Catalyst tackles the business of making 5G pay

5G is tipped to be a transformative technology for consumers and enterprises. However, for it to be a success, communications service providers (CSPs) need to be confident they will get a decent return on investment (ROI). A TM Forum Catalyst proof of concept is looking at how telcos can tap new industries and business models to monetize 5G.

Juniper Research estimated that by the end of 2018, CSPs, hardware suppliers and public bodies would have spent $60 billion on 5G research and development. In 2018 alone, they are estimated to have shelled out $30 billion on trials of the network technology. CSPs will need to recoup these costs and offset rising data costs with effective 5G monetization models to make all this worthwhile.

Last year, Deutsche Telekom CEO Tim Höttges was quoted as saying his company is exploring new lines of business to recover 5G investments:

“We will not be selling data packages alone. We are participating in the solution space. Our ecosystem is changing into a model where we participate on the revenue.”

During a 5G event panel in late 2017, Telenor Norway CEO, Berit Svendsen, urged the industry to identify a strong business case and use case for 5G, noting that increasing network efficiency and enabling faster speeds for consumers was not enough to justify the “huge” investment required.

From low value to high

A new TM Forum Catalyst project called 5G Operations & Monetization, is exploring how CSPs can move from low-value, traffic-based business models to higher-value, experience-based ones. Moving into new verticals such as manufacturing and entertainment – where the higher-value, multi-sided business model opportunities exist – requires new and complex partnerships. CSPs must find a way to ensure services are delivered seamlessly between the partners and that everyone in the ecosystem gets paid.

Game on

China Mobile, the largest operator in the world, is the champion of the Catalyst. Catalyst champions bring a business challenge that needs to be solved, and each brings a unique angle based on their geography, strategy and more. They work alongside the Catalyst participants – in this case, APIGate, BUPT, CAICT and Huawei – to develop solutions to the specific challenge. Each participant provides a different piece of the solution puzzle.

The Catalyst team initially is exploring two use cases in distinct but growing verticals: media and entertainment, with a focus on gaming and utilities.

According to Ovum, by 2028, gaming will account for 90% of 5G augmented reality data, and immersive and new media applications will generate more than $67 billion a year – this is equivalent to the value of the entire mobile media market (video, music and games) in 2017.

For CSPs it seems like a good place to start with reaping 5G rewards.

“The number of media and entertainment providers is growing very rapidly with different types of content technologies that they would like to roll out on consumer handsets,” says Emmanuel Amamoo-Otchere, Vice President, Carrier Software Technology and Industry Development, Huawei. “It’s growing at an exponential rate. Most of this new content and video requires high bandwidth and also very low latency. Therefore it is an ideal candidate for the 5G network.”

At Digital Transformation World in Nice in May, the Catalyst team will demonstrate cloud virtual and augmented reality (VR/AR) gaming partners working with CSPs to deliver an enhanced gaming experience via 5G. They will show the integration of partner services, orchestration of 5G resources and monitoring of network services, as well as how the consumer is billed for the combined services and ensuring all the partners get paid.

“Most of these of these content providers understand the potential network bottlenecks and want to partner with the right network provider to ensure they can deliver the best experience for end users,“ Amamoo-Otchere says.

He adds that in this context service providers, content providers and other partners must share the responsibility – and reward – for delivering an optimum consumer experience.

There’s no place for “finger pointing,” Amamoo-Otchere says, adding: “Partnering has never been an easy process and 5G actually escalates it to a new level as most of the activities and processes demand real-time automation of settlements, and embedding of digital trust. This work is a very important piece of the partnering puzzle.”

New energy

The second use case focuses on utility companies, which increasingly are partnering with CSPs to monitor and manage a growing amount of IoT infrastructure. Because of their ability to ‘slice’ the network, CSPs can provide dedicated and reliable low latency and guaranteed connectivity experiences for critical industries such as utilities.

The Catalyst team will show the use of a 5G backbone to manage, operate and maintain a utility company’s assets. This will include demonstrating how the CSP can orchestrate services that monitor a specific power line, stream a video about that power line’s condition, charge for the service and ensure settlement with the service-delivery ecosystem.

“It is exciting times for CSPs as this will show that they have a role as ecosystem service aggregators, enabling services between different producers as well as consumers,” says Amamoo-Otchere.

TM Forum know-how

The team is using the TM Forum Business Process Framework (eTOM) to map out enhanced partnering and settlement capabilities, while TM Forum’s Open APIs are being used for orchestration, service level assurance and product activation between partners and with the CSP. The architecture is based on the TM Forum Open Digital Architecture (ODA), which is a vision for a cloud-native business approach, based on microservices that are deployed in virtualized containers in a loosely decoupled environment.

“We’re focusing on the IT part and hammering that out, so we can give assurance to service providers that everything is ready for them to support their new business models,” Amamoo-Otchere says.

Next steps

The Catalyst wants to continue to help push CSPs further up the value chain through working with more verticals such as the automotive industry, health and finance. In the future, the team is also interested exploring the possibilities of edge-based charging and billing services as core networks adopt cloud-based deployments.

Learn more by watching this video filmed at Digital Transformation World 2019: