Intelligence Brief: Will enterprises pay for 5G without service level agreements?

Over the past few years, we’ve been ramping our coverage of enterprise services as a core component of the GSMA Intelligence content agenda. I probably don’t need to tell you why.

As a part of that focus, we kicked off a series of reports earlier this year to look at enterprise requirements in a 5G world. We started by looking at what enterprises will need from 5G services. But we then turned to a less-discussed topic, what operators will need to tap these enterprise 5G use cases. As you’d expect, we talked to a bunch of executives at operators around the world to test our theories and build an understanding of operator strategies. And, as you’d expect, the result was confirmation of some commonly-held expectations alongside the discovery of clearly divergent market views.

The stuff we know
Last week, our good friends at Mobile World Live wrote up the latest instalment of our research on this topic. The top-line message, that standalone (SA) 5G is key to delivering on enterprise requirements, falls into the category of confirming existing beliefs. Whether it’s via slicing, massive IoT connectivity, or low-latency communications, the reality is that many enterprise-critical 5G capabilities will require SA. Combined with an interest in tapping digital transformation demands, this is why we see more than 70 per cent of operators highlight plans for SA deployment within the next three years.

And that “interest in tapping digital transformation demands?” File that, as well, under confirmed expectations. Every operator we talked with cited B2B services as key to their 5G monetisation plans, some arguing there is no 5G business case without the enterprise.

Neither point might seem particularly insightful. Yet, both are important reminders: SA and a push on enterprise services will define operator 5G strategies for years to come. They will set the context for future service and network innovations. Ultimately, however, the real question we set out to answer was less about stuff we know and more about stuff we don’t. Specifically, what operators will need to do in addition to launching SA if they want to leverage 5G into B2B success.

The stuff we don’t know
It’s unfair to suggest that we don’t know what operators need to do in pursuit of B2B revenues beyond simply deploying SA.

Those who plan to target vertical industries will need ramp their vertical-specific profile, integration assets, and go-to-market capabilities. Those without a vertical market focus will need to loudly message the broader value of 5G to enterprises, while rolling out new services attractive to enterprises of all shapes and sizes, for example video surveillance, AR/VR-based training, and asset monitoring. And, of course, new network capabilities like edge networking and slicing will follow.

But, if SA is about helping operators meet specific enterprise service requirements, it will have implications for the way in which services are consumed. After all, any enterprise paying a premium for 5G based on the promise of service performance guarantees will want to know the performance they are paying for has actually been delivered. A key question around SA monetisation, then, is whether operators are ready to provide this type of performance visibility.

Are operators ready?
As with so many things in life, the answer to whether or not operators are ready to prove they’re meeting promised 5G service level agreements (SLAs) is an unsatisfying maybe.

On the one hand, operators have been successfully selling into the enterprise for years and SLAs have played a part in those sales. For the most part, those SLAs haven’t been particularly granular, based on metrics like coverage and availability. This is a far cry from the performance characteristics and metrics which are supposed to make 5G an enterprise game-changer. The suggestion, then, is today’s SLAs will need to evolve.

Here, the good news is that some operators clearly understand this: about half the operators we talked with noted they would need to be more granular with 5G-based SLAs than they have been in the past, exposing metrics like latency and bandwidth on a real-time basis, potentially via direct integration into enterprise business systems. Unfortunately, this means the other half doesn’t see any real reason to change the way they provide performance visibility to their enterprise customers in a 5G era.

For operators who plan to treat enterprise 5G at a high level, targeting services with less stringent performance demands, business as usual may suffice. But those hoping to execute on all the performance and digital transformation promises of 5G would do well to heed what one operator told us: “if you plan to charge for SLAs, your customers will want to know that they got what they paid for”.

– Peter Jarich – head of 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.