The inception of telecommunication was to connect people — Picking up the phone and calling anybody, anywhere was not something that could have been imagined 100 years ago. From the early days of 1G to the widespread adoption of 4G, telecommunications companies, or telcos, have been on a relentless journey to connect the world. They’ve sold tangible units, from SMS messages to talk time, and later, the volume of data consumed. However, the advent of 5G is ushering in an era where traditional telco models are becoming obsolete. To succeed in the 5G economy, telcos must shift their focus from selling data, minutes, or texts to delivering immersive experiences. This blog explores why telcos need to pivot, embrace technology partnerships, and adopt a startup mentality to thrive in the age of 5G.

The Declining ARPU Challenge

The Average Revenue Per User (ARPU) for telcos has been a key metric for measuring success. However, even with the introduction of 5G, almost all telcos have faced a challenging trend: declining or stagnant ARPU.

• United States: The ARPU in the United States has remained relatively flat since the launch of 5G. This is likely due to the fact that 5G is still in its early stages of adoption, and many consumers are not yet willing to pay more for it.

• China: The ARPU in China has actually decreased slightly since the launch of 5G. This is likely due to the fact that there is a lot of competition in the Chinese telecom market, and telcos are under pressure to keep prices low.

• Europe: The ARPU in Europe is expected to remain flat or even decline slightly in the coming years. This is due to a number of factors, including the increasing popularity of over-the-top (OTT) services, which compete with traditional telecom services, and the rising cost of 5G spectrum.

This is a clear indication that traditional revenue models based on data volume are no longer sustainable. Consumers are now looking for more value in their connectivity beyond just the amount of data they can consume. This is important else they cannot even recover the ROI with 5G . So what's the solution?

Telcos as Technology Providers

To adapt to the 5G landscape, telcos must transform from being mere telecommunication companies to becoming technology providers. This shift entails selling experiences rather than volume of time. For example, telcos can collaborate with augmented reality (AR) and virtual reality (VR) companies to create immersive experiences that leverage 5G’s low latency and high bandwidth.

Adopting the Startup Mindset — Unpopular Opinion

This is a very unpopular one with telcos. One of the biggest hurdles for telcos in the 5G era is overcoming the legacy mindset. In the majority of my consultancy calls telcos ask me “What is the 5G use case they can implement “. I feel when a Telco finds itself in the position of requesting 5G use cases from vendors or consultants, it has already lost the plot and not understood the economics of 5G.

In a world brimming with challenges, Telcos should take the initiative and proactively find their relevant play and develop solutions instead of waiting for the elusive ‘perfect use case’ to materialize. It’s essential to bear in mind that customers are not interested in purchasing a product but rather a resolution to their specific problems.

Most importantly, the old model of taking 2–3 months to create an RFP, another 6 months to run it, followed by 2 more months to award a contract and a further 6 months to implement is simply too slow. In a world where technology evolves within six months, telcos are already 18 months late from vision to reality. They must embrace agility, innovation, and a willingness to take risks. They must adopt a fail-fast and pivot startup mentality that values agility and experimentation.

Examples of Telcos Embracing Change to solve real-world problems

• AT&T: AT&T is working with the city of Chattanooga, Tennessee, to develop a 5G-powered smart city. The project includes the deployment of 5G small cells and the development of applications for traffic management, smart lighting, and public safety.

• Deutsche Telekom: Deutsche Telekom is working with the University Hospital of Cologne, Germany, to develop a 5G-powered telemedicine solution. The solution allows doctors to remotely consult with patients and perform remote surgery.

• Verizon: Verizon is working with the city of Pittsburgh, Pennsylvania, to develop a 5G-powered smart city. The project includes the deployment of 5G small cells and the development of applications for autonomous vehicles, public transportation, and environmental monitoring.

• Qualcomm: Qualcomm is working with the Siemens AG,, to develop a 5G-powered industrial metaverse solution. The solution will be used to improve the efficiency of manufacturing processes and reduce the need for manual labor. Siemens named leading industrial metaverse provider by PAC RADAR

• China Mobile: China Mobile is working with the city of Shenzhen, China, to develop a 5G-powered smart city. The project includes the deployment of 5G base stations and the development of applications for smart transportation, smart healthcare, and smart manufacturing.

• NTT Docomo: NTT Docomo is working with the Keio University Hospital, Japan, to develop a 5G-powered remote surgery solution. The solution allows surgeons to perform surgery remotely on patients in rural areas.

• Verizon: Verizon is working with Caterpillar Inc., an American construction equipment company, to develop a 5G-powered industrial metaverse solution. The solution will be used to train workers on new skills, remotely operate heavy machinery, and improve the efficiency of construction projects.

Partnering for Innovation

The era of telcos relying solely on vendors for use cases and solutions is over. Telcos should understand their limitations and instead, should actively seek out partnerships with technology companies, startups, and innovators. By collaborating, telcos can tap into external expertise and gain access to cutting-edge solutions. This is true for both vendors and Operators. For instance, partnering with a tech startup working on 5G applications can accelerate the development of new services and solutions.

Final Words — Dont sell Data — Sell Experiences

In the 5G era, telcos must evolve or risk becoming obsolete. They must pivot from selling data to delivering immersive experiences, adopt cutting-edge technologies, embrace a startup mindset, and actively seek partnerships for innovation. The declining ARPU trend and the rapid pace of technological change leave no room for complacency. Telcos that can adapt to this new landscape will not only survive but thrive as technology leaders in the 5G economy. The time for change is now, and the future belongs to those who can innovate and deliver exceptional experiences.