5G business horizons – going beyond connectivity

By Shane McClelland, VP Strategy and Business Development, Head of Emerging RAN Solutions, Ericsson

Note: This blog was produced under WIA’s Innovation and Technology Council (ITC). The ITC is the forum for forecasting the future of the wireless industry. Participants explore developments in the wider wireless industry, from 5G network monetization trends and streamlining infrastructure deployment to future spectrum needs and cell site power issues. The group is publishing a series of thought-leadership pieces throughout 2024.

Over the past few years, service providers have put significant efforts into deploying 5G networks, as well as promoting 5G data plans. While there is a positive momentum with the deployment and uptake of 5G around the world, the exploration of new services and business opportunities is just beginning. 5G provides many more attributes like low latency, throughput, reliability, mobility, quality of service (QoS), energy efficiency and more that can be used to articulate value and construct new revenue models. That said, it takes time to design and deploy these new technologies (Massive MIMO, SA, MEC, etc.). Then once deployed, figure out how to create and deliver new services for customers, in both traditional and new markets – including an innovative focus on digitalized operations in enterprise and industry.

When examining the current mobile industry, four distinct business horizons are emerging in the market. Communication service providers (CSPs) worldwide are actively exploring and experimenting with new offerings and go-to-market models across all four horizons. This blog explores the 5G monetization horizons.

Horizon 1 – Leverage and extend existing use cases

Horizon 1 focuses on making sure CSPs are getting the most from current investment in 5G. Baseline 5G connectivity enabling enhanced mobile broadband (eMBB) represents the foundation for service revenue generation that all CSPs rely on today. As the figure below shows, as 5G subscription penetration increases for eMBB smartphone service, there is a corresponding improvement in revenue growth.

With the underlying network in place, CSPs can actively experiment with adjusting plan structures and realigning service packages to match demands from different subscriber segments. This is an important first step on the monetization journey. This can include offering creative data/service plans that are value-based, leveraging various 5G attributes listed above. This may represent a challenge, especially in markets where unlimited plans have been the norm for years. However, it could be highly rewarding for service providers – maybe even necessary to fully utilize the toolbox and capabilities provided by 5G.

One of the capabilities made available by 5G is very high throughput. For example, upgrading existing 4G sites to 5G has the potential to increase capacity up to 10 times by deploying 5GNR TDD Massive MIMO radios. As 5G networks have launched worldwide, speed tier offerings for smartphones have become increasingly popular and are currently used by around 27 percent of service providers. Consumers tend to equate speed with quality, making this an excellent motivator to pay more, which is a vital step toward providing QoS oriented offerings. Speed tiers, in combination with existing models with buckets and unlimited data, also represent a tool to guide users toward a desired package or proposition. This may be a way to exit from unlimited propositions and to adjust bucket plans to appropriate sizes.  Another important aspect of 5G is that it also brings cost advantages to help CSPs handle the data growth that will come from future revenue.  For example, CSPs can reduce energy consumption by more than 30 percent by deploying NR FDD radios using sleep modes. This makes it possible for CSPs to grow revenue and reduce costs while being more sustainable.

Horizon 2 – Bring in new money from adjacent profit pools

Horizon 2 leverages 5G mobile broadband assets being deployed in Horizon 1 to address adjacent profit pools.  Fixed Wireless Access (FWA) is one of the major early 5G use cases, particularly in geographies with underserved broadband service.

FWA continues to grow in the US, as net adds have been consistently over 90% of all broadband adds for over a year.  FWA users consume 20-30 times more data than individual mobile subscribers, taking full advantage of the capacity gains offered by 5G technologies coupled with mid- to high-band spectrum assets.  Moreover, appreciation is increasing among households using FWA, with 7 out of 10 households using 5G FWA stating that it has become their primary connectivity in the home. The figure below shows how this sentiment is reflected including in a recent Ericsson ConsumerLabs study, with the current uptake of 5G FWA not replacing a specific type of connectivity, but rather replacing all types of connectivity in line with the prevalent types available in the respective markets.

With adjacent services like FWA, 5G value creation is achieved by combining additional revenues, reduced opex and optimized capex shared with the mobile broadband infrastructure.  This subscription growth and associated traffic being added to the network, creates opportunity for CSPs to invest in and implement additional advanced 5G technologies. Examples are:

  • FWA network slice to offer service differentiation, security and MBB user protection
  • Wider use of mmWave spectrum to offload mid-band spectrum
  • Ecosystem creation and maturity for 5G SA capable devices.

Once CSPs start to deploy and monetize new technologies and capabilities based on an adjacent profit pool, this leads to Horizon 3.

Horizon 3 – Differentiated connectivity solutions based on the 5G platform

In Horizon 3, the 5G network matures into a revenue generation platform.  The main focus of Horizon 3 is to build out horizontal capabilities:  This means deploying various capabilities like dynamic slicing, edge compute and exposure to enable different types of use cases. Today, many CSPs are experimenting with such horizontal capabilities, in preparation for large scale commercialization. For example, Telstra has deployed an award-winning orchestration solution which enables fully automated 5G slicing for enterprises on a commercial network.

In Horizon 3, the 5G platform gives service providers an opportunity to move up in the value chain and increase revenues both within and beyond traditional domains of connectivity and mobility – including an innovative focus on digitalized operations in enterprise and industry.  For consumers this means having the ability to purchase services for immersive gaming, 3D video experiences, Video on Demand (VoD), connected stadiums, etc.  For enterprises, this means being able to purchase private networks in various forms to include:

  • Slicing the public network, for flexibility and speed
  • Extending the public network onsite for performance
  • On-site private networks for performance and security.

5G monetization models based on horizontal capabilities brings with it more complex partner interactions, and new experiences for customers. An important part of this horizon is having 5G platform flexibility and speed in service creation.  CSPs must look to implement capabilities for automation, on-line marketplaces linked to OSS/BSS tools, and products with open interfaces.

Horizon 4 – Drive innovation and ecosystem growth – Programmable Networks

Horizon 4 is based on leveraging enabling technologies in previous Horizons to create programmable networks. In Horizon 4, a programmable network democratizes the 5G platform made available for developers to easily access advanced 5G network capabilities provided by service providers. Network APIs unlock opportunities to develop new enhanced applications and services, driving new revenue opportunities for the entire ecosystem, benefitting developers, service providers and enterprises.

The figure above outlines a possible network API monetization value chain.  Business models where service providers can commercialize APIs include wholesale or retail applying revenue share, subscription, or usage-based commercial models. Exposing the 5G platform in an open, intuitive way via global open APIs will enable developer communities to innovate new applications and features for any device and service that benefits from network connectivity, creating multi-sided business models.  Using a combination of communications and network APIs including open standard (CAMARA) APIs will simplify and guide the service provider’s customers to rapidly implement and achieve revenue growth through new and differentiated experiences.

Summary

While challenges and opportunities in the telecom market shift over time, the key for service providers to drive profitable growth is to keep exploring innovative ways to sell mobile data services, together with the wider ecosystem of application developers, device manufacturers and system integrators. To deliver the full potential of 5G to customers, 5G monetization approaches must evolve together with 5G network implementation. 

Sources:

Ericsson, Capturing the 5G FWA opportunity: A household view, February 2024

Ericsson Mobility Report Business Review, February 2024

GSA, December 2023

Ericsson Mobility Report, November 2023  

Ericsson, Getting Creative with 5G Business Models, 2020