5 things telcos will need to monetise 5G

Will the 5G bang be worth the buck for telcos? Telecommunications companies have spent a fortune on 5G licensing in recent years, as operators have raced to snap up spectrum on the network that will underpin our digital future. 

Yet while we all know that 5G will be vital for the next stage of digitisation, it has yet to reach its full potential. Although use-cases in industrial and commercial environments are emerging – from operating heavy machinery remotely to enabling swifter, more flexible automations – the telecommunications industry is still waiting for 5G’s breakthrough moment, that tips the balance from a ‘nice-to-have’ to ‘must-have’ network for end users.

How can an industry already beset with diminishing financial return on services make sure that their spending on 5G gets the return they need? With a combination of increasing consumer demand for services and decreasing mobile phone bills impacting commercial opportunities, telcos need 5G to deliver the financial rewards it has promised – and fast.

5G’s commercial value will always, in part, be driven by consumer adoption and successful innovation by enterprises, both of which are unfortunately out of telcos’ hands. Yet there are steps that they can be taking to make sure that they get maximum value from their 5G spend in the future.

Get the right technology

One of the fastest ways that telcos can maximise their income from 5G in the near future is by cutting costs in the here and now, creating a more agile operation, ready to explore 5G opportunities. Automations, streamlined processes and data-driven activity can all contribute to a more efficient, cost-effective operation, but telcos need to carefully consider the technologies they introduce and the commercial impact they will have on their business. 

Over the past 20 years, telcos have accumulated masses of legacy technology that is now holding back flexibility and progress: simply adding more ‘solutions’ to the pile isn’t going to help. By addressing technical debt, and making strategic technology investments, operators can cut costs and increase agility.

Find the ‘killer App’ (or develop it yourself)

Telcos are racing to find that ‘killer app’ that will recoup their 5G spend, having learned a powerful lesson from 4G. While billions were spent on implementing high-speed 4G networks, the real winners of 4G were the tech giants who invested in the social media platforms that now dominate 4G usage. This time, telcos need to make sure they are part of the catalyst for widespread 5G adoption, by exploring investment into 5G-supported applications.

In Asia, China Mobile and SK Telecom have already started to work with external developers and in-house teams to build apps that could generate revenue from 5G in the future. But what exactly will the first round of 5G-supported apps look like? The metaverse seems to be attracting the most attention in the press, but there is a whole slew of other possibilities, from e-commerce platforms to communications. 

One thing’s for sure: making the right app investments now could spell a big difference to operators’ profits in the future. Research by Ericsson AB’s Consumer & IndustryLab anticipates that operators could earn a third more in revenue by developing their own 5G applications, rather than just providing the network capabilities to power them.

Offer a better customer experience now

Perhaps the key to generating revenue from 5G in the future is to offer a better customer experience in the present. Julian Frankum, MEA Regional CEO and co-founder of global technology recruitment firm RP International, comments, “Take a customer-centric approach now to secure consumer trust. Create excellent service, get customers using your network and work on the future apps that will encourage them to buy when you’re ready to offer the next level of service. Invest in the right customer focused skillsets today, and drive innovation for the future.”  

Network speeds for gaming, live video streaming and running multiple apps simultaneously are already a key differentiator for network users, but 5G’s ultra-low latency will be an attractive addition to those consumers: one that most will be willing to pay extra for.  

Take a strategic approach to coverage

Will the current biggest spenders in 5G be the biggest winners in the 5G race, or are less aggressive strategies going to see a higher return in the long term? Last year, an auction for 5G licences in Portugal reached 2000 rounds of bidding – yet some major providers chose not to bid. Why? With bids reaching phenomenal figures, some operators are choosing strategy over size, opting for a gradual and, perhaps, more sustainable approach to securing coverage by waiting to claw back initial expenditure before investing too heavily in spectrum. 

In their guide to 5G, PWC discussed the option of maximising country coverage by focussing on 5G services that are compatible with 4G mobile networks, and later updating core networks to offer more advanced services with funding from earlier investments. Deciding when and where to place 5G infrastructure investment now will be a key factor in determining the winners (and losers) of 5G later. 

Invest in commercial skills

Skills will arguably be the biggest driving force behind 5G commercialisation, and as the focus shifts from technical facilitation to commercial remuneration, telcos need the right people spearheading their 5G campaigns. Deciding where – and how much – to invest in the next stage of 5G is critical, regardless how much operators have already spent on 5G infrastructure.  

Telcos worldwide are coming to realise that financial 5G success will require more than just the initial outlay, with business-savvy hires high on the list of telco’s recruitment priorities. 

Jeremy Hopwood, Asia Regional Director at RP International, says, “Traditional technology roles will always be needed to keep developing new ideas and offerings and making sure that telcos have the infrastructure to support it, but we’re seeing increased demand for less traditional, more commercial roles in digital strategy, digital channel development and customer experience to lead telcos into a more profitable future.”

Only time will tell which operators will ultimately win the 5G race and successfully monetise the service. In the meantime, telcos may need to make dramatic changes to the way they operate in order to maintain their commercial footing long enough to see 5G through to fruition.