PARTNER CONTENT: The arrival of 5G has always promised new monetisation opportunities for operators. While much of the attention has been focused on the B2B opportunities that 5G can unlock, the fact is that the larger 5G opportunity is in the core consumer business as 5G’s advanced capabilities enable all kinds of new apps and services.
In the early phases of 5G, mobile consumer offerings were initially limited to enhanced mobile broadband services that were faster than 4G, but offered little additional value beyond better speed and latency. However, the mobile sector has always understood that the future of 5G monetisation lies in differentiated services. The obvious question is: how do we get there?
The secret is in focusing on “traffic value-based operation”, which provides the foundation for operators to not only launch differentiated services, but also enable a successful ecosystem around them and explore new apps and business models.
The good news is that this isn’t still off in the future – it’s already starting to happen.
Four value pipelines
Unlocking and monetising the opportunities of traffic value-based operation for 5G consumer services requires an understanding of the four key areas of 5G where the value lies, and what that value actually is.
For example, the 5G downlink offers faster speeds, of course, but it also enables rate-based charging and assurance of a VIP experience, which creates new Average Revenue Per User (ARPU) opportunities. The 5G uplink increases the value of live streaming packages and enables assurance services for things like video conferencing. Low latency enables acceleration of cloud-based apps and services and high-value sensitive service assurance.
All of these can be used to develop innovative and differentiated 5G services, which creates more monetisation opportunities in the form of branding – i.e. logo premiums for differentiated services and high-level package logo display rights.
Innovative models for 5G development
Short-video apps have become the top service driving mobile network traffic consumption – in fact, it accounts for 40% of mobile data traffic in China alone. 5G speeds are great for HD video, but its uplink capabilities enable new scenarios such as 5G live broadcasts.
China Unicom Guangdong is doing exactly that. The operator has launched 5G live broadcast packages that leverage 5G’s ultra-high uplink rates and VIP priority services to enable users to watch and create live broadcasts, with three different traffic package sizes and upstream rates.
Since its launch in October 2021, China Unicom has signed on 200,000 users to its live broadcast package. Since then, the service has been continuously optimised based on live-broadcast requirements of users. In May 2023, Unicom launched an acceleration service for 5G broadcast to provide better guarantees for broadcasters.
5G’s low latency and ultrafast downlink and uplink speeds also enable innovative cloud-based mobile apps that provide computing and storage power for everything from entertainment to remote working. For example, Hutchison’s 3 Hong Kong offers latency acceleration packages targeted specifically at gamers and financial investors. In both cases, they offer targeted traffic and 5G acceleration services to ensure a differentiated experience for customers.
This ability to differentiate by customer segment highlights the innovative potential of 5G business models for more accurate user segmentation and customised rights for each segment.
One example is China Mobile’s launch of several packages (or “cards”) for user segments such as livestream broadcasters, senior citizens and take-out delivery couriers. The Shenzhouxing Knight card for delivery couriers is designed to meets their requirements for high call minutes and high traffic – it also helps them drive safely and provides insurance functions and even a ‘smart helmet’.
Service and ecosystem prosperity
Operators looking to target the consumer market with more innovative 5G-powered services have typically looked at things like augmented and virtual reality. This makes sense, as both can leverage 5G’s ultrafast speeds and low latency. However, the possibilities for 5GtoC are much wider than they look – we’re already seeing new 5GtoC innovations such as cloud phones, 5G new calls and naked-eye 3D.
For example, in May 2023 China Mobile launched the China Mobile Cloud Phone – a virtual phone that runs on the cloud. In essence, this enables the phone to harness the storage and compute power of the cloud to host and run apps and services, rather than onboard, which frees up memory and computing power on the device, thus enabling smartphones to exceed their physical limitations. The Cloud Phone also enables enhanced features, from multiple mobile numbers and cloud games to public-private separation, privacy and anonymity.
5G new calls leverage ultra-HD, intelligent and interactive capabilities to build platform products based on content operation, AI ecosystems and interactive innovation. This means operators can upgrade from voice-minute operation to content operation, which poses higher requirements on wide coverage and heavy traffic of 5G networks (especially the uplink).
Naked-eye 3D promises an immersive 3D experience without having to wear polarised glasses or VR helmets. Naked-eye 3D tech is becoming more mature, and AI-powered automatic conversion technology from 2D to 3D has completely changed the way 3D content is created. 5G can accelerate large-scale development of naked-eye 3D mobile applications and usher in a new era of immersive experience.
Exploring new applications and business models
As 5G networks expand their coverage, the possibilities for innovating new applications and business models also expand.
For example, expanding coverage of 5G networks has resulted in growing popularity of e-commerce live streaming. iiMedia Research estimates the number of mobile e-commerce users to reach over 1.1 billion in 2023. Meanwhile, live games, reality shows, concerts, and sports events are also driving demand for large 5G bandwidth and traffic.
Cloud gaming is another emerging market for 5G, with China’s market alone reaching an estimated RMB4.5 billion in 2022, according to iiMedia Research, with 96 million monthly live users. The user base is projected to pass 180 million by 2025.
These new scenarios and user requirements provide a strong opportunity for operators to monetise 5G network capabilities and create greater value.
Monetisable and profitable
As for the obvious question – how profitable is all this? – remember that 5G has been commercially available to consumers for more than four years now. And during that time, 5G operators have been exploring new dimensions in monetisation – for example, the rate-based charging model, which has emerged in markets in Europe and the Middle East.
For example, Switzerland Sunrise charges for unlimited traffic entirely on a rate-based and experience-based basis. Etisalat in the UAE has introduced a new rate-ranked package based on its existing traffic package mode to provide a rate-limited and unlimited package for dedicated users.
This model enables operators to innovate and monetise differentiated 5GtoC services, which is proving to be a crucial path to increase 5G ARPUs. According to Omdia, 38% of operators now provide 5G featured services, such as 5G rights and new applications, which is not only monetisable, but profitable.