2017 could be a year of great opportunities for communications service providers (CSPs) or it could be the year that they truly fall behind. We have said time and time again that CSPs must become Digital Service Providers in order to remain competitive, and with a tidal wave of IoT-related services on the horizon, this is more important than ever. Fortunately for them, 5G and connected cars are just some of the markets that are actually helping drive that change.
CSPs must complete their digital transformation
CSPs face two daunting roadblocks before them – one social and one technical – before there’s any hope of reaching the digital service provider promised land.
On the social side, they must overcome general dissatisfaction among their customer base. A recent study by Accenture and Salesforce.com found that among CSPs across the globe, their net promoter score (a measurement of customer satisfaction on a scale from -100 to +100) was a paltry average of six. On the other hand, that same study uncovered an average NPS of 74 among the “born digital” DSPs like Amazon.com and Netflix, the same companies against whom the traditional CSPs aspire to compete.
The technical challenge for CSPs, akin to the social challenge, is overcoming their legacy systems, which are highly fragmented, often monolithic and largely outdated. Designed in the 80s and 90s, these systems were intended to serve a world where services were inextricably linked to a single physical location or device. Moreover, trying to create services that are fluid and flexible in and around these platforms has only increased the technical “debt” that CSPs must pay down before emerging into the new age.
Gartner agrees. In a recent “Market Trends” report the firm recommend CSPs rapidly modernize their infrastructure, primarily by turning away from the “suite-based” behemoth on-premises systems that were built for the traditional “triple-play” offerings and little more.
CSPs must turn to building systems comprised of agile (and largely cloud-based) best-of-breed systems to overcome the technical hurdle before them. By doing so with haste the hope is that their woefully low NPS will then start to inch up and CSPs can avoid the fate of the dinosaur.
CSPs are expected to generate substantial recurring revenues from 5G services
Like its predecessors, “5G” is primarily a mobile technology. But the ultra-fast mobile broadband offers invaluable monetization opportunities.
HD mobile video
Mobile customers will be able to purchase and download an entire high-definition movie in about five seconds (compared to eight minutes with “4G”) and with no lag time and no buffering.
New content services
CSPs can monetize new data-intensive over-the-top services through partnerships with OTT providers or by charging them for access to their networks. In addition, they’ll realize new advertising revenues with the ability to support location-based services that can deliver highly targeted multimedia content to customers in their cars and in retail, sporting event and concert settings.
5G will pave the way for the widespread adoption of 3D technologies such as augmented reality and virtual reality, which extend purchase opportunities and transform the way we experience HD movies, TV, sports, video games and business content.
Fixed wireless broadband, one area of 5G that’s already in the works, will offer many carriers the shortest route to 5G monetization
One major stumbling block to most recurring revenue possibilities by and large is that they’re at least 5 years out from realizing complete 5G networks. Most won’t be deployed until industry standards have been established.
Unlike most other 5G scenarios, which target mobile devices, fixed wireless is designed for static locations such as homes and businesses. A growing market already exists for ultra-high-speed broadband access. Google launched the first one-gigabit-per-second internet service in Kansas City in 2011. Since then providers such as AT&T, CenturyLink and Cox have been gradually deploying gigabit fiber in select cities across the U.S. But these rollouts are still in their early stages.
The promise of fixed wireless is that it can potentially deliver even faster speeds, while costing far less to deploy. That’s because it eliminates the substantial expense involved in running physical cables from hook ups on utility poles into homes and buildings. Instead, it uses radio frequencies to transmit “last mile” broadband connectivity.
Major equipment makers and carriers are undaunted. The technology is currently undergoing trials in the U.S., Europe, and Asia as key stakeholders work to resolve technical roadblocks. Some carriers expect to begin commercial deployments in a little over a year. For example, Verizon Communications plans to offer fixed wireless services by late 2017 or early 2018.
Business models centered around one-time sales will become a thing of the past and recurring consumption and usage-based models will increase two-fold in popularity
At Aria’s Monetize 2016 Conference in September, an analyst from Deloitte noted that an impressive 80% of software vendors will move to consumption models. Conversely, our 2016 research with Gatepoint, revealed a mere 11% of respondents (across many industries) said they plan on relying only on one-time sales in the future. The move to sophisticated monetization models, while necessary and profitable, will require a big pivot for business capabilities, including among other obstacles, software that was designed for 18- to 24-month product development cycles instead of on the fly.
Connected car service revenues to top $42B in 6 years
Connected car services are driving recurring revenue growth and transforming the automobile industry. Revenues from connected car services are expected to top $42 billion by 2022. Many of those proceeds will involve a range of flexible billing options, including traditional up-front payments, subscriptions and consumption-based recurring payment schemes.
The “internet of things” has created an entirely new market for services in the automotive market. Growth from $13.6 billion to $42 billion in 6 years is extraordinary, which has caused the automotive industry to take notice. How we consume transportation stands to be transformed in the process, affecting everyone and everything that moves from one place to another.
This article was originally published at RCRWireless.com