The introduction of 5G technology marks a major advancement in telecommunications, offering faster speeds, reduced latency and the potential to connect a large number of devices simultaneously.
According to GSMA, this technological advancement is anticipated to contribute over $960 billion to the global economy by the year 2030. This scenario presents a significant opportunity for mobile network operators (MNOs) to capitalize on their substantial investments in 5G, which is particularly crucial considering the high capital requirements. Nevertheless, telcos face a significant challenge in recovering the substantial investments needed to implement 5G infrastructure.
Challenges to 5G monetization
Monetizing 5G investments poses several significant challenges. First, it requires substantial upfront capital expenditure, as MNOs need to invest heavily in new infrastructure such as radio equipment, small cells and spectrum licenses. Second, effective monetization often demands adopting more intricate business models, including subscription-based and transaction-based revenue streams, which can be a challenge for traditional telecom companies. Another obstacle is achieving a rapid ROI, as the time gap between incurring costs and generating revenue can be prolonged, putting financial strain on operators. Additionally, different regions have distinct regulatory requirements for 5G deployment, thereby complicating and delaying rollouts and adding to overall costs. Finally, integrating 5G with existing technologies and infrastructure can be complex, requiring substantial technical expertise and investment to ensure compatibility and smooth operation alongside current 4G networks.
According to Priyadarshi Ashok Das (PAD), Business Head – Telecom, Media and Entertainment at HCLTech, the adoption, deployment and monetization of 5G networks has not yet reached the levels expected by organizations and industry experts.
One reason is the significant investment required to build and upgrade the necessary infrastructure for 5G networks. "It’s not easy to rip up legacy infrastructure," said Das.
Generating revenue from 5G investments
Monetizing 5G investments requires strategic approaches. Here, we explore a few strategies to generate revenue from 5G investments.
1. Diversifying revenue streams
One of the most effective ways to monetize 5G is by diversifying revenue streams beyond traditional mobile connectivity services. Telecom companies can explore sectors such as IoT (Internet of Things), smart cities, autonomous vehicles and enhanced mobile broadband (eMBB) applications. These sectors present opportunities for telcos to offer specialized services that leverage the high speed and low latency of 5G networks.
2. Enterprise solutions and private networks
5G presents a unique opportunity for telcos to target enterprise customers with tailored solutions. Private 5G networks, for instance, can be highly valuable for industries such as manufacturing, healthcare and logistics. These networks provide secure, reliable connectivity for mission-critical applications, thereby justifying a premium pricing model.
3. Edge computing and network slicing
Edge computing and network slicing are pivotal technologies that can unlock new revenue opportunities. Edge computing allows data processing closer to the end-user, reducing latency and improving service quality. Network slicing, on the other hand, enables telco providers to create virtual networks dedicated to specific applications or customer segments. By offering differentiated service levels, telecom companies can cater to varied requirements and command higher prices.
4. Consumer value-added services
High-definition video streaming, augmented reality (AR), virtual reality (VR) experiences and cloud gaming are examples of services that 5G can deliver more effectively than previous generations of mobile technology. By developing partnerships with content providers and offering bundled services, telecom companies can enhance their value proposition and drive revenue growth.
5. Strategic partnerships and ecosystem development
Telcos should collaborate with technology firms, hardware manufacturers, software developers and other stakeholders to create a comprehensive 5G ecosystem. These partnerships can lead to innovative solutions, shared infrastructure costs and expanded market reach, which will accelerate the 5G monetization process.
6. Data monetization
Another key strategy is data monetization. 5G networks will generate vast amounts of data, which can be invaluable for various industries. Telcos can analyze this data to provide insights and analytics services to businesses, helping in making informed decisions and targeted marketing efforts. However, it is crucial to ensure compliance with data protection regulations and maintain customer trust.
The importance of partnerships
To realize 5G monetization ambitions, telcos need to embrace partnerships with technology transformation partners.
HCLTech, for example, has developed a range of 5G solutions specifically for enterprise clients. Its offerings include private 5G networks designed to meet the unique requirements of various industries.
For instance, in manufacturing, these networks can support IoT-enabled smart factories, while in healthcare, they can facilitate telemedicine and remote monitoring services. HCLTech also uses edge computing and network slicing to enhance its 5G services. It provides edge-to-cloud orchestration solutions that enable data processing at the network edge, improving efficiency and reducing latency. Its network-slicing capabilities allow telcos to offer customized service tiers, enhancing user experience and revenue potential.
In addition, HCLTech has formed strategic alliances to strengthen its 5G offerings. One notable collaboration is with Tecnotree to develop 5G-led GenAI solutions for telecom operators. This partnership combines HCLTech's technological expertise with Tecnotree's telecom-focused solutions to create advanced AI-driven applications that improve operational efficiency and open up new service opportunities for telcos.
A multifaceted approach to 5G monetization
Monetizing 5G investments requires a multifaceted approach that leverages the unique capabilities of 5G technology. By diversifying revenue streams, targeting enterprise solutions, utilizing edge computing and network slicing, offering consumer value-added services, forging strategic partnerships and exploring data monetization, telcos can unlock new growth opportunities and ensure a return on their significant 5G investments.
