New CSP Business Models Required For 5G-6G Success

April 6, 2022

Written by Alex Lawrence

“If you can’t make any money on it, it’s just a hobby,” Marc Price observed. The CTO of Matrixx is nothing if not pragmatic.

This is perhaps nothing new, but it is very easy to be caught up in the excitement of novel technology for its own sake and leave “the market” to work out how to monetise it. Price, executive at a company built around charging and billing, is acutely aware of the need to measure, bill and monetise services.

In the mid-2000s, Og Vodafone in Iceland delivered video calling for the first time. They offered it for free because they had no suitable billing system set up. Their hope was to accustom users to the service and then charge for it once it had delivered a proven value… and once they were technically capable of doing so. The trouble was that they accustomed their users to a free service, and usage dropped to nearly nothing once it was billed.

This is, perhaps, ancient history. However, there is an important lesson to take away from this example: understanding in advance what the monetisation strategy should be is immensely valuable.  

“The telcos themselves – some of them anyway – really understand that they need to pivot their business models,” Price acknowledged. He is talking to 6GWorld about the transition which is under way today as a result of the emergence of 5G.

“The heart of the question is ‘What is it going to mean to be a telco in the 5G and ultimately in the 6G era? I think it positions the telco potentially quite differently.”

The thrust of Price’s argument is that the operators delivered communications in the early generations of mobile and delivered broadband in 3G and 4G.

“This environment we’re moving to now, in the 5G era, is one of immersive data. We have augmented reality, virtual reality, and so the network resources that are used are much more dynamic than they’ve ever been before.”

From Technology Challenge to Business Model

Dynamic network resources do not, on the face of it, seem like a business opportunity. However, Price is positive: the variability in demand itself can be a critical factor in building new business models. He uses the example of a visitor to a match-day stadium not many years from now. 

“You may need real time augmented reality, for example using your glasses to watch a football player, and you want to see the stats over his head as he shoots the goal. Or you may want to use it in the stadium to find the food or beer stand with the shortest line, which is highly practical. Or to get you to the bathroom with the shortest line. But then you might just want to check email in a quiet time. Each has different requirements.”

What these all have in common, though, is that many of these applications would be tailored to the specific venue or at any rate be part of the unique in-venue experience they are trying to deliver.

“Some of the more advanced telcos are not just selling cost-plus models for those resources, but they’re actually recognising that they can partner with venues. And that’s about providing a superior experience and becoming a channel partner for these applications. That’s how I see these models evolving.”

Something similar – acting as a channel partner – makes sense in many contexts where companies are providing applications to end users. For example, telcos can engage gaming platforms to “partner with them to say ‘when your subscribers are accessing these types of games, we’re going to guarantee them this type of bandwidth’,” Price explained.

A Little Bit of History Repeating?

For those who have been in the industry a while this sounds somewhat familiar.

“Telco has tried a number of different times to expose its network as a service or as an asset that can be used by other parties,” Price agreed. “And it’s failed pretty much every time. Arguably one reason is that the business models were never very compelling, but the big problem really was that the telcos were just too difficult to work with.”

In part there have been some reasons for telecoms providers to struggle, in terms of specific regulations and privacy concerns. However, “there are lots of other services that can be enabled if a telco was able to interwork with an enterprise using the same sort of technologies that the enterprises use themselves,” Price observed.

As well as the technology, the business model needs to be right. Price harkens back to the first attempts to open up a programmable network. “There were only a handful of developers in the world that understood the protocols. It was too unwieldy. If you wanted to do that, you had to do a deal with the telco, which was a very difficult thing to do.”

This was essentially telecoms providers asking enterprises to fit in with their models and approaches, which led to very limited uptake. Instead, to be successful “they’re going to have to essentially establish enterprise marketplaces where enterprises can partner. They should buy with the click of a button instead of having a six-month contract negotiation and then some sort of physical rollout.”

For those service providers making their own transitions to software-centric and increasingly cloud-based networks and capabilities, an increasing technical ability to meet enterprises on their own terms does need to be matched by a change in approach to doing business.

Simple integrations and one-click purchasing open up the opportunity, too, for service providers to move beyond “enterprises” – the large customers that have typically had enough purchasing power and resources to work with service providers one to one – and engage with SMEs in more of a mass customisation approach. This ties back to the work that Price has been doing at Matrixx, since the billing engine is likely to be a critical part of any such capability.

“We basically did away with a lot of the telecom protocols and now much of it is web services based,” Price explained. “All the interactions, not only on the telco network but between the telco network and external entities, are now web services, they’re restful interactions. Those are the same technologies that enterprises use today to expose data using APIs and so on.”

This is, of course, not a 6G issue, but something which will begin in 5G and build from there. However, what kind of timeline can we realistically expect for a market shift?

“It’s really just the beginning,” Price explained. “I think what we’re seeing is likely to play out certainly in the next five years. Those business models are going to mature and there are some early winners who are already positioning with companies like ours, and they are going to be quick out of the gate.”

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