PARTNER INTERVIEW: Salesforce executives urged operators to rethink their concept-to -implementation strategy for 5G, arguing a new mindset and marketplace approach will be needed to capitalise on the opportunities the technology brings.
Kishore Sannidhanam, Salesforce’s global GTM lead for communications and media, told Mobile World Live the “true value” of 5G can only be realised if operators borrow a page from technology giants like Apple and Amazon and turn their networks into a platform for innovation. By exposing their network capabilities and allowing third parties to build on their core IP, operators can capture key revenue they’d otherwise miss out on, he said.
Sannidhanam explained this additional income will be critical for operators trying to generate adequate return on investment from the massive amounts of capital they’re pouring into next-generation networks.
Without a new business model, he said operators could face significant financial hurdles. He pointed to data compiled by Harvard Business School and Keystone Analysis which showed operators globally are expected to spend approximately $644 billion operating their 5G networks. While $480 billion of this will be recoverable through the provision of traditional connectivity services, the data indicated operators will be left with a $164 billion gap to fill in order to break even.
Historically, Sannidhanam noted operators made most of their revenue from the consumer segment, with this accounting for anywhere between 85 per cent and 90 per cent of revenue. It was initially theorised operators could continue this focus with 5G, using tiered rate plans to generate revenue and recoup their costs. But Sannidhanam pointed out that vision hasn’t panned out, and all operators in the US are currently offering 5G service at no additional cost to consumers.
He added operators could glean some additional revenue through the deployment of oft-discussed fixed wireless access (FWA) services, but noted that it could put players which also have fibre offerings at risk of cannibalising their other products.
Marketplace model
Other options, including selling B2B managed services at the edge of the network, will not be enough to bridge the gap alone. But Sannidhanam and Salesforce senior director of industry solutions for the communications and media industry Abhi Sur said there is a way for operators to create entirely new, substantial B2B opportunities.
Sur explained the combination of 5G, AI and network slicing creates the “perfect storm for disruption,” enabling operators to adopt a new platform-based strategy.
“You build this business model where you can setup the digital ecosystem as a marketplace where you connect the consumers and producers together,” Sur said, just like Apple has done with the App Store and Amazon Web Services with its cloud marketplace.
Sannidhanam noted this is substantially different from the partnership models some operators have in place today:
“Most telcos, if you ask them, say they have a partner model, but what they really mean is they have a reseller model. They need to essentially take that reseller programme and convert it into a true partnership model. I would urge them to look at software vendors to look at how their partner programmes work and essentially provide that sort of a structure.”
On the back end, Sannidhanam said this would involve the creation of a robust set of network APIs; a developer portal with tools such as sandboxes for testing new applications; and fresh governing processes to ensure “developers or vendors are not actually causing more harm than good”.
Sur added operators would also need to set up new systems for partner onboarding, billing, and experience and order management; develop a centralised product catalogue; and create a branded digital storefront. Security, he said, should be at the heart of the entire system, spanning all components of the stack: “You have to bring in security right at the very beginning of the design, not as an afterthought.”
While all of these changes might seem like a lot for operators to tackle, Sannidhanam said the idea is a “high risk but high reward proposition for them truly becoming the vertical solution provider”.
“That would be the holy grail for operators, to have the maximum revenue both top line and bottom line and make the most of the 5G network coming out.”
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