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B2B2X New business model come from 5G
What is B2B2X?
B2B2X is a new business model in which a telecom service provider is primed to deliver services to any number of end users. The idea is to integrate telecom and IT services capabilities with applications used by enterprises to offer services to customers, retailers, partners, suppliers or whoever might make up the “X”.
B2B2X Model At the heart of integrating Telecom and IT Services
Telecom operators and IT service teams have been working towards integrating network infrastructure along with applications, portals and third-party applications so these can be offered as a bundled service to enterprises.
B2B2X involves telecom operators gaining a better understanding of the industries in which their customers operate and appropriately reconfiguring their businesses and operating models while achieving improved agility and openness in their processes. All this leads to digital transformation by placing telecom and IT services into the products of other companies and considerably increasing revenue by extending the value chain.
The business driver for the telecom operator’s customer isn’t to source telecom or IT services for internal consumption but as a means of offering a differentiated value proposition to the market.
The chart below explains this service chain:
Vertical-specific use cases of B2B2X that are disrupting business
One of the upsides of B2B2X is its ability to be applied across a variety of verticals. Captured below are some of the interesting use cases across a variety of industries:
- Transportation & Mobility: The future of transport is evolving right before our eyes as new disruptions such as self-driving cars, flying taxis and high-powered drones begin to take shape. Using the inherent advantages of B2B2X, a telecom provider can service the entire value chain, from connectivity to the integration of vehicle telematics on a single platform.
- Healthcare: With the emergence of IoT and the ubiquity of connected devices, traditional healthcare is undergoing a radical change. There is also a palpable shift towards wellness and holistic living that is driving people to capitalize on the emergence of digital health. Telecom providers can now play a pivotal role by providing the right enablers — for instance; they could look to develop a telemedicine solution for a monitoring and analytics platform for people with implanted cardiac management devices.
- E-commerce: With the e-commerce boom now extending to several developing countries across the world, the retail industry has been turned on its head. This also means that the market is ripe for the taking for players of any scale who can leverage technology as a key innovator. Telecom providers have developed e-commerce solutions for end users to simply tap and pay while also providing Mobile Financial Services.
- Energy and Utility: The energy sector is the more traditional of the industries we have discussed so far and is plagued by issues such as outdated infrastructure, cost pressures, climate change and unpredictable oil prices to name just a few. Telecom providers can now help address some of these challenges by developing a solution based on an M2M platform. This platform would enable remote grid measuring and provide pertinent analytics to energy firms.
Why focus on B2B2X?
B2B2X represents a significant break with the recent past for operators. Consumers’ response when presented with a plethora of over-the-top (OTT) services has dictated that telecom companies focus mainly on the type of business model illustrated in Exhibit 4. Under this model, commonly used for 4G services, the operator sells voice and data connectivity directly to end-users, who simultaneously contract separately with their chosen third parties to access services over that connection. For example, a user might buy a 10 GB data plan from the operator and a separate subscription to a video-streaming service such as Netflix or Amazon Prime. But this pattern is now evolving: Some operators have started to partner with OTT service providers to bundle their service with connectivity subscriptions, sometimes with an explicit charge and sometimes without (for example, by making certain streams unmetered against the customer’s data bundle). “With the improvements in network capabilities in the 5G era, customers can expect to enjoy more network services bundled with content provider services — including accelerated gaming — and the operator could offer its network service to the customer as part of that bundle,” said a senior executive at an Asian Internet player. “So, as a content provider that is closer to the requirements of the customers, we could be the sales channel for the operator’s network service.” In the 5G world, where the network technology allows a far greater range of functionality that can be monetized, telecom companies have many more opportunities to develop these types of collaborations with a variety of businesses and public agencies. We see three main options for how operators could monetize this greater functionality.
•Connectivity provider — operator-led B2B or B2C: The telecom company extrapolates the typical 4G pricing and bundling model by applying additional elements and innovation. This may involve adopting an “airline-type” approach, delivering a multitiered connectivity service to both B2C and B2B customers based on the level of package selected by the customer (see Exhibit 5).
To implement such a model, an operator could offer different speeds, quality-of-service levels, and pricing levels to match each customer’s needs and budget. A variation on operators’ traditional approach, this tactic runs a risk of becoming overly complex for end-users, who may struggle to understand the value of a plan whose pricing is defined on the basis of technical functionality (such as latency and reliability) rather than simply speed and data allowance.
• Solution enabler — third party–led B2B2X: A third party such as a cloud provider or video-streaming service incorporates 5G connectivity sourced from the operator as part of its own offering. The third party markets the bundled offering to its customers, receiving revenue through either direct payment or some other monetization model, while paying the telecom company for the network usage and variable functionality in the form of either a network charge or a revenue share. The third party effectively buys a “slice” of the operator’s 5G network capacity for its own use, and the interface between them is managed and enabled through application programming interfaces (APIs) (see Exhibit 6). “We don’t need to develop every capability in-house, especially if they are core to other sectors,” notes Vishal Dixit, director of strategy and wholesale, Vodafone U.K. “We recently announced a global strategic partnership with IBM focused on cloud and hosting. We will jointly go to market, with Vodafone leading on connectivity and IBM leading on verticalized solutions.”
• Solution creator — operator-led B2B2X: An operator creates new digital propositions by bundling third-party products and services with its core connectivity and markets the bundled solution directly to its own customers (see Exhibit 7). Telecom companies might use this approach to create vertically integrated solutions that bundle third-party offerings, such as AR/VR services and equipment, with access to their 5G networks.
Under this model, a telecom company could offer its customers a data plan that comes complete with VR gaming, including a VR content subscription and a headset, at no extra cost. A number of operators, including Vodafone, already make commercial agreements with OTTs to buy their services wholesale and resell them to consumers — and they are looking at how this type of model could be enhanced to build in 5G functionality, allowing customers to pick and choose from a menu of OTT products and receive a discount depending on their selection.
Conclusion
New collaborative monetization models will undoubtedly be invented as the possibilities of 5G become clearer to the market. Operators have the opportunity to be proactive in scaling up and industrializing their partnership-based businesses.
The availability of these widely varying business and monetization models will enable operators to benefit from greater choice and flexibility in terms of their services and pricing, and will spread value around more evenly into different areas of the ecosystem. Across all the models, operators and their partners will tailor their service offerings to capitalize on emerging technology trends such as the IoT, AI, drones, robotics, smart cities, and Industry 4.0.
Telcos are keen to offer our branded devices — they’ve been investing and focusing on acquiring and developing content for them. So a B2B2C VR model will be a good mechanism to distribute and package VR content more attractively. We want 5G to unlock the uptake of high-quality but cheaper all-in VR solutions.”
CEO of a virtual reality hardware company
Source:
https://www.pwc.com/cl/es/publicaciones/assets/2019/Making-5G-pay.pdf