It’s no secret that the big communication service providers (CSPs) companies have seen their traditional revenue streams hit in recent years by a never-ending race to the bottom on pricing.
Competition in the market, along with the mass adoption of web-based communications tools (and competitively priced data packages), have made it increasingly difficult to make money on basic services such as SMS/MMS and calls.
That’s not to say that the B2C market is diminishing, of course. Figures show the number of registered smartphone users in the UK grew by 3.8% in the past year, while smartphone use is expected to reach 95% by 2025 – up from 88% in 2021.
There are still opportunities to take and grow B2C market share, especially for providers who become a ‘one-stop-shop’ for broadband and other services. Yet even this might not dramatically increase profitability, especially when the high network and infrastructure costs associated with 5G are factored in.
Selling assets to finance 5G rollout and decrease maintenance costs like the $16billion towers deal Vodafone recently struck with Global Infrastructure Partners (GIP) and KKR (KKR.N), and/or expanding their service portfolio like Orange’s diversification into banking, demonstrate how the industry is adapting to challenges in the market.
Big opportunities in B2B
As more organisations, in more sectors, take their first steps towards digital transformation, the opportunities for CSPs to diversify into the B2B market grow. Though valuable for consumers, 5G is set to radically alter how business gets done – for example, connecting supply chains, improving crop yields and healthcare, and heralding a new era of smart cities.
It’s a chance for CSPs to climb the value ladder with their enterprise customers, maximising the returns on the investments they’re already making in networks and infrastructure.
Supporting organisations across a range of sectors unlocks the value of digitalisation and puts CSPs at the centre of Industry 4.0 (and 5.0) – so they can become a conduit for product innovation, digital consumerisation, ecosystem collaboration and digital organisations. They also bring the strategies, culture and skills, and regulatory compliance needed in the digital economy.
5G is critical for enabling the next generation of Internet of Things (IoT) services including Artificial Intelligence of things (AIoT) since it supports low latency, higher capacity and network reliability. Businesses investing in connected devices need to be confident that the network will improve operational efficiency and not fail.
As well as leveraging public 5G, there’s further untapped potential for secure and private 5G networks. Earlier this year, BT and Ericsson announced plans to build these networks for customers, which should help them to grow their market share in sectors such as manufacturing, logistics, healthcare and defence. But while CSPs are well-placed to deliver 5G private networks, they also face competition from hyperscalers among cloud services providers, though AWS at least has described itself as a ‘collaborator’ not a competitor.
Risky business
All this represents a fundamental shift in CSP business models. According to one report from McKinsey, they are starting to build ‘non-core’ businesses – including offering ‘big data services, business insights, and data consultancy services to corporate clients.’ Others are becoming ‘ecosystem’ businesses by partnering with complementary, digital-first companies to increase their value.
It’s easy to see why CSPs would be nervous about diversification. The IoT space is an ‘unknown’ and they may feel they have no option but to enlist expensive consultants. It will require rapid upskilling of the workforce plus recruitment, and a level of data maturity that might not exist yet. Both financial investment and strong partnerships are essential if they want to move into new markets.
Powered by analytics
Still, CSPs cannot afford to stand still if they want a slice of the lucrative 5G market.
To ensure a sustainable future, while mitigating the risks, they’ll need to use real-time analytics, automation, powered artificial intelligence (AI) and machine learning (ML), to quickly derive deep contextual insights from every networking event. Processes such as network slicing must be ultra-efficient, dynamically allocate capacity where needed, without manual intervention as demand for services surges, while offering high levels of service assurance.
Delivering innovative network services is one of the five principles of digital transformation, set out in our eBook, A New Manifesto for the Future of Telecommunications.
The SAS analytics platform has been developed to support new data-driven business models by bringing together multiple data sources across hybrid and multi-cloud environments and then facilitating the consumption of those, using automated and semi-automated techniques to manage capacity and address challenges. Bringing together multiple data sources is possible via ‘Data Fabric’ – an architecture with enabling technologies that focus on an integrated layer of data with unconstrained access from any platform. According to Gartner by 2025 this can reduce human effort by a third and increase data utilisation fourfold. This, combined with use of automated and semi-automated techniques, reduces complexity, and presents actionable insights that drive innovation and diversification.
This is critical because, as we have seen, it’s only by unlocking the value of their own huge amount of data that CSPs can help their customers do the same.
