In the 18 months since 3GPP Release 15 was frozen in 2018, operators and equipment vendors have focused their efforts on conducting technical feasibility tests with B2B customers to uncover the network capabilities required to support real-life industry applications. In July, China Mobile moved past technical tests to announce its commercial offering for 5G private networks. What is noteworthy here is China Mobile has simply started the first of many iterations of such service bundling by operators. Expect tighter identification of business needs in coming months: having an actual offering gives buyers and sellers a focal point from which to evolve the 5G private networks portfolio, sifting through what is good to have and what is absolutely essential. Longer term, expect the dust to settle to reveal operator winners in 5G private networks.

What is China Mobile offering?
In the classic convention of using mnemonics to label packages in China as 1+N+X, China Mobile modelled its 5G private network offering into three packages (see chart, below, click to enlarge), guided by six typical network requirements and four services capabilities, id est: One network; N combinations of menu components; and X technologies.

To customers in China, this offering becomes the first time they see what and how they can buy a 5G private network. In this case, they select their packages based on three levers of pricing: network speed; extent of private network requirements; and the business value expected from the network. They pay based on well-understood network parameters including bandwidth, speed and number of connections.

What is new to B2B customers, however, is the ability to pick the types of services they need: a menu of four network services that should align to the business value expected from the network. First, network design services are structured to meet network customisation requirements including the option to help B2B customers understand different network deployment model options. Second, network optimisation services include the traditional wireless access optimisation as well as the cloud-native core network. Third, network operations and maintenance services are as described, network monitoring and predictive maintenance, but also includes SLA queries that are essential for service guarantees. The final network service is service guarantees, with the usual round-the-clock service support, but also guarantees for seasonal peak traffic patterns and incident response capabilities.

What is new about China Mobile’s offer and why does it matter?
Comprehensive services portfolio: China Mobile’s offering reflects their B2B ambitions not only from their desired technical leadership position but also from their aspirations in delivering associated services. Judging by China Mobile’s more than 18-month efforts to get to this point of a commercial offering, we can infer they are ready to deliver these services and hopefully to profit. Indeed, the addition of the word ‘service’ is an important distinction in identifying the winners in terms of the addressable market for 5G. Using GSMA Intelligence IoT revenue forecast methodology, the 2025 IoT market size will reach $900 billion, of which connectivity makes up only 5 per cent of the total market. Any 5G uplift to an operator will have to come from additional professional services as well as other solutions such as platforms, analytics, security and applications. A proposition with both network and services capabilities shows an operator’s ambition to compete with not only their peers but also the wider technology players such as system integrators, industry engineering services companies, and consulting/business processing outsourcing companies. Other market-leading operators will now have a known commercial offering to fine-tune their propositions.
Pick and choose menu: B2B customers now have a clear price book from which to build commercial metrics behind their investments into 5G private networks and considerations for their optimal deployment configuration. For example, it is important to note China Mobile’s offering is organised into an entry level tier of a public network slice in Special; a hybrid option in Exclusive; and a fully dedicated package in VIP. Since there is no one size fits all deployment mode for B2B customers, China Mobile will begin to discover which package will be more popular. For now, Liu Jian, general manager of China Mobile’s Business segment, believes that the middle package (Exclusive) will be more common among B2B customers.

What next for operators?
Iterative 5G private networks offerings: If operators’ M2M/IoT strategies are a good leading indicator of 5G private network ambitions, then we can expect operators to narrow their 5G B2B offerings throughout the next three to five years. This means operators will first cast a very big net to see what they catch and then begin to right size their target customers, reach of partners and breadth of portfolio. B2B customer demands need time to form: currently B2B customers have limited experience to experiment with what and how to buy 5G private networks. Operators will also need practical deployment experience, especially those who offer accompanying services to their network capabilities. To do this, working with vendors on experiments will help with failing fast by leveraging existing references for use cases and best practices to accelerate commercial deployments.
Deliver on beyond core ambitions: To the extent that operators are B2B-focused, professional services such as network services are important to meet customer needs. Our Operator in Focus survey suggests a high proportion of operators self-identify as currently offering 4G private networks. However, revenue reporting thus far suggests operators are not yet offering additional services which are reflected in revenue. Using China Mobile as an example, its H1 business revenue grew 18.4 per cent year-on-year and the proportion of non-connectivity business revenue increased from 29.2 per cent to 37.9 per cent. Strong performance in H1, but the majority of non-connectivity business revenue comes from internet data centres or IT infrastructure. The services revenue from B2B customers is likely insignificant.

Revenue from services-oriented ambitions will take operators years to materialise. Regardless, this transition requires investors who are patient: expect to see more organisational restructure in the coming years as operators align their beyond core connectivity ambitions.

– Yiru Zhong – lead analyst, IoT and Enterprise, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.