Keywords

We cannot solve our problems with the same thinking we used when we created them.

(Albert Einstein)

Toward Sustainable Value Creation

Developments in Information and Communication Technologies (ICT) like mobile communications have substantially transformed service systems and extended the boundaries of service interactions, while providing new business opportunities for value creation (Edvardsson et al., 2018). In parallel, the traditional view that value is first created, then delivered, and finally captured by a focal firm has changed to a view in which value is simultaneously co-created and co-captured by and for both service providers and users in an ecosystem of actors. In practice, value co-creation and co-production are becoming more widespread due to ICT’s capability to drastically reduce actors’ coordination costs in co-producing services (Kallinikos, 2011). In short, this makes service processes interactive, collaborative, and able to involve multiple actors or service system entities (Vargo et al., 2010).

Successful value co-creation requires that actors can interact through exchange of resources, while integrating these in the context of their own ecosystemic business reality (Prahalad & Ramaswamy, 2004). Ecosystem actors are enabled to exchange resources to accumulate value, co-creating value increasingly through virtual, i.e., digital, rather than physical interfaces (Davis et al., 2011).

Many scholars extend the value construct from a one-dimensional shareholder logic of profit maximization to more stakeholders and levels of attention (Aagaard & Ritzén, 2020). In sustainable businesses, value propositions go far beyond economic considerations, and include environmental and social considerations, referred to as the triple bottom line logic (Bocken et al., 2015; Pedersen et al., 2018). Thus, all actors and entities should benefit from the transformation of value-in-use into value-in-exchange, meaning that value may be captured on more levels (Lepak et al., 2007). Sustainable value may be defined as “a promise on the economic, environmental and social benefits that a firm’s offering delivers to customers and society at large, considering both short-term profits and long-term sustainability” (Patala et al., 2016, p. 1). This implies that value is embedded in a specific social context and consequently is defined differently by different players (Barrett et al., 2016).

It follows that an organizational value proposition varies depending on the contextual specifics or a ‘regime of value’ (Appadurai, 1986). A regime of value “is a socially coherent and situated way of establishing what is valuable” (Barrett et al., 2016, p. 709). Resonating with the idea of sustainability, and triple bottom line, a regime of value includes social, political, and economic regimes of value (Grover & Kohli, 2012). It is important to note that the existence of multiple value propositions can naturally lead to various tensions that, however, can be creatively leveraged to achieve synergies (Stark, 2009).

In business model research—that constitutes the mainstream of the value creation discussion today—value is closely intertwined with the concepts of opportunity and competitive advantage (Zott et al., 2011). Given the growing sustainability pressures, these concepts are increasingly discussed in the context of sustainability (Greissdoerfer et al., 2018). A possibility of the concurrent presence of several value propositions by different stakeholders in an ecosystem may entail variation in opportunity and competitive advantage conceptualizations, as well as in the processes of value creation (Corvellec & Hultman, 2014). Traditionally, business model discussions identify four sources of value creation: novelty, lock-in, complementarities, and efficiency (Amit & Zott, 2012). In this, novelty may serve as a starting point, with complementary elements to existing products and services leading to efficiency, or having it as a key feature of the novel offering, finally resulting in customer lock-in.

For 5G services, the basis for value creation comes from the three usage scenarios defined by ITU-R (2015) are as follows:

  • Enhanced mobile broadband (eMBB) addresses human-centric use cases for access to multi-media content, services, and data as an extension to the mobile broadband services offered by earlier generations of mobile communications. The aim is to achieve improved performance and an increasingly seamless user experience both in hotspots and wide area coverage.

  • Ultra-reliable and low-latency communications (URLLC) set stringent requirements for machine-centric use cases in terms of throughput, latency, and availability in various application areas including industry, healthcare, energy, or transportation.

  • Massive machine-type communications (mMTC) are characterized by a high number of connected devices with relatively low volume of non-delay-sensitive data. These kinds of communications are typical for different Internet of Things (IoT) applications.

