Three ways telco operators could monetise 5G

“This pay-per-use 5G will be valuable to customers when networks are congested (Photo by Shiwa ID from Unsplash)

These include offering connectivity speed in line with a customer’s need.

Telcos may not be getting their return on investment from 4G because the technology amongst 2,400 customers across six countries, McKinsey found that speed is correlated with higher customer limits the providers in offering plans specifically aligned to their customer’s demands. But with 5G, they can differentiate offerings through various ways backed by network slicing, or the ability to charge customers more for parts of a network that will offer premium performance.

In a report, McKinsey said 5G allows telcos to drop the traditional one-size-fits-all model and create different offerings that will use the same physical infrastructure. Network slicing will enable telcos to launch “sophisticated ‘speed tiering’” and support the three innovative models to monetise 5G. Doing so, could increase their average revenue per user (ARPU) between 16% and 20%.

“We believe that the shift to 5G core is inevitable and that early movers will benefit. They will be able to skim the market to attract early-adopting customers. It is unclear whether the robust wholesale market that arose for 4G networks will also exist for 5G networks,” the report read.

“If early movers choose not to wholesale parts of their 5G networks, lest they erode the value, late movers seeking wholesale agreements could find themselves shut out of the market,” it added.

In a survey conducted in April 2021 satisfaction even if a larger bill is needed. Around 74% of customers have a “positive or neutral feeling” toward the offering of different speeds to various mobile users. However, around two-thirds of customers are unwilling to pay more than EUR5 every month for 10 times higher speed, and 49% are expecting consistently high speed. Around 43% are also expecting new applications and services. But by upselling traditional portfolios with 5G speed, McKinsey said telcos can increase their ARPU by 3% to 6%.

Innovative models

First way telcos can monetise 5G is by leveraging impulse purchases and “business class” plans by tapping into yield-management strategies. According to McKinsey, operators can move from standard monthly subscriptions to flexible plans allowing customers to upgrade their network performance when needed. If they want stronger connectivity for streaming, gaming, or making important calls, they can pay $1 or $2 to avail of better performance temporarily. “This pay-per-use 5G will be especially valuable to customers when networks are congested, allowing

telcos to reasonably monetise the temporarily scarce resource of premium connectivity,” it said, adding that an option for this is to buy Wi-Fi on an aeroplane. McKinsey said telcos can gain from this as 7% of the consumers surveyed are willing to pay for 5G boosters and would avail them an average of seven times a month at $1 per boost. Impulse purchases can raise the APRU by 1% to 2%.

Pay-per-use 5G

Several Hong Kong telcos have increased ARPU amongst the highest-paying customers by 20% to 30% with the adoption of this strategy, resulting in expected revenue growth of 5% in the next three years. Meanwhile, 5G “business class plans” will ensure users of unlimited premium network performance in terms of speed, latency, stability, and network access. This may bring a 2% to 4% increase in ARPU, as 15% to We believe that the shift to 5G core is inevitable and that early movers will benefit 20% of customers are willing to pay between 7.5% to 15% more. Second, telcos can sell 5G-enabled experiences instead of selling connectivity only for additional revenue streams. Customers are willing to pay for some 5G-enabled experiential use cases such as low-latency multiplayer gaming which feature an alternative reality and high degrees of interaction. Other areas customers are willing to pay extra for were immersive entertainment, smart stadiums, fixed wireless access hybrid plan, and real-time translation. These markets could potentially raise the ARPU by 8% to 9.5%, McKinsey said. “To adopt this model, operators will need to develop an ecosystem of partners that provide an expansive, enticing catalogue of user experiences. These partners will provide coveted, high-quality experiences, whilst telcos will provide connectivity and customer access,” it said, adding that, the challenge would be in explaining to customers why they are paying for premium connectivity. Lastly, telcos could enter partnerships to deliver 5G-enabled experiences, as more consumers are open to paying content providers directly for better network performance. For more on this story, go to https:// asiantelecom.com/

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