Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this article, Niall Norton, CEO at Openet, explains why question marks over the operator business case for 5G should be a cause for excitement, rather than concern.
5G is now a commercial reality. South Korea and North America are leading the world in bringing this new technology to market, despite ongoing industry cynicism on the lack of obvious monetizable use cases or supporting business cases. In this respect, 5G is merely following the same narrative that accompanied the arrival of 3G and 4G. The iPhone saved the blushes of 3G, then 4G saved 3G by offering the true mobile broadband capability that 3G promised. The industry was equally in the dark on how ROI would be gained – the networks were built regardless, and the customers signed up.
The truth is, very few can say with any real certainty that they know how they will make money from 5G, or what real consumer intention to sign up will be. But that hasn’t prevented tremendous excitement building for the technology. A recent Telecoms.com survey of telecoms professionals, looking at forthcoming 5G opportunities, revealed that 71% of respondents think 5G will boost ARPU. What’s more, nearly a third think it will be boosted by more than a margin of 10%.
5G positivity is further reflected by the 5G landscape in early adopter markets like South Korea. Just 50 days after its commercial launch in April this year, South Korea announced it already had 600,000 5G subscribers. It now has more than one million registered users. With monthly tariffs starting around the US$40-$50 per month mark, Korean consumers are paying premium prices for what they perceive to be a premium service. In most cases, this is double the current average Korean tariff for 4G and is seeing early 5G users consume more than three times the data. SK Telecom, for one, is trying to push this by creating ‘around 8,000 different content offers spanning UHD video, AR and VR’ to its customers, pushing a strong customer experience improvement message.
This vast number of available offers from SK Telecom for potential new 5G services illustrates how many other operators are likely to monetise 5G. South Korea has always led the world when it comes to mobile technology innovation. They have strong operator momentum behind 5G, with the larger players all launching 5G services concurrently. They also have 5G devices thanks to Samsung and LG, and endless potential content partnerships with global third parties. With so much industry support, and endless possibilities in terms of technology capability, there’s little surprise they can generate so many different offers and create so much choice.
This is precisely where 5G excitement is being generated. The more available offers and services, the more chance at least some of them will take off and enable operators to recoup 5G investments. The same level of choice simply wasn’t available with the advent of 3G and 4G because their limited technical capabilities throttled it. With 5G, operators, OEMs, content providers and ecosystem partners can all hedge their bets more effectively. Furthermore, the operator 5G opportunity goes beyond direct to consumer propositions and spans the enterprise and wider vertical markets, especially with the rise of industrial and enterprise IoT services.
But enabling a wide variety of 5G service choice, across so many sectors and opportunities also has its challenges. If operators are to capitalise on 5G, they need to be fast, agile, flexible and extremely opportunistic. Unfortunately, these are not terms commonly used to describe the BSS solutions most operators are hoping to use to monetise 5G services. I heard one operator recently bemoan the fact it currently takes a month to create a single offer, and get it configured and set up through its existing billing and charging system. By that reckoning, it will take the same operator more than 600 years to emulate SK Telecom’s 8,000 5G offers. Not quite the time-to-market advantage they’ll be hoping for, especially given the anticipated short shelf lives of some proposed 5G services.
Fundamentally, operators need to have the flexibility and the confidence to set up and launch their own 5G offers and have the speed to react to changing market sentiments and conditions. They need to simplify and automate the ‘plumbing’ and reduce the need for additional technical intervention. This is how operators will best plan for the unexpected and maintain strong commitment to offering broad 5G service choice and sustain the excitement that surrounds its potential.
Niall Norton has been Chief Executive Officer of Openet Telecom Limited since September 2006. He served as Chief Financial Officer of Openet Telecom Limited since joining in February 2004. He served as the Chief Financial Officer and Company Secretary of O2 (Ireland) where he was responsible for O2’s financial control functions, business process re-design, strategy planning and wholesale. He also took the lead management role for the Ireland element of the BT Wireless demerger and O2 IPO process. He has been a Director of Openet Telecom Limited since August 2006. Mr. Norton holds a degree in Commerce from University College Dublin and is a Fellow of the Institute of Chartered Accountants in Ireland.