Exclusives : Monetising the Enterprise: Paths from 5G to 6G

Monetising the Enterprise: Paths from 5G to 6G

Making money is taking central stage in discussions about 6G in a way which it simply hadn’t at this stage in 5G conversations. That may be a good thing though. Can we build on lessons and business models emerging in 5G to create a smooth upgrade path towards the next generation of services?

At a recent briefing, Spirent’s Stephen Douglas highlighted the opportunity for enterprises inherent in 5G’s evolution. He pointed to statistics from Vodafone suggesting SMEs could reap productivity savings of £8.6bn thanks to an accelerated rollout of 5G Standalone; the $23.6bn windfall Rethink Research have predicted operators will gain by 2030 thanks to enterprise network slicing; rail network upgrades and much more.

While these sound promising, we have to question how much of this revenue opportunity is likely to land in the hands of the telcos. History does not look encouraging in this regard.

In a recent conversation with 6GWorld, Accenture’s Jefferson Wang noted that: “We’re running into the same problem beyond 5G that 5G had. Yeah, release 15 and 16 were amazing to work on for the mobile industry, but would B2B clients accept 5G?”

Wang, Accenture’s Chief Strategy Officer in Cloud First, went on to explain the challenges that the telecoms ecosystem has been facing in finding a place inside other industries.

“I’ve worked across almost all of Accenture’s 19 industries. Manufacturing industries focus on yield, number of shifts, flexibility of the line, among other KPIs. So it has leveraged very dependable technologies like shielded ethernet and question the need for 5G and edge computing. Utility industry clients said “We design networks to substations drawn in lines, not circles like a mobile network.” And the healthcare industry said “We’ve got massive HIPAA privacy compliance issues. We can’t do certain things that other industries can.””


Enterprise Elements

While 5G advocates will highlight the pace of consumer 5G roll-out and adoption, all the talk in the development of 5G was based on enterprise use-cases – autonomous driving and remote surgery were much talked-about during 2016 and 2017. Arguably, the fact that there is such an emphasis on consumer 5G today reflects a failure of 5G adoption in the enterprise.

That said, ‘telecoms’ is a broad church. Can we learn from some of the more effective companies?

Amit Mehrotra was hired earlier this year to lead Tata Communications in the UK & Ireland, a company which is exclusively focussed on enterprise customers rather than consumers.

“It’s really about three levels: Connected infrastructure, connected experiences and connected solutions,” Mehrotra explained, outlining their business approach.

“At a global level, digital platforms are roughly 55% to 60% of our revenues, but if I look at the UK it’s about 85%.”

That kind of approach is a far cry from many others in the telecoms world, although many would like to get there. “It’s just been a journey,” Mehrotra noted, giving the example from the automotive industry where adding connectivity modules and SIMs was step one.

“The next thing you know, we’re talking about connected entertainment in these cars; at some point in time then we talk about how you monetise that. Then we also have… security where we connect about 180 locations of their plants, factories, marketing offices, all of that.”

Note that 5G doesn’t appear in this conversation; nor does any particular generation of connectivity. How come?

“5G is an amazing technology. It’s not a holistic enterprise solution, it’s a piece of the solution,” Wang explained.

“As we think about 5G and 6G, we need to move from creating a single technology to create an end-to-end solution and we need to take the friction out for the end buyer through creative contracting and business models. If the ultimate customer  of 6G is going to be enterprises, we have to take all the lessons learned in 5G and evolve this for 6G with data, AI, and key ecosystem partners.”

This is a philosophy which Mehrotra echoes.

“Probably one of the reasons I’ve been hired is I come with a strong system integrator background. You need to bring in partner ecosystems, different technologies to manage and land those complex deals and work across a whole complex set of players,” he noted.

Mehrotra is not alone in having an outside take on the market. Usman Javaid, Chief Products and Marketing Officer at Orange Business, came to the role after spending several years with Amazon Web Services.

“It does give you a different perspective,” he commented to 6GWorld. “The focus is much more on looking at customer needs and then building answers to that. We sometimes go the other way in telecoms.”

Orange Business itself is quite far away from the stereotypical CSP enterprise unit, with a deliberate focus on spanning not just connectivity but also digital services such as AI, cybersecurity, analytics, and cloud services. Once again, the focus here really seems to be on providing comprehensive solutions to problems rather than delivering a product.


Physician, Heal Thyself… And Your Ecosystem

In Orange Business’ case, this is tied to a deliberate transformation that CEO Aliette Mousnier-Lompré is promoting. “We need to be very fast and to transform simultaneously our organisation, our culture, our operating model and our cost structure,” she noted last year.

This is a tough job; taking more of a systems integrator, solution-oriented approach means a different set of skills and adopting a different approach to the sales cycle, partner management and reward structures, all while in the middle of operations. Javaid is sanguine though.

“I would say we are five to six years ahead of most of our peers,” he commented. “For example, cybersecurity as a service accounted for about 15% of our revenues last year and is a growth area for us.”

Tata may not be considered a peer, but the change process internally seems quite a parallel.

“Internally, we’re digitising our own business, we’re very passionate about it. We have created monitoring through a single pane of glass for all our clients, for all our products, services, service level agreements, whatever we do. That is certainly work in motion; and I would say we have Tata 2.0 created, but there’s a 3.0, there’s a 4.0 in store,” said Malhotra.

