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5G Services: Profitable for Business

Home 5G Services: Profitable for Business

5G Services: Profitable for Business

by Anudha Sawarkar
Anudha Sawarkar

4G opened up a whole new world to consumers. Seemingly overnight, a vast ecosystem of mobile applications appeared that allowed consumers to do everything from watch movies on their tablets to make bank deposits from their smartphone. But 4G didn’t have a substantial an impact on enterprises beyond the need to mobile-enable their existing services.

The Difference Between 4G and 5G

5G, however, will have an enormous impact on enterprises. What 4G has been to consumers, 5G will be for enterprises: it will change the way they interact with the world around them. And, for service providers, 5G opens up a new world of opportunities to partner with enterprises.

Perhaps nothing illustrates the difference between 4G and 5G more clearly than the projected markets that service providers will serve in the future. The chart below on the left shows where service provider revenue comes from today; not surprisingly, consumer-centric services drive the lion’s share of revenue. But on the right, we see where revenue sources are expected to be in 2025. That’s not a mistake: the vast majority of service provider revenue in the next five years will come from enterprises, not consumers.

5G Targeted Services

5G: More about vertically targeted services

Enterprise customers have historically been the most profitable for service providers, yet it remains a small portion of the overall market. 5G changes all that because, for the first time, service providers are offering enterprises more than connectivity; they’re offering innovation that allows enterprises to not only do things more efficiently, but do different kinds of things, from smart factories to drone deliveries.

Why 5G will be Profitable for Service Providers

Right now, 5G is a wide-open field of opportunity. We’re only beginning to see how the ubiquitous mobile broadband, IoT interoperability and low-latency communications enabled by 5G will drive business innovation, but the early applications are already generating excitement: self-driving vehicles, remote real-time medical care, smart factories, smart cities, augmented reality, and the list goes on. In these scenarios, service providers aren’t simply providing the underlying network infrastructure; they’re critical partners in the service delivery as well, adding analytics, intelligence and assurance to 5G services that will differentiate them in the market.

No wonder service providers are excited about 5G. But they’re not the only ones. Over-the-top (OTT) competitors, from Amazon to as-yet-unknown start-ups, will figure prominently in the 5G mix, and mobile service providers will need to figure out ways to out-serve and out-innovate them. That competitive advantage could come in the form of unique network intelligence that allows enterprises to customize their 5G services, or by providing a better service experience through technologies such as Wi-Fi data roaming.

One thing is clear: service providers need to begin mobilizing their business model around 5G enterprise opportunities today. For example, we’re beginning to see tier one operators restructure their organizations around these opportunities. In the past, tier ones might have divided their business units between consumer, enterprise and, maybe, IoT. Today, it’s not unusual to see service providers structured by vertical industries—healthcare, banking, manufacturing, transportation, etc.—with new business initiatives built specifically around those industry opportunities. This gets to the heart of 5G’s transformative potential, because this isn’t simply a change in the way that the network is architected, but a change in the way a service provider’s business is architected.

What enterprise services will drive your revenue in the future? It’s a question you need to ask yourselves today, because it’s a certainty your competitors already are.