The promise of 5G, however far away it is, is clear. Lightning-fast speeds, low latency, great reliability – essentially it heralds the realization of every use case on every Powerpoint slide for the last 20 years.
What is also clear is that the last vestiges of traditional billing models must evaporate along with the last wisps of hype.
In many cases, the pricing and billing of 5G should be about what doesn’t happen. In the same way that Chinese medicine is preventative by design (in other words, you are essentially paying the doctor to keep you healthy, and traditionally if you got sick anyway you didn’t pay him), it may be that the pricing model for 5G should mirror that by leveraging analytics.
Indeed, analytics will be key to providing the value for billing – and therefore the monetization of 5G, far more so than technologies that have gone before. Consider – with 5G (and the latest upgrades of 4G), superfast connectivity will practically be a commodity. The real value add is when the analytics engine picks up a blip in the water pressure behind a dam, say, or the blood pressure in the heart patient. That knowledge has enormous value to the doctor, and more so for the patient.
We have discussed for many years how to bill for value. Finally, with the advent of 5G, we will almost be forced to do so. Billing for time or speed or data (apart from on a subscription basis) will be completely redundant.
5G, more than anything else, will blow apart old business models. The IoT, which we still talk about as a ‘thing’, will disappear. Healthcare will evolve as the industry understands how to use the technology, from apps and monitors to teaching and diagnosis.
So, too, in other industries, from retail to automotive to logistics, 5G will disrupt and remold.
How telcos think through their pricing and billing models – whether based on QoS, analytics or another method based on value – will determine the success of a range of services, industries and companies for the next 20 years or so.
If we end up ‘billing for value’ as we have discussed through the 3G years and the 4G years, then telcos need to start thinking now about the value of 5G to customers and how they can turn that into money.
Remember all the next gen billing conferences back in the late 1990s and early 2000s when the internet was going to drive value based pricing. 5G could actually start to deliver this – especially if you consider the need to provide SLAs for IoT and enterprise services. 5G is going to drive a lot more partnerships between telcos and other companies as 5G connectivity will be foundation that many digital services are built on. It’s a bit ironic, but the faster networks become the more commoditised they become, People expect them just to work and to deliver the services that they’re paying for (from music to movies and all the new services that 5G will open up). Going to be an interesting journey updating billing systems for 5G, or do we even need billing systems anymore?
We are asking exactly the same questions Martin.
The impact is indirect at best! If you’re thinking we will start billing for latency or based on the average download speed for a session, think back to when some people thought that we were going to start billing for quality on 3G! 5G may enable digital services that have more complex rating/charging models, but these are likely to be controlled at the edge, not in centralized billing systems.
Good point, Paul. The question, almost 20 years on from those discussions, is ‘are we ready for more complex charging/rating models’ – let’s hope so.
I suspect people are never ready for more complex charging/rating models – unless the end result (the price) is ‘cheap as chips’, in which case they won’t care much how you arrived at it. And telcos are never ready to explain complex charging/rating models to consumers. To take one of the examples above, are they ready to explain that ‘while your health monitor normally costs $5/month, this month we detected that you were about to have a heart attack, so that’ll be $10,000 please. Hope you appreciate the value’.
I’m still struggling to understand what any of this has to do with 5G. Whether it’s 5G or 4G or nothing to do with the network technology, successful businesses, whether they’re selling airline seats, hotel rooms, sandwiches or whatever, already charge based on delivered (and perceived) value. And to a large extent, so do telcos. People perceived 4G as a wider, faster mobile data channel, for which they were willing to pay a (relatively small) premium (though that was soon eradicated by competition). It let them download more, so they were willing to buy a bigger data package. Pretty simple commodity pricing, reflecting the value they perceived the telco to be delivering.
If your definition of 5G (‘lightning-fast speeds, low latency, great reliability’ – i.e. ‘4G+’) is correct, the same pattern will repeat itself – assuming that consumers perceive that to be of any great value to them. Personally I’m not sure they will. Unless someone comes up with a compelling case for a ‘5G handset’ – i.e. a tangible example of 5G, delivered by the telco – they’ll save their pennies for things – services, devices – that will improve their domestic experience, or their automotive experience or whatever (which in all probability won’t be provided by a telco) and won’t give the proverbial rat’s ass whether it’s supported by 4G, 5G, bluetooth, WiFi or whatever.
If it’s a market for telcos at all, 5G (assuming it ends up having real intrinsic value in terms of speed, coverage, latency, the usual stuff) seems to me much more likely to be a wholesale market for a wholesale service that a myriad other service providers – if they see the value – will plug into, to enable their smart cars, domestic hubs, intelligent parking and so forth. If I was running a telco, I’m not sure I’d be confident about the return on investment in that model.