However, the process of making substantial change to the bottom line is going to be a long and painful one, not least because of the different approach and sales cycle. As Malhotra pointed out,

“It means bringing a plethora of different partners, systems integrators, consulting companies together to deliver the end result for the client. It’s never easy because you’re not giving a point solution. It’s not something that you do in three months or six months, you know, it takes a good 12 or 18, sometimes 24 or 36 months to develop those kinds of propositions, land them and see the end result.”

Malhotra gave an example he lived through before joining Tata:

“We had to form a consortium of twelve, fourteen different partners to land something for the public sector. It’s consumed by every household in the country, right? I mean, you can’t really muck it up. But every partner will have his own nuances – “you will sign an x-million-Euro agreement or I walk off” whereas a consulting company will have a different perspective. How do you work through the terms and do you know what the client wants, what is a single pane of glass going to look like for everyone? It’s that level of complexity.”


Ecosystem In Application

The same need to work with a complex ecosystem also applies to the network APIs which the GSMA is promoting. Here the challenge is slightly different.

Wang observed that “You can get scale, you can get the coordination, you can get the standards, but you still have to incite developers to want to use network APIs and keep using them, and that’s a really big thing that we as an industry are not completely focused on right now.”

While Javaid might agree with that to some extent, at Orange Business they have a slightly different approach planned.

“It is a two-dimensioned strategy,” Javaid commented.

One element is to create a platform with SDKs and assistance to enable third-party developers to make the most of Orange’s network APIs. The other is for Orange to create its own business applications and services that link into the network.

“In this case we are creating value from the network for ourselves,” Javaid commented. “I would expect these will be applications which have usefulness across different industries, for example to further help small companies protect themselves or to manage transactions; whereas we are not the right people to do more vertical-specific applications.”

This kind of conversation just shows how far the enterprise business has come in the last few years; from selling devices and airtime to becoming its own application developer. This has to be in part a recognition of the sheer financial impact that some applications can have. Statista estimates that in 2023 the revenue of the security technology and services market worldwide was 188bn USD. Being able to access a small fragment of that is a great business, especially building on top of existing capabilities.

This dual approach is music to Wang’s ears.

“With APIs there are multiple tiers of monetisation that we need to think about,” he enthused. “It can’t just be “Network APIs!” and that’s the only way that we’re going to monetise the network, right? We have to think about a multi-sided platform for monetisation.”


Short Term And Long Term Thinking

At April’s 6GSymposium, NTT DOCOMO’s SVP Takehiro Nakamura pointed out that 6G business models are liable to rely on and learn from what’s worked in 5G, especially in the enterprise. However, in that case there is a risk that emerging successes will lead to their own challenges. Wang observed:

“I had a client recently tell me “Jeff, you’re talking to me about private 5G, you’re talking about 6G in the future, but I literally just spent $25 million with you to upgrade and manage my Wi-Fi 6. I’m out of money right now.””

However, as things stand the chances of that are slim. Partly we might nod to the NGMN’s proposed gradual and steady upgrade process from 5G to 6G. In this approach it may be that no new air interface is required or desirable, so that any changes in the systems for 6G require primarily changes in software rather than hardware upgrades.

However, more relevant is the sheer difficulty of getting traction in 5G services today.

“One of the things we are seeing are clients asking for POCs [proofs of concept],” Malhotra said. “We are seeing that quite a lot, but when does it blow this out into large deals, say 50 or 100 million? I think there’s still some more work to be done before that.”

Wang concurred: “You can get 100 pilots if you want; but moving from pilot to scaled value is really hard with enterprise clients.”

That may not be a source of joy for many telecoms providers, however.

“There’s an urgency right now in the industry,” Wang noted.

“There’s an absolute urgency – people need to find a path because they are, some would argue, anywhere from 4 to 6 years into 5G and don’t have a very clear path to B2B monetisation yet. We’re trying to help them be surgical by picking one industry, one problem where your product has an advantage and explore how to build a solution and ecosystem around that. If there’s an existing value chain and you’re a better mousetrap, we’ll find it.”

However, this is a short-term bandage to shore up enterprise units at CSPs rather than a long-term strategy. The need for an evolution is clear, according to Malhotra:

“We look at ourselves in all honesty as a challenger to the likes of the Verizons of the world, the BTs, or some systems integrators. But I think the market likes that because, you know, there’s a lot of incumbency that is set in. People want a fresh challenger with a different thought process.”

That different thought process is certainly in evidence with Javaid, who hints at a potential strategy from Orange:

“We should be ready to platformise our technology,” he stated.

“We need to make sure that we can create end-to-end automation in our network so we can adapt our network to the needs of the application. The second layer is the software layer. We need to make sure that we can deploy software on the fly in the network for specific needs of the consumers and the enterprises. And the third is the digital experience layer.”

This is a structure which can apply to enterprise users, of course, but also to consumers.

“For example, if you’re a gaming user, imagine you get a pop-up to say, “We noticed that you’ve been using a lot of gaming experience on our network, we can offer you this new service which is based on the network being intuitive to understand your experience.” And then based on that we give you a network slice, software deployed in the network to create a new experience for you. And that is only possible through me,” Javaid grinned.

Once again, we find ourselves far away from simple questions of feeds and speeds or selling products. This is personalisation of experience in a way which has value for the end-user.

To Javaid, “This is 6G and we haven’t talked about any radio upgrades yet. So this 6G is about value creation, and value creation through a platform and open ecosystem approach.”

Image courtesy of Toronto Innovation College




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