Those capabilities also need to be bolstered with a cloud-native, partner-centric strategy that makes it easy and cost-effective for businesses to take full advantage of them. For example, despite inflation that has consumers spending less, Amazon Web Services still had a solid second quarter, with $19.74 billion in revenue and a 29% operating margin. That is a 33% revenue increase over Q1 2022, maintaining AWS’s decade-plus record of steady growth.
AWS’s success is welcome news for mobile operators for new revenue streams and new ways to reduce their reliance on the fickle consumer market, where cutthroat competition continually puts downward pressure on profit margins. like amazon, mobile operators can sell businesses access to the same infrastructure used to support their B2C applications. Here is why and a roadmap for doing it.
no more dumb pipes
Mobile operators have supported various B2B2X applications since the 2.5G days. One example is companies that packaged connectivity with hardware and services for tracking shipping containers, trucks and other high-value mobile assets. In agriculture, similar packages enabled farmers to monitor soil temperatures and moisture levels. Virtually all of these B2B2X applications had one thing in common: The mobile operator was a “dumb pipe,” with all of the revenue coming from connectivity sold at wholesale prices.
Today, this business model remains the rule rather than the exception, but it has become financially untenable. Between the steep cost of 5G and additional competition from greenfield operators such as Dish and Rakuten and MVNOs, mobile operators must find ways to add value in the eyes of companies providing B2B2X services. The more value they can demonstrate, the more likely they will attract and retain those companies and upsell them on more than just connectivity.
A fast, reliable 5G network with solid indoor and outdoor coverage might be an obvious value add. Still, it will be table stakes, like with 4G LTE, where Tier 1 operators often have neck and neck independent QoS comparisons. The bigger value add will make it easy for companies to use the 5G network to deploy, manage and monetise B2B2X services.
This added value flows directly to the bottom line. According to 2021 Telecoms Intelligence survey, “The ambition of 5G operators and their partners to generate income from value-added services
through partnerships has risen noticeably from a couple of years ago. When taking this survey in 2019 when the first commercial 5G services were only half a year old nearly half of all respondents
believed that telecom operators’ revenue coming from services provided through third-party partnerships would not surpass 10%. Now, two years later, more than half of the survey respondents (55%) believe such services will generate between 10% and 30% of 5G operators’ total revenues by 2025.”
The BSS is key to unlocking those new revenue opportunities. To understand why, consider what Amazon did to make its infrastructure easy to use. AWS is based on protocols and architectures that potential business partners already know and use, such as HTTP, JSON, SOAP and REST. All that makes it fast and easy for those companies’ developers to access AWS infrastructure. That speed gives those businesses a competitive advantage because they can get their B2B2X services to market ahead of competitors. Moreover, the ease of use lowers the cost of delivering those services, so they are priced competitively yet profitably.
Why the BSS is key
The big catch is that most mobile operators have rigid and complex BSS because it was cobbled together over the decades using components from multiple vendors. That legacy hodge-podge makes it difficult, time-consuming and expensive for B2B2X partners to perform various tasks.
One example is a home security service that consumers can install themselves, such as video doorbells and motion detectors. The mobile operator must have a BSS that enables those consumers to activate service and choose or change plans all on their own, instead of calling or chatting with the partner’s customer service agents. This type of self-service is a value add because it significantly reduces the partner’s overhead costs, enabling it to target a broader market without sacrificing margins.
The B2B2X-friendly BSS can also enhance the value of 5G’s capabilities. For example, mMTC enables 5G networks to support up to 1 million devices per square kilometer. That scale means that partners must be able to activate and provision those devices in batches of hundreds or thousands, such as in the case of IoT sensors and controllers around a refinery or railyard. Additionally, those processes must be highly automated to the point of zero touch because the IoT market is notoriously price sensitive.
These kinds of capabilities do not necessarily require a forklift upgrade of the BSS. Instead, mobile operators could use a cloud-native overlay that adds automation and other capabilities to their existing BSS. This design also extends the life of their existing BSS if they have business reasons to continue using it. As a result, those operators can begin pursuing the burgeoning B2B2X market now rather than years from now. Considering how much they have spent on 5G and how much they stand to make from B2B2X, that opportunity cannot come soon enough.
The author is John Giere, CEO of Optiva.