Martin Morgan, VP Marketing, discusses how stand-alone 5G will change the rules for monetisation platforms

In January this year Light Reading ran an article reporting that, according to leading analyst firm, Omdia, the biggest challenge for service providers in 2021 will be monetising 5G. They’ve got a point – but only until we start to see stand-alone 5G being rolled out. The reason for this is without a 5G core, 5G is currently just like ‘faster 4G’. However, the problem is that data, as a service on its own, is seen as a commodity. The danger is that with 5G, data will just become a faster commodity, with the only differentiator being price.

Indeed most of the current pricing models for 5G are based on unlimited data. However, from looking at the success of different 5G bundles from service providers like Verizon and Korea Telecom the most successful 5G bundles are the top end expensive offers which contain lots of different content services as part of the bundle. So it could be argued that from the consumer’s perspective the differentiator between which 5G bundle to go for is third party content from Disney+, Spotify, Amazon Prime, etc. Consumers like content as part of their mobile bundles and are happy to buy content from their service providers as part of a bundle. This is important as we know that consumers generally trust their service providers more than they trust OTTs. Service providers can build on this trust to sell increasing amounts of 3^rd party services over 5G.

Also in January, DisruptiveAsia ran an interview with the CTO of Dutch service provider KPN on the topic of 5G use cases. This discussed 5G use cases, such as guaranteed bandwidth and working with local municipalities to enable ambulances to change traffic lights from red to green as they rush to accident sites or back to the hospital. However, they also discussed a use case for a 5G coverage on-demand service. This where enterprises can order additional 5G coverage for areas with poor coverage. This could be in a factory, where 5G is important for connected devices. KPN provides coverage to a specific area and charges per square metre of additional coverage, where the cost per square metre is between 10 and 25 cents.  Charging by square meter for 5G services could pose some interesting challenges to older charging and billing systems.

When we start to see the roll out of stand-alone 5G and the implementation of 5G cores then this is when we will see some very creative ideas for how to monetise 5G services and the 5G network. The example of charging by the square meter for additional coverage, could just be one of many new pricing rules that service providers will need to provide for as they get creative with 5G monetisation. The ability to monetise the customers’ 5G experience has been well discussed with 5G gaming being the most visible example of how this can be done and this has previously been discussed in this blog. What is certain is that service providers will need to be able to apply pricing rules that they had previously not even imagined – and they’ll have to apply them quickly and by themselves. If a service provider wants to rapidly launch a new service with a new pricing model, then the last thing they need is a lengthy and expensive service heavy approach to change pricing rules. Good news is that configuration over customisation is now the norm in monetisation systems so service providers can quickly react to new opportunities.

With regards to different pricing criteria that we could see in 5G, data volume will still exist but mostly for fair usage and roaming. Some service providers have different prices for different speed tiers, and then there’s different bundle prices dependent on the content and other services bundled in. However, as we see more stand-alone 5G services and a wider variety of devices then we’ll see new pricing rules which could include the following list of different pricing variables:

Quality of service, latency, location, customer life time value, number of devices connected, on-demand pricing, groups (e.g. different pricing rules for sports clubs, etc), recurring fees for different content / service purchases, pricing based on service level agreements with partners, special time sensitive offers (e.g. weekend sale), special pricing for different services based on holidays, time of day, 3^rd party applications fees, customer loyalty, tiered pricing for different apps (e.g. game levels). These really are just a sample.

In other words, many, many new capabilities allowed for by 5G combined with some that were possible in 4G – but now much more manageable.

Plus there are an infinity of enterprise applications and there will be many more that we haven’t even thought of yet.

Just to add extra complexity into the mix, all of the above could change dependent on the business models being used. Some services may be zero rated and paid for by the government (e.g. home schooling / education and healthcare), some may be delivered “free of charge” and the service provider or third party generates revenues from targeted advertising. As many 5G services will involve 3^rd parties we’re also going to see a lot more partnerships and revenue sharing models. These will contain many different variables, for example SLAs for customer network experience, SLAs for thresholds, and so on. Then there’s also in-app purchases and direct carrier billing / charging where the service providers bill / charge their customers on behalf of others and take a percentage of the revenue.

Plus there’s the 5G network as a service (NaaS) business, whereby the service provider sells on-demand 5G connectivity to partners. Think of a gaming company launching their own 5G gaming service with 5G connectivity built in. This could be a charged by the gaming company as a monthly fee to customers, of which the service provider gets a share for delivering on-demand 5G connectivity. Could the service provider allow the gaming company to charge / bill for this service using the service providers’ charging and billing systems and open a new revenue stream? This is another option that needs to be considered when looking at 5G monetisation models.

Monetisation of 5G services will get more complex. Service providers will not just be selling GBs of data anymore. The opportunity is to sell much, much more and embrace new business models – this will be the key to monetising 5G and it will only get moving when we see stand-alone 5G start to be deployed. Then the floodgates of creativity will open and we will see 5G networks move beyond providing connectivity to be the foundation on which many new business models are built, and new revenues streams created.