Why is the industry considering subscription services to monetize 5G?

According to industry insiders and experts, the discussions have progressed beyond upload speeds and faster download data. Instead, the industry is considering how to capitalise on 5G’s value.

Much of the hype surrounding 5G revolves around speed, but the industry is now focusing on the business side of things.

The 5G sales pitch was all over the Mobile World Congress, which concluded last week in Barcelona. The sticking point for many executives gathered at the world’s most influential connectivity exhibition was how to move beyond the rollout phase and create new business opportunities so that every stakeholder involved started making money.

“If you are about to change your phone, it’s likely that you will get a 5G smartphone, and thereby also a 5G subscription. As a result, there is an automatic update for that. But there’s also a need for some users who want faster speeds or who want to do gaming,” Patrik Cerwall, Ericsson’s Head of Strategic Marketing, Business Area Networks, told indianexpress.com in an interview.

5G, or fifth-generation mobile services, are the next generation of mobile internet connections that provide significantly faster data download and upload speeds. Reliance Jio and Airtel launched 5G services in India last year. Both operators have stated that they will complete the 5G rollout in major Indian cities within the next few months. Airtel already has over 10 million 5G users in the country.

But building 5G networks is capital intensive and thus requires huge investments. In exchange, 5G significantly improves network speed and the volume of data that can be captured and processed, opening up new use cases and revenue opportunities that were not available during the 3G-4G era.

“5G investments will only be recovered if they can be monetised, unless they mean something consumable by the end user,” said Avneesh Prakash, Tata Communications’ Vice President of Mobility and IoT. Prakash, who leads Tata Communications’ end-to-end mobility platform MOVE, believes that 5G has the potential to benefit users, and that his clients, in particular, understand this.

Connected cars will be a key selling point for 5G beyond smartphones. “They [car manufacturers] must save money. They must do it efficiently and generate new revenue streams. “The entire automotive industry’s model is shifting from ownership to subscription-based,” explained Prakash. “All OEMs aspire to participate in the service economy rather than just focus on the revenue stream of selling cars.”

According to Prakash, connected cars are another area that will see immediate benefits, both in terms of usage and monetization. Consider guaranteed over-the-air software updates or entertainment in a car, such as movies, music, or gaming. “Cars will become experience nodes, which will be monetisable.”

According to industry insiders and experts, the discussions have progressed beyond upload speeds and faster download data. Instead, the industry is considering how to capitalise on 5G’s value. According to Prakash, 5G is bringing many sectors together and collaborating on solutions to problems that could not previously be addressed due to a lack of appropriate technology and training. He claims that “this should and will result in actually saleable propositions to the end user,” particularly in the automobile industry.

For the time being, 5G has received more attention from consumers, but the real cash cow could be the enterprise sector, which could help scale the applicability of 5G in real terms and bring cash to expand networks. “5G monetization is not just for consumers; it is also for enterprises,” Cerwall agreed. 5G enterprise use cases range from various productivity solutions to IT support and security features.

While Cerwall sees the enterprise as a long-term component, he believes that, for the time being, the consumer business is driving the majority of 5G adoption. “It depends a lot on market price positioning and how the operator decides to go to market on it,” he said when asked if the enterprise segment has a better chance of raking in more cash from consumers in the long run.

There is also the possibility of using 5G as a network backbone for private enterprise upgrades. However, growth in the consumer use case may take longer than previously anticipated. The slowing smartphone market, which continues to play an important role in 5G subscription upgrades, as well as potential traffic increases on the horizon, could dampen 5G’s potential and reach.