Communication service providers (CSPs) are predominantly oriented towards the B2C market, with more than half of all global CSPs obtaining 90% of the revenue from the consumers market. However, increased competition by OTTs has strained CSPs’ revenue. Meanwhile, the urgent need for enterprises to digitalize creates increased demands for CSPs. Coupled with the rise of next-generation technologies including 5G, IoT, cloud and AI, CSPs recognize the importance of innovating and reinventing to unlock new monetization opportunities.
To ensure sustainability, CSPs are challenged to expand on their core competency in connectivity and leverage connectivity to capitalize on new technologies to cope with the rising capex of 5G roll out.
5G-driven industry opportunities
By 2025, GSMA estimates that 5G networks will cover one-third of the world’s population. By 2035, 5G has been forecasted by Qualcomm to trigger a global economic output amounting to US$13.2 trillion. It has also been forecasted that the B2B market would grow at a faster rate than the B2C market, as revenue from traditional services appears to be waning.
While B2C will continue to make up the lion’s share of CSPs total revenue in the foreseeable future, the industry recognizes the tremendous potential of the B2B sector.
CSPs are well-positioned to expand on their offerings in connectivity, through an ecosystem of partners to build digital capabilities and create value for enterprises. With more than 90% of businesses in Asia being SMEs, coupled with the pandemic accelerating digitalization efforts, CSPs can become an enabler for SMEs to adopt innovation faster and more effectively.
While catering to the heterogeneous needs of SMEs across industries comes with its complexities, CSPs need to raise their operational readiness to close existing gaps and monetize on SMEs and startups – the growth engine of fast-growing Asia. Given the growing number of startups in the region attaining unicorn status, CSPs have to act fast to enjoy first-mover advantage and enable future unicorns in the region. To do so, CSPs would need a healthy ecosystem of partners to spotlight certain verticals
Offer converged services to meet enterprise demands
According to research published by BearingPoint and Omdia last year, the number of enterprise 5G projects have doubled. However, CSPs served as lead partners in just 16% of these projects, declining by 21% from the preceding year. On the other hand, private network providers are playing a lead role in 27% of enterprise 5G projects.
Beyond 5G connectivity, CSPs are challenged to offer converged services that include cloud, edge, storage, AI and security to become preferred partners and move up the value chain. They have to break away from legacy BSS to evolve and introduce flexibility, scalability and automation to their infrastructure. On a single digital platform, CSPs have to deliver faster time-to-market solutions for B2C, B2B and B2B2X.
For instance, network slicing is critical to monetizing 5G investments. It allows CSPs to partition their networks into portions, where network slices can be tailor-made to defined specifications for myriad applications to support individual use cases across industries.
An important 5G use case is augmented reality (AR) for remote inspection and troubleshooting in smart factories.
In the smart manufacturing industry alone, the market size is poised to reach US$250 billion by 2024, increasing from US$165 billion in 2019. CSPs can work with partners who possess expertise in AR and precision robotics.
CSPs need to tweak their business models to serve as a single platform that addresses the multiple needs of different industries. Other verticals include autonomous vehicles, industrial IoT, healthcare and smart cities.
Enhanced mobile broadband (eMBB) is also important to help CSPs handle increased data rates, traffic and user density.
Essentially, monetizing 5G will be a multi-year journey that CSPs need to embark on. Through diverse forged partnerships, CSPs can be better prepared to deliver clear use cases and embrace vast opportunities in an intelligent and digital future.