Consumer services have always been the top strategic priority for operators. In the 5G era, the competition for valuable users is growing rapidly. Operators are striving to ensure steady growth of consumer services and revenues. There are two types of innovation－service innovation and model innovation, which will allows operators to develop consumer 5G services and break the 4G growth ceiling.
Service Innovation to Create 5G Killer Apps
The consumer services in the 5G era mainly focus on the video-based field, and incorporate 5G features to provide a better user experience. They mainly include UHD videos, AR/VR, cloud games, 5G messages, and wireless fixed access.
Video services are the most critical service in the consumer field, and also the basis for service innovation. In addition to the original 4G service mode, the UHD video can provide multi-angle live broadcast (panoramic view, player tracking and special angle) for scenarios such as stadiums and concerts, powered by some new 5G features such as MEC and slicing. In addition, the UHD video also can be combined with 4K/8K live broadcast, VOD and camera array-based video analysis.
AR/VR services attract the highest expectations from consumers. IDC forecasts that shipments of AR/VR head-mounted display (HMD) will increase from 7 million in 2020 to 77 million in 2024. In particular, COVID-19 has increased use of online office and entertainment while some offline activities (e.g. exhibitions, industry summits, and even concerts) have become online pursuits. However, large-scale AR/VR deployment depends on the development of headsets, such as functions, costs, and needs the right contents. Major application scenarios of AR/VR include 4K/8K panoramic VR live broadcast, cloud gaming, sports events, office environment, industry summits and exhibitions.
Cloud gaming allows easier access to high-quality games, and improves the user's willingness to pay more, and on the other hand, the user pays for the services rather than for the expensive hardware. Mobile games have vast potential. Combined with MEC and 5G slicing, cloud rendering creates a more realistic and lower latency gaming experience. In the era of cloud gaming, operators can provide different levels of gaming performance in accordance with different classes of users.
5G messaging is based on the unified GSMA rich communication suite (RCS) standard, and provides a brand-new experience in multimedia messaging, business messaging, intelligent messaging and interactive services. Parties in the 5G messaging industry chain are enriching 5G application scenarios and helping the intelligent and digital transformation of thousands of industries. The first commercial use of 5G messages in China and the continuous maturity of the industry chain build industrial capabilities for subsequent deployment in other countries.
Fixed wireless access (FWA) has been an important supplement to the wired connection in the last mile since the legacy 3G/4G era. As a solution for fast and low-cost broadband connectivity, it can be used in single-user and multi-user broadband access scenarios. According to GSA, 37 operators have launched 3GPP-compliant FWA, and the number of 5G CPE devices has reached 84. From the perspectives of application scenarios, costs and industrial chain, 5G FWA is a suitable service for early 5G deployments.
It should be noted that operators deploy their 5G services based on the user requirements, network performance, and the status of services-related industry chains. Table 1 shows the mid- and long-term planning for consumer 5G services made by ZTE for a Southeast Asian operator.
Model Innovation to Add Value to Operation
The tariff plans based on voice and texting during both the 2G and 3G eras were phased out with the popularity of mobile Internet applications. The unlimited plans in the 4G era, which have less consideration for the special requirements of users, were phased out due to the scissor gap between data of usage?(DOU) and income. In the 5G era, operators need to break the shackle of unlimited plans and meet the differentiated needs of users.
Maximizing Network Value Through Multi-Dimensional Tariffs
Based on the performance features of 5G, it is advised that operators use a value-oriented measurement system in the business models for consumer services. In essence, this system uses different tariff dimensions based on service level differentiation. 5G services can be divided into network connection services with features including data volume, latency, priority, security, and reliability, and platform services such as MEC, capability openness, slicing, and integration. Therefore, operators can implement multi-dimensional tariffs according to the capability requirements of different services (Fig. 1).
Maximizing User Value Through Differentiated User Rights
Differentiated user rights are assigned based on the membership system and the principle of higher price for higher quality. With the in-depth development of O2O, the issue of homogeneity in consumption brought by the surplus supply becomes more pronounced, and consumers are becoming more and more rational and mature. In addition to the network performance rights based on user levels, consumers will pay more attention to the additional rights.
Connecting 5G commercial value chain horizontally for differentiated value: Operators need to collaborate with players in the value chains related to consumers' daily lives and work, such as players in the entertainment and business travel fields. Users can redeem their points for the services they want, which encourages more purchases, and on the other hand, additional services can be precisely pushed through information such as users' package usage, which further promotes consumption.
Promotion of rights based on personal service scenarios: Personal service scenarios are divided based on user preferences and user locations. For example, operators can push to users notifications such as a traffic acceleration card or a low-latency card by predicting their preference for movies or games according to their browsing history. Pushes of location-based rights target scenarios such as central shopping areas or sports venues, and are to deliver timely and relevant contents, such as venues discounts, VIP coach information, which increases consumption opportunities and revenues for operators.
Despite the COVID pandemic, South Korea's SKT and LG Uplus saw their Q3 operating profit rise 19.7.6% and 60.6% respectively year-on-year. They both saw double-digit profit growth for two consecutive quarters as a result of steady 5G subscriber growth. As of September, South Korea had more than 9.25 million 5G users. 5G users consumed two times more data than 4G users, mainly driven by games, VR and media usage. It can be seen that the commercial success of 5G is the main driver of both the revenue and profit growth for operators in South Korea.
Therefore, harnessing the performance benefits of 5G networks, operators can create more innovative services and business models to gradually release themselves from the operation pressure of relying solely on data usage. Meanwhile, innovations in the consumer field will more directly and quickly contribute to revenue growth, which enables operators to expand into new fields in the future.