Home Making—and not just saving—money should be your focus with 5G

Making—and not just saving—money should be your focus with 5G

Home Making—and not just saving—money should be your focus with 5G

Making—and not just saving—money should be your focus with 5G

by Seshadri Sathyanarayan
Seshadri Sathyanarayan

For years, “bigger, faster, cheaper” has been the mantra for telecom transformation. In the 5G future, however, the new mantra is value. While saving money is good for communications service providers (CSPs), the focus with 5G should be making money. Communications service providers CSPs need to look beyond reducing the total cost of ownership (TCO) of their network and invest in increasing the total value of ownership (TVO) of their network by delivering new revenue-generating services to enterprises and consumers.

CSPs, of course, have heard this message before. The rise of over-the-top (OTT) providers during the 4G transformation included a warning to CSPs not to become merely bit-pipe providers. But the opportunity in 5G is very different from 4G because the demand for new mobile services is there and is being driven by enterprises this time. Smart factories, real-time healthcare applications, autonomous vehicles, private mobile networks, and augmented/virtual reality experiences are just some of the 5G applications that enterprises are looking to their CSPs to help deliver and manage.

Building Valuable Networks

So, how do you build a more valuable network? A value-driven network focuses on service creation and innovation rather than simply driving down costs. Moving hardware into the cloud is primarily a TCO play because it drives down CapEx costs through better resource utilization. But what happens when you move edge services into the cloud? Or the entire 5G mobile core?

Strategies like these become game-changers for delivering private 5G services to enterprises because now you don’t have to worry about processing real-time data off-site or backhauling sensitive data over the Internet. And if you connect those services to a cloud platform like Azure, you can bring in machine learning, AI, and other technologies to bear on those enterprise services.

How CSPs Can Use a TVO Approach to 5G

A TVO-driven approach isn’t intuitive for telecommunications companies because the focus for years has been running the network as a cost center rather than an innovation engine. With the arrival of 5G, there are many more opportunities for CSPs to bring innovation to enterprises and even enhance the offerings of OTT providers through partnerships.

Multi-access edge computing (MEC) is one such innovation, and network slicing is another. Bringing this technology to the enterprise market is about more than connecting endpoints; it’s about connecting businesses to the advanced technology that will power mobile solutions of the future.

Using a “TCO Plus TVO” Equation

There is a cost-saving component to 5G transformation, to be sure. The ability to shift virtualized network functions from a CSP’s premises to a public cloud service provider, for example, brings additional levels of cost efficiencies. These TCO-driven initiatives are where CSPs start the journey to 5G because they can pay for the investments to come. However, the real payoff in 5G transformation occurs when you combine these savings with new revenue generation. The “TCO plus TVO” equation is what CSPs need to make money from 5G and create a sustainable future strategy.

How to Calculate Total Value of Ownership

Calculating TVO can be problematic because most 5G services are still in the development stage. Likely, the most profitable 5G services have yet to be discovered. But to illustrate the opportunity, we’ve created a TVO formula to show how investing in network innovation can pay high dividends. You can view that formula and the business case for considering TVO as the best measurement for 5G success in our new whitepaper, Total Value of Ownership: The New Metric for 5G Transformation. The paper outlines why TVO is essential, what it looks like, how to measure it, and how to get there.

Making Money With 5G

Saving money is good, but making money with 5G is better. Read the paper and find out how Microsoft can help you and business customers make more money with 5G technology.