5G pricing, service and partner innovation: The big picture

This is an excerpt from our recent report Pricing, service and partner innovation in 5G. Download the report now for the full insight. 5G and cloud computing offer communications service providers (CSPs) an opportunity to rethink services, pricing strategies and approaches to partnering. In doing so they can revolutionize telecommunications in the same way that public cloud providers have revolutionized computing. Mobile operators are at the start of this journey. Even though 5G services have been available in some countries for two years, little service innovation has taken place. Is this because technology is holding operators back, or is it their culture and unwillingness to experiment and take risks?

The answer is all the above. Early 5G services are not very different from LTE. Operators have taken the path of least resistance in how they have deployed the new technology, connecting 5G radio access networks (RANs) to LTE core networks. These networks are closed, meaning equipment vendors have delivered access and core networks end to end.

Even so, there has been some innovation in 5G services and pricing. South Korean mobile operators, for example, have invested in new capabilities such as augmented and virtual reality (AR/VR) to give consumers new gaming and entertainment experiences. Globally operators have adopted 5G pricing structures similar to fixed broadband rather than mobile data pricing, and speed-based pricing has become commonplace in many markets.

What’s next?

Now CSPs are starting to roll out standalone 5G networks, which involves deploying a new core network. T-Mobile USA announced the world’s first standalone 5G network in August 2020, and many other operators have indicated they will begin deploying new core networks this year. It will take time for operators to develop and deliver advanced 5G services based on these networks, however. Some operators plan to deploy edge computing to offer services that require extremely low latency, but most are still figuring out their edge strategies. At the same time, CSPs are determining which network components and support systems should move to the cloud and which public cloud providers to partner with. Open RAN is generating a huge amount of interest because of promised CapEx and OpEx savings, but most telco CTOs realize that they must strike a balance between cost savings, network reliability, customer experience and ability to innovate.

Whatever capabilities mobile operators create in the network, they must have IT systems in place to ensure that they can deliver and monetize new services. Agility and flexibility in these systems are crucial.

CSPs can no longer take a “build it and they will come” approach. For example, they simply cannot afford to build edge networks across entire regions without first demonstrating demand for edge-enabled services. The ability to experiment and test monetization principles is a necessity.