With these original usage scenarios, ITU-R has adopted a service-centric approach to value creation with mobile communications services. In practice, however, the value creation in mobile services has taken different forms. Drawing on the insights of extant research, this chapter approaches and conceptualizes opportunities for value co-creation and co-capture based on 5G and 6G usage scenarios as configurations on service, platform, and ecosystem levels of analysis (Grover & Kohli, 2012; Orlikowski & Scott, 2008). The purpose of the chapter is to provide a preliminary understanding of how the 5G/6G-enabled services may unfold in future, and what value they may bring to the evolving mobile communications ecosystem.

The chapter starts by providing a conceptual understanding of value creation in via services within platforms and ecosystems. What follows is a presentation of the current understanding of services within 5G focusing on different deployment modes. Since 6G is still in the research phase, the chapter discusses the capabilities and use case candidates identified for 6G as possible sources of value creation. The chapter concludes with a discussion on trustworthy 6G and outlook to applications and services in future 6G.

Digitalization, Platformization, and Ecosystems

Digitalization has enabled companies to create novel value and offer service configurations by incorporating and combining emerging technologies either as a main value driver or as a complementary agent (Parida et al., 2019). Reflecting on mobile communications and ICT in general, the business value creation has changed from a connectivity approach (ICT as a communication channel) through an immersion approach (ICT as an operating environment) to a fusion approach (ICT as fabric), where modular platforms can be adapted and interconnected in different ways (El Sawy & Pereira, 2013). Digital technologies have enabled opportunities for value co-creation through services by connecting actors who would otherwise not have been connected. Consequently, companies have increasingly adopted digital platforms to mitigate service innovation challenges (Rai et al., 2019). Through digital platforms, the flow of information is mediated, which enables the interconnection of products and services, as well as data flows between different actors (e.g., service providers, customers, and end users) on multiple sides of the platform (Ruutu et al., 2017). As an example, Apple and Google have established digital platforms to develop new mobile data services by acquiring commercial ideas from firm customers and consumers (Ye & Kankanhalli, 2018). However, in these technology-mediated ecosystems, value creation by itself is insufficient, as one needs to consider the extent to which agents can capture value in a fair way with respect to their contribution (Corsaro, 2020).

In the digital service context, defining and identifying individual contributions are not always straightforward, as some service processes might be hidden, and benefits and costs might be intangible (Hofacker & Corsaro, 2020). Furthermore, the value creation of digital services depends crucially on the network effects (Zhu & Iansiti, 2019) created by the platform. For example, the value of a mobile phone operating system platform for end users depends on the number of application developers as well as the applications developed by them (Garcia-Swartz & Garcia-Vicente, 2015). In sum, new technologies and the concomitant emergence of various digital services have enabled new means of value co-creation.

From Platformization…

The integration of various forms of value co-creation present requires ecosystem actors to interact through the exchange of resources in the context of their own reality (Prahalad & Ramaswamy, 2004). Platformization and the modularization facilitated by the convergence of ICT technologies enable novel configurations of needs and resources. It has been argued that platform-based digital markets can alter the way companies generate and deliver value to end customers (Cusumano et al., 2020). The purpose of platforms thus is to “facilitate the multi-party exchange of products, which can be goods, services, or even social currency” (Sorri et al., 2019, p. 2), in the creation of novel value while ensuring value capture. McIntyre and Srinivasan (2017, p. 143) state that “platforms can be conceptualized as interfaces—often embodied in products, services, or technologies—that can serve to mediate transactions between two or more sides.” From a more technology-centric perspective, digital platforms can therefore be explained as software-based external platforms. These platforms consist of an extensible codebase of a software-based system, which provides core functionalities shared by the modules that are interoperating with it and the interfaces through which they are interoperating (Sorri et al., 2019).

Thus, in ecosystems characterized by technological interdependence between companies, the value created by a particular firm’s technological choices is highly dependent on the choices made by other ecosystem actors that possess complementary technologies (Adner & Kapoor, 2010). Therefore, to unlock network effects and create ‘lock-in,’ technology ecosystem actors need to coordinate these choices not only with upstream and downstream value chain participants, but also with competitors and complementors (Vasudeva et al., 2020). Consequently, to fully leverage technological ecosystems aimed at value co-creation, adaptations are required by the complementors as well as the focal firm, resulting in a co-specialization of the underlying economic, technological, and cognitive architecture (Aarikka-Stenroos & Ritala, 2017; Autio & Thomas, 2019; Shipilov & Gawer, 2020). Furthermore, technology ecosystems constantly co-evolve and self-organize, leading to changes over time in the interdependencies and relationships between actors, co-creating value (Phillips & Ritala, 2019) and therefore require agile governance models.

