The journey through the generations of mobile networks – commonly denoted as “Gs” – provides crucial insights into the evolving landscape of telecommunication and how Communication Service Providers (CSPs) have capitalized on these advancements. This analysis, although might seem grim, is essential for understanding the challenges in monetizing 5G Standalone (SA) technologies, necessitating innovative and, at times, unconventional strategies.
Additionally, the article acknowledges the importance of B2B and Enterprise offerings but focuses on B2C for markets with lower GDP growth and industrialization levels.
The Evolution of “Gs”: A Brief Overview
- 2G Era: Marked by the introduction of wireless connectivity and voice services, 2G was a groundbreaking step away from the tethered, wired connections of the past. It revolutionized how we thought about communication, setting the stage for future advancements.
- 3G Innovations: 3G expanded network coverage and introduced mobile data, allowing users to browse web pages and send emails on the go, albeit with limitations like attachment sizes due to the relatively slow data speeds (hundreds of kbps). A notable feature of 3G was video calling – a concept revolutionary at the time but with a debatable impact on market adoption.
- 4G/LTE Breakthrough: The advent of 4G/LTE was a game-changer, significantly enhancing data speeds (15-25 mbps) and introducing a new network architecture. The shift to Evolved Packet Core (EPC) and eNodeBs, coupled with the replacement of circuit-switched voice cores with packet-based IMS cores, introduced APIs for Voice/SMS and SCEF based Network APIs, setting a precedent for API use in telecommunications.
Monetization Strategies and Challenges
Over the years, CSPs have seen incremental revenue growth with each new generation by:
- Increasing Subscriber Base: Leveraging the attraction of new technologies to grow their customer base driven by higher mobile penetration.
- Boosting Mobile Handset Sales: Offering bundled deals (phone + data + voice) to encourage the purchase of newer, more advanced devices.
- Striving for Network Superiority: Investing in marketing to portray themselves as the “Best Network” and attract users from competitors.
- Launching Value-Added Services (VAS): While numerous VAS have been attempted (e.g., Anti-Virus, Personalized Ring Back Tone), they haven’t significantly contributed to revenue, highlighting a challenge in VAS monetization.
Lessons from Past Generations
- Unsuccessful Technology Levers: Despite its innovative potential, 3G video calling did not become a cornerstone for monetization, offering a lesson for 5G SA’s potential challenges.
- APIs Aren’t Novel: The introduction of APIs in 4G was not a panacea for revenue growth, indicating that 5G’s new network APIs alone may not be a unique selling point.
- The Rise of OTT Players: The real beneficiaries of the 4G data revolution were Over-The-Top (OTT) services, app developers, and device manufacturers, leaving CSPs to compete in an increasingly challenging market.
The possible “Mistake” of 5G Non-Standalone (NSA)
5G NSA, which relies on dual connectivity with 4G LTE cores, delivered improved speeds and reliability. However, the strategy of offering unlimited data and voice has eroded the potential for monetizing these aspects, particularly as 5G NSA’s enhanced speeds became less distinguishable to consumers accustomed to 4G capabilities as their mobile apps don’t necessarily require 5G level speed.
Transitioning to 5G SA
Embarks on a new architectural journey (more revolutionary than evolutionary) with promises of ultra-reliable low-latency communication (URLLC), massive machine-type communications (mMTC), and enhanced mobile broadband (eMBB) with Network Slicing & Network APIs. However, the legacy of 5G NSA and the prevalent consumer perception that equates 5G with mere speed enhancements pose significant challenges.
The task is now to differentiate 5G SA not just as another step in speed enhancement but as a platform enabling a plethora of new applications and differential services, from industrial IoT to critical communications and beyond. But what is the industry saying? I would like to draw your attention to a couple of articles:
- Verizon surprises with ongoing delays in 5G standalone rollout
- “This is a moving target,” Recon Analytics analyst Roger Entner told Light Reading. But Entner said Verizon’s position on the standalone version of 5G makes sense. “The benefits you can get today from standalone are limited.”
- Standalone 5G has proven difficult for a number of operators. “The reason it is taking quite a while to roll out the 5G [SA] core is that’s a sea change in the underlying infrastructure,” said one European network operator executive last year.
- Why is 5G SA taking so long?
- So why is SA taking time to implement and scale? In a nutshell, in the words of one anonymous operator CTO, “because it’s difficult.”
- You need a service differentiator: If your lowest spectrum band is allocated to 5G spectrum, you might need SA for Voice over NR (VoNR), but that is not really going to blow the doors off the marketing department. So what else is there? What is 5G SA for, and will customers notice? Here I am optimistic – I think edge services, network slicing, predictable low latency, cloud integration, XR, metaverse, wearables, industrial IoT, connected car, you name it, have potential. But these SA-enabled services need time and experimentation.
Above are just two very relevant articles but the crux of the matter is quite simple:
- 5G Stand Alone is perceived as “difficult” and “complex” thereby meaning high CAPEX & OPEX
- Benefits (read “extra revenue”) you get from 5G Stand Alone is perceived to be “limited” thereby meaning CSPs are at a risk of delayed return on investment.
- 5G SA “MUST” have a “service differentiator” thereby meaning products based on 5G SA must have something niche and unique.
Concluding Thoughts
This exploration of the telecommunications industry’s evolution and the subsequent monetization challenges reveals several critical insights:
- Previous technological innovations, such as 3G video calls and 4G APIs, have not dramatically shifted revenue models.
- Traditional methods of generating revenue are becoming less effective, with data quantity and speed losing their allure as unique selling points.
- The VAS ecosystem is increasingly dominated by entities outside the traditional CSP domain, complicating efforts to monetize these services.
- The introduction and marketing of 5G NSA have set a confusing precedent for consumers and CSPs alike, complicating the future promotion and adoption of 5G SA.
The narrative surrounding 5G monetization is complex and nuanced. The transition from 5G NSA to SA represents more than just an upgrade in speed or efficiency; it’s about reimagining the role of CSPs in the digital ecosystem. The lessons learned from past generations underline the importance of adaptation and innovation. As we move forward, the ability to look beyond traditional revenue streams and embrace the new possibilities 5G SA offers will be critical. This may include embracing the role of enablers in an increasingly interconnected and smart world, where the true value lies not in the network itself but in the services and experiences it facilitates.
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