Despite all the distraction presented by COVID-19, the second half of 2020 was significant in terms of accelerating 5G's commercial potential. In the US, T-Mobile, AT&T and Verizon were ramping up 5G. In the UK, Vodafone switched on a small part of its standalone 5G network and in Japan, Rakuten made its own unique advancements in building a greenfield 5G network.
However, it remains early days for commercially available standalone 5G network services – it is expected these will start to arrive towards the end of 2021. This is great news for global telecom service providers, because the revenue potential from enterprise-grade standalone 5G services far exceeds those of non-standalone. Furthermore, unlike so-called OTT services in the past, telecom service providers can provide network-embedded services into standalone 5G offers and can't be disintermediated and relegated to only providing connectivity.
Embedded network services are services that rely on the technological capabilities within the network to offer guaranteed quality of service, strong levels of reliable bandwidth and optimal levels of security. These services require the extra low latency capabilities of 5G created and guaranteed by network slicing, which requires standalone 5G infrastructure and a dedicated network transport layer. In a true standalone network environment, 5G can achieve download speeds of between 10 Gbit/s and 50 Gbit/s and provide millisecond latency. These powerful capabilities have countless possibilities when it comes to monetizable use cases for telecom service providers. These range from mobile cloud gaming, to remote surgery in hospitals, to autonomous cars, to supporting fully automated robotic production lines in smart manufacturing environments.
Some of these use cases are mission critical – instances like remote surgery in hospitals where guaranteed low latency is literally a matter of life or death. Required levels of throughput must therefore be guaranteed to be viable and healthcare organizations will pay a premium for such assurances. The same is true for automotive companies or local authorities looking to safeguard roads with the launch of autonomous vehicles. Even mobile cloud gaming will carry a premium in a consumer setting. A recent study by Ribbon Communications proved that hardcore gamers would pay more for 5G if it could guarantee a better playing experience – the majority (60%) would pay at least 50% more than they're paying today. That is a significant increase for telecom service providers to contemplate.
With great potential comes greater complexity
These use cases can mean the introduction of tiered pricing for 5G embedded network services. Some service providers in the UK, Switzerland and Finland already sell 5G based on speed tiers. The thinking here is that people may not know how much data they're using, but they will notice different speeds. In an enterprise setting, this means telecom service providers charging more for premium quality of experience (QoE) courtesy of bespoke SLAs. Tiered pricing for embedded network services brings additional complexity to telecom service providers to not only launch new services, but also charge appropriately for them. We may also see service providers launch specific offers, e.g. a working from home offer with guaranteed quality of service, or a 5G gaming offer with, say, Nintendo or Microsoft, backed by consumer speed guarantees and wholesales (gaming partner) SLKs. While having plenty of addressable use cases to monetize is good in terms of potential ROI, it creates challenges in terms of supporting and launching them all concurrently.
The 5G service reality facing telecom service providers is that there will be more devices and services to support, with new chargeable elements to parts of these services, more network functions to manage, new business models to contemplate and multiple partners to manage as transparently as possible. This requires connecting thousands of offers with countless network functions to offer services on demand. It also needs dynamic capacity allocation on a network slice-by-slice basis. Doing all this seamlessly to effectively monetize each service requires the creation of a value plan – a bridge between the 5G network and the IT and business functions in a service provider.
Integrating 5G policy and charging functions in a 5G value plan into the service catalogue in BSS, and also the 5G networks, will ensure that service providers can quickly develop and monetize new 5G services where the quality of the customer experience is a central part of the overall offer. Standalone 5G will herald an unprecedented range of use case and services. Many of these new services will be network embedded services where the service provider cannot be pushed aside to be a dumb pipe provider, but will instead take center stage in the creation, development, monetization and management of 5G services.
— Martin Morgan, VP Marketing, Openet
Photo by Glenn Carstens-Peters on Unsplash