… To Ecosystems

From a firm-centric perspective, value creation may be defined as an actor’s attempt to increase value, whereas value capture is explained as the process of securing financial or nonfinancial return from value creation (Chesbrough et al., 2018). However, as we move value creation toward platform ecosystems, we need to address the system-centric perspective as well. Platforms present the highest potential for co-creation (Saebi & Foss, 2015), where an array of peripheral firms are connected to a central platform via shared or open-source technologies or technical standards with the objective to co-create value (Cennamo & Santaló, 2013; Jacobides et al., 2018). From the ecosystemic perspective, the logic is to enable value creation for all stakeholders, not only how it is captured by the focal firm (Upward & Jones, 2016; Zott et al., 2011). Thus, value co-creation may be identified as a “joint, collaborative, concurrent, peer-like process of producing new value, both materially and symbolically” (Galvagno & Dalli, 2014, p. 644).

The co-created value is co-captured through sharing and distributing the revenue between ecosystem members (Oh et al., 2015). Thus, value co-capture through platforms is realized through resource exploitation and coopetition, and through the provision of a unique platform by a focal actor for complementarities. However, commitment from the ecosystem actors and stakeholders invokes an extra dimension, value sharing, as potential stakeholders will not hand over their resources unless in return for what they can obtain from the relationship of the exchange (Verstraete & Jouison-Laffitte, 2011). Particularly, Adner (2022) stresses that for platforms to win at sharing value, it requires that both orchestrators and complementors work to further each other’s interests.

Value networks and technology ecosystems of complementary actors have become central to successful value creation. With the emergence of these technology ecosystems, companies can combine capabilities across boundaries into innovative new service offerings and solutions to co-create and capture value (Aagaard, 2019). Thus, ecosystem partners face tensions from simultaneously sharing knowledge, while protecting internal knowledge to preserve their competitiveness (Rouyre & Fernandez, 2019). Therefore, to avoid the potential threat to the efficiency of value co-creation, the actors should consider simplifying the contracting and negotiation processes, formalizing knowledge transaction processes, and they need to implement transparent governance mechanisms (Zhu & Liu, 2018). These are typically handled by centralized rules and standards organized around a digital platform (Kretschmer et al., 2021). Thus, platform governance of value co-creation broadly concerns the design and deployment of governance choices, including decision rights, incentive structures, and control mechanisms. We, therefore, view ecosystem governance for value co-creation from a co-alignment structure perspective, which allows actors to productively combine their co-specialized inputs toward a joint value proposition (Adner, 2017; Thomas & Autio, 2020).

Value Creation in 5G

The service-centric definitions of standardized eMBB, URLLC, and mMTC do not characterize the currently available 5G services well. The first of the above, eMBB is under deployment globally, but the two latter industry-focused services URLLC and mMTC are yet to be adopted. Instead, we may find six types of commercially available mobile network constellation services: public commercial networks, public commercial virtual networks, neutral hosts, private local networks operated by MNOs, private local networks operated others than MNOs, and public network integrated non-public networks. Table 5.1 provides their description and key mechanisms of value co-creation and co-capture as well as their value sharing and spillover effects.

