency, helping telecoms reduce infrastructure costs by eliminating the need for extensive on-premises hardware and maintenance. However, both Cortley and Scarfo warn about the rush to move everything to the cloud. Organizations need to think through the costs involved and whether a hybrid solution might work better. “There’s the whole financial engineering around making sure that you optimize those workloads to the cloud and not sign up for unnecessary resources,” Cortley explains.
Other applications of 5G include faster download and upload speeds for gaming and media, large-scale machine-to-machine communications, ultra-reliable and low-latency connectivity for mission-critical applications, improved remote maintenance and repair, AR/VR experiences, and 5G-enabled services for smart cities.
Other Financial Factors to Consider
When asked about the biggest challenge of implementing 5G, a third of the webinar audience answered that they see budget and investment as a barrier. Monetization involves more than just finding the right business case, and telcos need to do a comprehensive evaluation of all the financial aspects involved in adopting this transformative technology.
When identifying business cases, Gangotra suggests looking at both capital expenditure (CAPEX) and operational expenditure (OPEX) factors. Infrastructure plays a big role for successful adoption, but costs can quickly add up when maintaining new networks on top of old ones. To keep OPEX down, telcos should consider sunsetting older networks like 2G and 3G and carefully strategize how best to deploy 5G cores.
It’s also important to ensure sustainability of ROI. Scarfo highlighted the risk of telcos being relegated to mere dumb pipes, passive networks for others to profit from, if they don’t actively participate in advancing the technology. Carriers play a huge role in setting up other businesses for success by increasing bandwidth capacity and connectivity. However, it is equally important to figure out how to reap the ROI on 5G investments rather than seeing all the benefits flow to the gaming, media, and over-the-top (OTT) players.
Unlock the Future with 5G
5G and Edge opens exciting opportunities to explore new data and revenue streams for telcos. While it may be tempting to dive headfirst into the hype, there are several technological and financial factors to consider before deployment. With careful planning, organizations can start with low-hanging fruit, leveraging 5G to transform operations, improve customer experiences, and tap into new markets.
Orion has been serving the Telecom & Media industry with business solutions for two decades. Learn more about our expertise here.
Watch a replay of our webinar How Telecom Providers Can Monetize 5G and Edge Computing, Addressing the Opportunities and Adoption Challenges featuring Orion’s Jeff Cortley and other industry experts.
