March 3, 2023
We caught up with Accenture at MWC 2023 to find out more on 5G monetisation and the growing sense that it’s difficult to do.
This year’s show as anticipated wasn’t short of 5G monetisation demos but when speaking to exhibitors, such as Accenture, there was also a sense of realisation that monetisation is a work in progress. With that in mind, here are our key takeaways from that conversation.
FWA to connect the unconnected
On the consumer side we were told that 5G Fixed-Wireless-Access (FWA) is something we should be excited about, especially from a social aspect. Word has it that, in pretty much every country around the world, there’s the issue of digital divide and in rural areas, or more economically disadvantaged areas, 5G FWA can act as a “game changer”. Especially in markets such as the US it reportedly presents a real solution. This we understand is because in the US, as compared to Europe, a circuit connection can be very expensive compared to FWA which puts forward a low-cost opportunity to connect the unconnected.
5G to mimic the Kaizen method in enterprise
On the B2B side, with an advanced network, telcos are given an opportunity to provide value-added services (VAS) to large enterprises. We were given an example from the manufacturing sector where 5G can be used as a tool to gradually improve processes. We were told of Toyota’s Kaizen method, which loosely speaking is about continuous process improvement, and the idea here being that 5G is not to be seen as a panacea, implemented to expect a sudden spike in revenue. Rather, it should be viewed as a gradual yet continuous cycle of improvements to customers’ production processes, worker safety, reduction in error rates etc.
In terms of other types of VAS we should think about, security was brought up as something on everyone’s mind right now and with that private networks as a use case. By setting up private networks for enterprises telcos can secure the network and support their customers by protecting them from hacking. As such, we were told 5G will act as a platform, and therein lies its value.
Rising costs and stagnating returns
More broadly we also discussed the economic crisis and the impact on operators as their input costs are rising, including labour, energy, equipment, software prices, and other parts of their supply chain. Meanwhile, we were told operators can’t raise their rates high enough to compete with the rise of their costs (although we know some telcos in Europe haven’t been shy to go above the inflation rates). But some operators such as Telia, Liberty Global, and Verizon we were told, aim to combat rising costs by becoming more digital to improve customer satisfaction, be more engaged with employees and hopefully improve employee satisfaction but also reduce their outgoings.
It’s worth considering what has been going on for a little while in the industry already, namely the delayering of telcos. This includes turning towers into multi-tenancy assets to generate more revenue with some operators for instance choosing to maintain private equity. Another example we were given was of Virgin Media/O2 taking their sunk assets and monetising them by turning their legacy wire centres into a new company called AtlasEdge. The essence of the company being to lease their wire centres and allow cloud and software providers to use the infrastructure and enable edge computing across the continent. So, with some inventive thinking, we were told, more creative operating models are now beginning to emerge for telcos.
In short, while no new ground-breaking models to monetise 5G seem to have emerged, we learnt that in certain markets 5G FWA may be an unsung hero that can help close the digital divide. While the social aspect of connecting the unconnected is certainly a good cause, how much impact this use case can have on operator bottom lines isn’t clear yet. In that, the question of commercial viability for operators to connect some of the most remote and economically disadvantaged areas around the world remains unanswered. Here is a previous coverage of the topic if you fancy a read.
Also, while plenty of exhibitors were showcasing edgy ways to monetise 5G (we certainly weren’t short of metaverse demos), we learnt that the real hack of 5G monetisation will be to look for a gradual yet continuous impact on revenue. In the meantime we say let’s hope for more ubiquitous 5G coverage.
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