Table 5.1 Identified mobile communications services in 5G
Full size table

Offering public commercial networks is the bread and butter of MNOs as these networks are open for all to subscribe to at the national level. The customer value comes primarily from enjoying the connectivity as a service, but often MNOs bundle connectivity with devices and various content services such as entertainment. Connectivity enables customers, whether consumers or organizations, to enjoy or provide various digital services to others. Public commercial networks are under net neutrality regulations and are obliged to provide their service so that all communications are treated equally without discrimination, offering users and other online content providers consistent rates irrespective of content, website, platform, application, type of equipment, source address, a destination address, or method of communications. Net neutrality regulations form the basis for the treatment of traffic for societal value creation and the high level of value spillover across the different sectors of society. Public commercial virtual networks are a category of public commercial networks that are operated by a different organizational entity using the infrastructure of another MNO. These networks are operated by mobile virtual network operators (MVNO)—that are often, but not always, MNO subsidiaries—that focus on specific customer segments requiring differentiated experience and a differentiated brand. For MNOs, an MVNO is an opportunity to monetize extra capacity. The MVNO spillover effects to other sectors or society mean increased competition and choice for end users.

A neutral host creates value by increasing cost efficiency by offering communications services for multiple MNOs serving their customers in given locations. Typically, all MNOs build their own mobile networks to provide the required coverage. In areas where the number of users is low, it may be that the returns on the network investment remain negative. In such areas, it might be beneficial for MNOs to collaborate and build only one network that serves all MNOs, thereby sharing infrastructure and site costs. This can be particularly effective in buildings where it is not feasible for all MNOs to build their own infrastructure. This neutral host concept can be run by one of the MNOs or some other organization so that all the MNOs’ customers can utilize the service. Within the neutral host concept, value sharing primarily takes place between the partners, making the achieving of spillover effects restricted. The neutral host model can serve various campuses, factories, and hospitals, but also customers located in rural and sparsely populated areas.

Private local networks serve closed user groups and usually come in two variants. First, MNOs can offer local communications services for private dedicated user groups, starting with a project and continuing based on a specific contract. In this model, value is shared between the partners in the ecosystem, who are typically industrial customers. Second, private local networks can be offered by stakeholders other than MNOs, for example, local network companies, or end user organizations themselves can have local stand-alone communications services of their own. Additionally, in this case, the value creation and sharing takes place between the ecosystem partners, but now without MNOs. In cases where a connection outside the networks is needed, private local networks can also be integrated with public networks meaning that part of the network (e.g., slicing or access point functionality) is shared between the local network owner and hosted by an MNO. This kind of arrangement is called a public network integrated non-public network where value sharing takes place only between the ecosystem partners.

Strategic Considerations for 5G Services

From the value creation perspective, the key elements of mobile communications platforms include data, algorithms, components, and interfaces (Iivari et al, 2022; Yrjölä et al., 2021). Components include (readymade) add-on elements that connect to the platform to add functionality to it (Baldwin & Clark, 2000; Sanchez & Mahoney, 1996). Interfaces, such as specifications and design rules, describe how the platform and components interact and exchange information using well-documented and predefined standards such as application programming interfaces (APIs) (Katz & Shapiro, 1994). The engineering tradition has placed components and interfaces either at the core or periphery of the system. Baldwin (2008) found that modularity reduces coordination and transaction costs across the module boundary, while interface standardization reduces the asset specificity of modules. The increasing volume of data has transformed contemporary business practices (McAfee et al., 2012), while the algorithm revolution and cloud computing have given rise to a platform economy. Computing power is converted into economic tools using algorithms operating on data as the raw material.

In collaborative contexts, it makes sense to examine platforms regarding their openness from the combined perspectives of components, interfaces, data, and algorithms. Four strategies of openness can be identified for value creation. The traditional logic has been to base value creation on proprietary resources, but with increasing platformization, value creation strategies may be based on open interfaces (referred to as open edges of the platform) that the ecosystem stakeholders can utilize, open functionalities of the platform core that the stakeholders can access, or using an open-source approach where the stakeholders can themselves use and modify the platform’s components, interfaces, and algorithms (Casadesus-Masanell & Llanes, 2011).

