What’s driving future profits for mobile network operators?

From retail to entertainment, mobility is transforming industries across the spectrum. It’s part of the wider digitalization that is transforming our world and bringing new opportunities for businesses to get the edge over the competition.

Or they could get left behind: it’s sink-or-swim. All kinds of organizations are making the most of the rapid changes taking place. And the ones who actually operate the mobile networks themselves also stand to benefit.

And to do this they need to take advantage of the big technological advances that are coming, reinvent themselves and think about new business models and ways of doing things.

5G is on its way

According to Cisco Visual Networking Index  (VNI), internet traffic is increasing at a massive rate of 53% per year.

Along with this demand for mobility comes the next phase of mobile technology: 5G.

It’s not expected to really take off until 2020, but the change will be dramatic. 5G isn’t simply faster than 4G.

As the VNI states, it will be mostly be driven by the Internet of Things (IoT), with resources allocated based on “awareness of content, user, and location.” The bottom line of this: services. 5G is really about facilitating new services, each with unique needs, delivered by integrating a range of different types of connectivity into unified service delivery networks, offering the unique characteristics the services require. Not just speed.

How mobile network operators can benefit?

This is all great news for organizations that are harnessing mobility and the IoT to provide new mobile apps and services.

But what about the ones who actually provide mobile internet to users?

In contrast to the 53% annual rise in mobile traffic, mobile network operator (MNO) revenue is growing disproportionately less, at only 2% per year. This begs the question: what’s the opportunity for them?

5G isn’t just a new technology for operators to upgrade their network a notch. It’s the next step on their digitalization journey.

It can help them run better and better serve their customers. If they adopt 5G, it can differentiate operators and their customers from the competition. And importantly it also enables them to transform their own business propositions via innovations and new business models.

Running more efficiently

New software technologies allow operators to reduce operational expense (OpEx) in their networks.

Cisco’s Ultra Services Platform is just such an advance.

It virtualizes all the functions required in mobile service cores, automates the deployment and provisioning of services and uses SDN techniques to distribute packet processing while centralizing control. And this can cut OpEx by as much as 50%.

Getting the edge over competitors

These new technologies allow mobile network operators to deploy services faster.

They also make it simpler and cheaper to create and trial new services such as the ones Orange, Deutsche Telekom (DT) and South Korea’s SK Telecom showed at Mobile World Congress 2016.

Redefining your business and how you do things

Mobile network operators are looking transform their businesses by entering new expanding segments, using technology to disrupt markets and competitors and get new services to market quickly.

Until now, operators have mostly sold services to consumers, but now enterprises are major engines of growth.

Cisco can help mobile network operators enter this new market, because we have the best relationships with enterprises in the world, and great expertise in building the products they want.

And what’s more, Cisco cloud services also help operators get new services to without having to put massive investment into their own data centres and infrastructure in order to accommodate them.

That means they can be a lot more flexible, responsive and innovative.

Transforming for the 5G world

So it’s clear that there’s a huge opportunity for mobile network operators as well as their customers.

And to realize that opportunity, all it takes is for operators to rethink what 5G means to them and how best to capitalize it.

In the future, it will be evident who manages to make the shift and who doesn’t.

Related topics: What’s new with Service Provider Wi-Fi or VoWiFi? See more point of view here.

Find out more about what Cisco can do for mobile network operators here.