Risk and reward in 5G – too big a gamble?

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As telecoms operators respond to the potential that 5G networks bring to their customers—and to their own bottom lines—there is already pressure to create and deploy appealing applications and services quickly. But will the gamble of quick rewards might simply be too great a risk.

It is unknown if consumers will be willing to pay a premium or even have an appetite for higher-speed, low-latency services. Some operators have obviously not learnt from experience and have already fallen into the same trap as 4G by offering 5G services at the same price points to attract early adopters and offset the massive costs of network upgrades and spectrum purchases.

When 4G was rolled out, new apps and services did not require near-instantaneous, zero-failure communication, or include the kind of liabilities that come with providing immediate connections on which people’s physical well-being depended. So, network operators only needed to concern themselves with areas such as theft of services, network vulnerabilities, poorly managed partner accounting, fraud and dissatisfied customers demanding refunds or credits. Even in those simpler times, many found themselves flat-footed when unanticipated weaknesses and vulnerabilities were revealed, and sometimes exploited. The industry may not have had the chance to learn in a 4G world about the risk-management required for the new 5G world.

Artificial Intelligence and Deep Learning technologies will have vast quantities of data to tap, enabling whole new business opportunities. But this also raises a vast range of concerns, ranging from liability exposure to ethics and bias concerns and explaining decision making in court when things go wrong. Life- and culture-changing services ranging from remote medical consulting and monitoring to self-driving vehicles spark plenty of excitement that may overshadow risks and could undercut the benefits.

Market expectations, and even network stake holders, will demand new apps and services that can reach consumers virtually overnight, concurrent with expanding and operating a properly functioning and protected network. Operators will turn to partnerships, many newly formed, to provide insufficiently tested services and apps quickly to both consumers and enterprises, further increasing the element of risk.

A recent survey by Accenture found that 79% of the respondents believe that 5G will have a significant impact on their organization, but 62% also believed 5G would make them more vulnerable to a cybersecurity incident. Service providers are going to have to come up with some seriously convincing risk mitigation plans if they are going to overcome these market doubts.

Peter Coleman, risk specialist at Aegis Interaktif Asia, said that, “Operators and service providers we’ve talked to in Asia Pacific plan a wealth of service offerings, and prepare for unanticipated ones the market will inevitably demand. But that focus on the marketing potential may leave them without a full evaluation of potentially very large risks and how to manage them”.

As 5G networks are deployed, service providers get a chance at a makeover, building a firm risk-management foundation underneath a world of business potential in new services. Risks, however, will be found in every corner of an operator’s business. An ethos of equal attention to profit potential and risk assessment and minimization will light a path to sustainable profitability.

Key elements of making services profitable and successful include:

  • fully understood service requirements (service design);
  • partnership structures and liability sharing (contractual relationships);
  • network performance risks and liability, (plus cybersecurity controls); and
  • understanding all the elements of a clear risk profile, along with effective mitigation strategies.

But if history repeats itself, risk concerns will be put on the back-burner by service providers and network operators in favour of rapid rollouts and this may come back to bite them in the worst possible way. Losses from some of those risks could potentially be huge.

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