The six classes of mobile communications presented in Table 5.1 can be cross tabulated against the components, interfaces, data, and algorithms used in value creation and service delivery. At the same time, the openness of the system needs to be considered. The configuration of needs and resources in novel 5G digital services, therefore, implies a continuous balance between these different elements, where modularization can be considered as the basis for novel value configurations, as modularity can reduce coordination and transaction costs across the module boundary, while interface standardization can reduce the asset specificity of modules and extending the scalability of resources and services. Balancing user needs with resources implies a dualistic perspective on value, and both the technical platform modularity and architecture and service modularity and architecture (Yrjölä et al., 2021) need to be considered in the creation of new 5G services. The dualistic perspective on technical and service modularity and architecture can therefore be coined from the perspective of complementarity (Teece, 2018; Xu et al., 2020). Technology complementarity enables modularity from systems and encourages interoperability, whereas opportunity complementarity ensures a user-centric approach to service provisioning and service modularity. Complementarity relates to production, customers, asset prices, inputs, technologies, or innovation. As platforms with their ecosystemic characteristics can be either loosely or tightly coupled (Gawer, 2014; Teece, 2018), a focus on dynamic and integrative capabilities for value creation is important. Balancing between convergence, complementarity, and modularity is challenging, and therefore strategic thinking in terms of foresight and insight plays an influential role in ecosystems (Zahra & Nambisan, 2012).

6G -Enabled Value Creation

The value co-creation between companies in ecosystems is highly influenced by how technology evolves, as value and value propositions co-evolve along with the evolution of industry (Chau et al., 2020). With the technological evolution of 5G to 6G, new territories for value creation are being and will be established continuously. Recent research has explored some of the different typologies of value creation. For one, Kapoor and Teece (2021) discuss three different typologies of technological value creation: emerging, enabling, and embedding. As new technologies emerge (e.g., 5G and 6G), a trajectory is formed through a series of breakthrough inventions, which are introduced by a multiplicity of heterogenous ecosystem actors. This trajectory is associated with risks related to the emergent nature of the new technology. The enabling nature of technology corresponds to the commercialization of the technology across multiple application domains. This may be costly and require developments as well as an array of complementary assets, which may lead to underinvestment, hampering the growth and adoption of the technology. However, public policies and subsidies can support research and development activities of companies and ecosystems and may alleviate the situation. The embedded nature of technology captures the business model and ecosystem in which the technology is commercialized.

As 6G is still in the research phase, the use cases and services to be labeled as 6G-enabled are still emerging. At the same time, 6G is expected to become a future general-purpose technology with the potential to transform society. The new growth potential of 6G over earlier generations lies outside consumer services in 6G’s capability to serve industries and smart cities, for example, thus boosting novel kinds of network effects and societal returns. First, for value creation, 6G services should meet the following goals and expected impacts: (1) to be human-centric and inclusive, (2) to be socially, environmentally, and economically sustainable (i.e., triple bottom line of sustainability), (3) to be trustworthy, and (4) to be resilient and maintain sovereignty. Second, 6G is expected to serve: (1) humans, (2) machines, (3) public and private organizations, and (4) communities as users and developers, suggesting the existence of different usage scenarios and examples as indications of 6G’s role in everyday life and the different technological configurations and development trajectories expected to emerge for 6G in future. The new capabilities of 6G are expected to change the nature of human and machine life when communications merge with sensing and accurate positioning to serve humans and machines—and integrate the two—for increased efficiency, to enable earlier impossible tasks, and to automate processes. Finally, the question also remains of how to measure the performance of 6G with key performance indicators (KPIs) and value created with key value indicators (KVIs) (Hexa-X, 2021; Ahokangas et al., 2023).

The framework for IMT-2030 (6G) may cover four overarching aspects, which act as distinguishing design principles for 6G: sustainability, security/privacy/resilience, connecting the unconnected, and ubiquitous intelligence. No such design principles existed for 5G, making the design principles a novelty to be considered for 6G. 6G may thus embrace:

  • Immersive Communication

  • Hyper Reliable and Low-Latency Communications

  • Massive Communication

  • Ubiquitous Connectivity

  • Integrated Artificial Intelligence and Communications

  • Integrated Sensing and Communication

The following 6G-enabled services as sources of value creation can be identified:

  • Cost-efficient, sustainable, ubiquitous, near-instant, unlimited, mobile connectivity as a basis for future connectivity-adjacent services for humans, organizations, and communities—and verticals such as industry, healthcare, logistics, or agriculture. The growing number of increasingly more autonomous things, also in swarms, can be considered as the users of 6G.

