Unlocking the value of 5G in the digital marketplace

Communications service providers (CSPs) generally look to onboard many customers onto their mobile networks through varied channels. Sectors such as airlines and hotels on the other hand, intentionally leave space open in a phenomenon known as yield management. While empty seats or rooms may seem like a loss for an operator, they are essential for operational excellence. CSPs, unfortunately, have struggled with yield management since the 3G and 4G eras.

5G now is all set to change this! There is a significant push to shift the way CSPs engage with their customers. As the industry confronts a surge in network traffic volume, a proliferation of connected devices, and with increasing developments in automation and augmented reality (AR), operators are now realizing the vast potential of 5G technology to enable core services in the B2B arena.

The Unicorn Mindset

Network slicing will allow CSPs to automate and guarantee the delivery of services with very different characteristics and requirements over a standard software-defined infrastructure. This kind of dynamic, high-performance connectivity is critical in areas where analysts foresee some of the biggest investment trends.

In its coverage and analysis of the newest unicorns (privately held startups with a value of over $1 billion), the consultancy firm PwC focuses on “platformization” in five key areas:

1. Consumer financial services: PwC reports that the number of fintech unicorns has grown at a compound annual growth rate of 35%, from only 36 in 2016 to 159 in 2021. Platform trends here focus on payments, lending, and digital currencies.
2. Energy transformation: Interest in electric vehicles is driving the development of digital ecosystems attracting companies across automotive, energy, logistics and financial services verticals.
3. Metaverse: Specifically considering educational technology, gaming, and entertainment streaming, the PwC analysis estimates that unicorns operating in these sectors raised close to $30 billion in investments. Interest in the metaverse will increase substantially as 5G and artificial intelligence improve, making virtual spaces more realistic and immersive.
4. Mobility/delivery services: Here, a trend that began with ridesharing has shifted post-pandemic to focus on retail delivery ecosystems.
5. Healthcare: The pandemic has also fundamentally changed healthcare, giving rise to digital ecosystems focusing on health and wellness. Since the pandemic, PwC reports about 13 new telehealth startups, nine of which went on to become unicorns in 2021.

A 5G revolution is truly underway and even more evident in digital marketplaces that allow CSPs to tap into newer streams of revenue. The easy adoption of 5G is a catalyst for the marketplace revolution allowing many more businesses to realize the benefits of “network effects”; a phenomenon that platform companies like Amazon, Airbnb, Facebook, and Uber have honed over the years. Platforms that attract more participants than their competitors thrive because the larger the network, the better the match between buyers and sellers.

5G and the digital marketplace

The powerful combination of 5G, cloud technology and open application programming interfaces (APIs) is enabling companies with traditional business models to transform into platform providers and marketplace operators. The biggest benefits for CSPs is the ability to explore newer revenue models, strengthen their customer base and increase value for their core assets/services.

Several CSPs are currently developing platforms to not only innovate their customer offerings through partners but are also looking to maximize their core connectivity services. As these CSPs deploy 5G, they are creating digital ecosystems across several industry verticals to deliver exciting and new capabilities.

Vodafone, for example, is working on a marketplace for drones, where it will sell not only its own connectivity services but also devices and other capabilities such as management and location services.

Mercedes-Benz Group has partnered with Telefonica Deutschland and Ericsson to develop the world’s first 5G implementation hub for automobile production at its ‘Factory 56’ in Sindelfingen.

Qualcomm developed the world’s first 5G and AI enabled flight platform for large-scale deployment in areas of public safety, asset inspection, drone operations, filmmaking and entertainment.

With these examples, we can see the technology standards evolve through time to better support and future proof 5G innovations.

Conclusion

The 4G evolution was a step change that brought better capabilities in aspects of LTE, VoLTE, network efficiency and helped lay a standard for the future of network technologies.

Today, 5G is a technological breakthrough that is set to modernize many sectors by ushering in newer capabilities and raising the industry potential. CSPs are now positioned to innovate with disruptive business models and emerging technologies while exploring newer revenue streams through platformization of core assets and marketplace as-a-service models.