A study throws cold water on 5G business models – again

5G cold
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It is becoming increasingly clear that there was no real plan for 5G success. It was, it seems, all about technology after all.

Certainly based on what we believe CSPs can deliver (see any library full of articles about CSPs being proactive, personalized portals of pure pleasure and efficiency) and what users actually want, it is not looking good.

We may be wrong. We may be looking at a Ford situation where if Henry Ford had listened to what people thought they wanted we would now have very, very fast horses galloping us around.

A new study by the TM Forum highlights just how much has yet to be done to deliver non-traditional 5G services. It turns out that as well as the colossal investments in network technology – not to mention the associated costs of standards development, devices (whenever they arrive) and so on – the transformation of the OSS and BSS stacks is critical to success.

In fact, says the study, we basically need to scrap the stack and think end-to-end.

The main findings look like this:

  • 67% of total revenue from 5G use cases beyond eMBB and FWA is dependent on OSS/BSS transformation
  • 63% of connectivity related revenue for non-traditional use cases is dependent on OSS/BSS transformation
  • 72% of enabling and service creation revenue is dependent on OSS/BSS transformation

Summary: commercial 5G success depends on OSS/BSS transformation.

This may look gloomy enough, but study author Catherine Haslam says “operational silos must be consigned to history and services managed end-to-end from network provisioning, through to product creation, billing and service delivery, and back again. Automation and specifically AI-powered closed automation will be essential to monetizing the service differentiation that sets 5G apart from its predecessors.”

If you shook your head and sighed at that point, then you have our sympathy.

Other setbacks are beginning to emerge as well.

As a recent article points out – based on some work done by Gartner – the biggest barrier to digital transformation is you and your stodgy business culture. That, and the time honored fear of rocking boats, putting your head above the parapet, too busy putting out fires and the rest.

If the culture is not ripe for change, it won’t change. And it won’t change unless the change is forced downwards from the very top. Without that impetus it won’t be proper transformation, it will just be tokenistic (a word we now officially love).

Add to these buckets of cold water another study that says that consumers do not really trust or want autonomous cars (hopefully yet, given the amount of investment in the technology and infrastructure). Plus we know about the backlash against the ‘listening posts’ of Alexa and others, inside our homes, which we are now deeply suspicious about.

And the fact that ubiquitous coverage of 2G, 3G, 4G or 5G in developing markets like the UK is still a pipe dream and you have not just a barrier, but a huge obstacle course to get through, round or over.

It may be – as we are saying more and more – CSPs should stick to their knitting and concentrate on connecting whatever other industries want to connect as cheaply, effectively and appropriately as they can.

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3 Comments

  1. Hard to know where to start with this gloomy prognosis, but I continue to feel that 5G, if it is ‘a thing’ at all, is not particularly a telecoms thing. If we can stick the 5G label on anything, it’s most likely to be the next stage of industrial automation – enhancing many products and industries, very likely benefiting enterprises and consumers (though not all enterprises and consumers), dependent on communications, for sure, but equally dependent on AI, renewable energy, nano-engineering, massive cloud-based data storage and many other wonders – but, significantly, not ‘owned’ by the telecommunications industry.
    If this is at all true it makes 5G very different from other ‘Gs’, which were very much owned and driven by the industry, and closely and clearly aligned with new communications devices (handsets in particular) and services. Other ‘Gs’ enabled new business propositions, however shakily – a mobile phone! mobile data! mobile broadband! – that could be packaged up by the industry and sold. 5G is much more likely to be a B2B proposition that will be highly dependent on the whims and progress of other industries, whose requirements will be fragmented, geographically dispersed, highly varied, unpredictable. Leaving aside the demands on the OSS/BSS (which hardly seem like the biggest priority to me), how do you build a commercial business model for the telecoms industry on these shaky foundations? If telecoms was still publicly owned, a case could be made for massive speculative infrastructure investment in – let’s say – urban and industrial centres, and along major road networks, but how can it be justified to shareholders looking for a return in three – five years, not decades?
    This isn’t to say that no money will be made by the telco industry from 5G and everything that it enables – more connected devices, the IoT, the autonomous vehicles that we all so long for – but I struggle to see how telecoms can be in the vanguard of the revolution…

  2. 5G like all the other G’s is the promise of bigger and faster capacity and speeds. This time, 5G has brought in the imagination of what could be done with all that instantaneous speed, density, and capacity. Fundamentally, it is up to the applications and different businesses that will consume the network connectivity, speeds, and additional service capabilities – and at which operators will derive their returns and profitability. And certainly maybe that we won’t see the necessary technologies implemented until 6G. The key is speed in returns and profitability. The operators’ core OSS/BSS has a huge impact on the operating costs and ability to quickly execute the activities of the business to its customers and partners. It can increase sales costs, or it can decrease it (or contain it)…while increasing productivity. Same with network resources. I recently watched a SCI-FI movie where one of the premises of the story was the invention of ‘Hyper-light Communications’. One use of it was instantaneous, latency-free inter-planetary communications. It was also the key technology that enabled artificial intelligence to become real and functional. Government and private sectors were working together. So in SCI-FI terms, we can guestimate that the amount of applications and enterprises that will consume 5G density and speeds — we’re only half of the way there, but we’re working on trials and applications. In the meantime, there’s still plenty to connect with 4G.

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