How 5G Will Change the Telecom Operator Landscape

Spotlight on 5G | TelecomDrive.com

5G may be in danger of drowning in its own hype, but the truth is, it holds the promise to alter the operator landscape across a wide range of verticals - everything from consumer services, to enterprise, IoT and more.

5G's promise, however, is only as good as an operator’s willingness to see its potential and embrace its possibilities.

Telcos certainly recognize the potential of 5G, but only some recognize the need to move ahead with a fast adoption, digital-first mindset. Others are taking a watch and wait approach, failing to understand that now is the time for operators to prepare for 5G.

As 5G upends the landscape, it will be an absolute necessity for operators to deliver the kind of value-added services and digital experiences for which consumers are clamoring. How? To be successful, operators need to stop thinking of 5G as just another 'G,' and adopt a real-time, digital operating model that eliminates self-commoditization and puts an end to outdated pricing and positioning.

It's Not Just Another 'G'

If you are one for debate, you could argue 4G has served consumers 'adequately' over the last decade. Given the way mobile operators have packaged 4G plans in terms of speed, it's not a leap to see why consumers may view 5G as another 'G'. 5G is not just an improvement in speed over 4G, however, and operators can't afford to continue to position it that way. In effect, to focus on speed as the great differentiator, merely cannibalizes the telco’s own value proposition.

5G delivers considerable advanced capabilities in terms of latency, bandwidth, capacity and speed. These advanced capabilities will support a wider variety of use cases in everything from IoT, VR, cloud gaming, geolocation services and more, while delivering a vastly richer experience for customers.

5G also has the potential to put the operators in a more advantageous place in the IT value chain for the delivery of smart cities and enterprise IoT networks and the like. Given the huge investment involved, simply treating 5G as just another ‘G' through the lens of network investment and capacity upgrades is a strategy doomed to fail. 5G is a catalyst for reinvention. Operators should recognize the opportunity to re-energize their business model into one built on the 'outside-in' user perceived value and opportunity, where customers realize not only the importance of 5G, but also the operator's ability to provide it.

Adoption of Real-Time Digital Models

One of the most significant opportunities around 5G is to change the somewhat challenging business model on which operators sit. Many telcos are self-commoditizing, presenting their 5G services and network capabilities in terms of just offering one commodity -- improved speed -- while failing to differentiate against other high-value deliverables including substantial upgrades in network services, improved latency and digital-first customer experiences. This approach is a mistake.

To effectively compete, telcos have to adopt a real-time operating model that is digital-first at the point of service delivery. Digital-first means approaching any new opportunity or problem with the mindset that digital technology and services should back the offering - from apps to real-time billing and more. Not only will this take out substantial operating costs, but it will also make an operator more agile and flexible to market demands.

This digital-first driven model and approach enables telcos to offer customers services on-demand, in real-time. Uber is a good example of this kind of model and digital service approach. Everything happens in-app. All processes and systems are digital - from scheduling, to payment, to coordinating pickups. If operators want to stay competitive with digital upstarts and OTT players, who will inevitably pop up and be power players, it is essential to offer digital-first experiences to the customer.

A Shift in Pricing and Positioning

If you take an in-depth look at traditional telcos, there is a lack of any real innovation in pricing models. 5G needs to command a pricing premium over 4G; merely delivering greater volume plans or new speed-based plans with unlimited usage removes any differentiated value over 4G. Pricing 5G with this mindset will only lead, once again, toward a race-to-the-bottom mentality, one that does not open the door to any further monetization opportunities.

A fundamental reinvention is required from operators, one that begins with a move from network-centric, standalone positioning to a service-led, network foundation. In the new world of 5G, this approach will allow telcos to price out services, offer consumers customized plans and provide real differentiation. Essentially, mobile operators need to flip the script on their agenda. They need to lead with the message of providing value-added services through 5G, not just that 5G is the core of their business and their only central offering. Customers will pay for 5G and digital-first experiences if the value is there.

5G arrives on the scene at a time when consumers of every generation are demanding digital engagement. As 5G continues to gather pace and momentum, telcos cannot afford to be slow to enter the 5G market. If done right, 5G will allow telcos to offer greater differentiation in services, adopt real time-digital models and monetize on the promise of 5G.