B2C Revenues Falling? Reignite Them with B2B2X

The prevalence of digital experiences will only increase as we converge on 5G. Most of us have adopted a digital-first way of living, learning and doing business. As consumers, we expect services to be on-demand and in real time, with intuitive interfaces and the intelligence to predict our best next action. In a 5G era, this will only increase, with more and more industries, from education to health, transforming their businesses to offer digital services.

WHAT DOES THIS MEAN FOR CSPS?

The hyper-competitive B2C market is under constant pressure with margins tightening as voice, text and data services have become commoditized. 5G’s increased speed and bandwidth is unlikely to be attractive enough to generate real revenue growth for use cases such as Enhanced Mobile Broadband (eMBB) and Fixed Wireless Access (FWA). What B2C customers really want are connected and immersive experiences across all networks, devices and channels.

And they are willing to pay for them. According to recent research by McKinsey, simply upselling traditional portfolios with 5G speed may increase ARPUs by 3 to 6 percent. However, by creating highly personalized and targeted offers, selling “experiences” and pursuing B2B2C partnerships, CSPs could triple or even quadruple these gains.

In this context, digital-first consumer services, especially those co-created with cross-industry partners, are a new and exciting revenue source for CSPs. But to succeed, telcos need to become more agile and be ready to expand their business model to B2B2C.

AND WHAT IS B2B2C?

Simply put, B2B2C refers to the business model where two or more businesses partner to sell their products and services as a combined offering to a customer. This is a not a new concept. There are many examples of B2B2C models today: CSPs bundling connectivity with Netflix, Spotify or Disney+ is a well-established model in many countries.

A CSP can bundle a partner’s service with its connectivity services, or a partner can use the CSP’s connectivity to power its services (e.g., a car company offering smart monitoring services for cars to notify customers when a part needs to be replaced). It depends on who owns the primary relationship with the end-customer.

The result?

The customer receives more value, the partner extends its reach and the CSP opens up more revenue opportunities.

B2B2C IN THE 5G WORLD

5G technology, such as edge computing and network slicing, will shape not only the type of consumer services offered, but also how those services are offered and consumed. And underpinning those services are complex architectures, partnerships and co-opetition arrangements.

Think of the complexities involved in providing a seamless user experience to a gamer who likes to play games on his iPhone while commuting. His CSP needs to partner with a cloud gaming provider, host in on-net edge locations for performance, allow the gamer to “roam” to other CSPs’ network edge nodes to ensure coverage, quality of service and super low latency. The CSP then needs to charge for the service and to settle with all the partners involved. The CSP’s ecosystem needs to manage the technical and business complexity to make this multi-party, multi-site service seamless, automated and scalable.