  • Multisensory applications and services such as virtual, augmented, or extended mixed reality (VR, AR, and XR, respectively), holographic communications and immersive telepresence to connect the physical, digital, and virtual worlds like the metaverse(s). For example, haptic and empathic communications may enable AI-enabled work in radically new ways.

  • Privacy, security, and safety related services are increasing not only for humans in daily communications but also for ensuring that things, robots, and autonomous vehicles can be used safely, and that those critical infrastructures are secured. 6G may come with (also local) trust zones of different sizes and purposes.

  • Massive dynamic twinning, i.e., the creation and existence of online and real-time digital twins (DT) of the physical reality for, e.g., smart factories or smart cities.

  • Transhumanism via implanted biosensors and body-area networks to communicate and help merge humans and machines together, bringing humans new capabilities, creating a ‘digital twin of me.’

  • Sustainable development both at the societal and environmental level while being economically sustainable. First, trustworthy e-health services and institutional, local mobile coverage in schools and hospitals are examples of socially sustainable 6G services. Second, monitoring the earth via bio-friendly and energy-harvesting sensors exemplifies environmentally sustainable 6G.

The above list is not exhaustive, rather, it showcases many of the presently envisioned elements of 6G use. It can also be seen from different perspectives. Immersive communications, connecting intelligence, sensing for sustainability, and connecting the unconnected have been presented as 6G-specific usage scenarios or future examples (Ahokangas et al., 2023), exemplifying different sources, destinations, and types of value in future 6G. As an example, uncompromised triple bottom line sustainability is a new design principle for future mobile communications (Matinmikko-Blue et al., 2022). It is also evident that artificial intelligence will play a major role in future 6G value creation both as a stand-alone service but also as tightly integrated with 6G to enable novel services that enhance human and machine capabilities.

Trustworthy 6G

One of the recent challenges of 6G value creation concerns the question of trustworthy networks, specifically regarding privacy, security, safety, and resilience of mobile communications. On the one hand, achieving trustworthy mobile communications is a challenge for the whole lifecycle of network technologies from their definition to standardization, deployment, and use. For deployment and use, the EU Agency for Cybersecurity, ENISA (2022) lists ransomware, malware, social engineering, threats against data, threats against service and Internet availability, disinformation and misinformation, and supply chain attacks as potential threats that concern mobile communications. From the 6G system perspective, trustworthy networks require not only an understanding of the types and contents of threats as those listed by ENISA, but also the sources of these threats, whether individuals, organizations, or hostile nations. 6G needs to be designed and built to detect, prevent, and respond to these threats to ensure it remains trustworthy and resilient (Next G Alliance, 2022).

On the other hand, with the increasing use of artificial intelligence, 6G is expected to become more autonomous, which also increases the pressure on the trustworthiness of mobile communications. This can be seen also as an opportunity for future 6G. The 6G system characterized by architectural disaggregation, open interfaces, and embedded artificial intelligence, calls for trustworthy networks throughout the myriad of services and applications envisioned for the 6G ecosystem stakeholders (Ziegler et al., 2020). In the same way that artificial intelligence and the EU’s AI act (EC, 2021) have done, 6G could benefit from being ethically responsible (Wu, 2022) with a focus on explainable transparency, fairness, accountability, robustness, safety, human agency and oversight, privacy, and data governance. However, trustworthy 6G calls for deep interaction between academia, industry, communities, and the authorities and regulators throughout its development. Amidst the existing geopolitical tensions, trustworthy 6G can also be considered a requirement for strategic autonomy, sovereignty, and democracy (Moerel & Timmers, 2021), which involves the increasing role of societal value, sustainability, and resilience in mobile communications.

Conclusions

This chapter has focused on value creation in 5G and future 6G by examining mobile communications services. The other side of the coin, value capture, will be discussed in subsequent chapters. It appears evident that platformization and ecosystems will play an increasingly important contextual role for mobile communications services as technologies converge and become integrated, making innovation efforts also more ecosystemic by nature. The original technology-driven value creation approach of the first mobile communications generations has evolved into a service-driven approach now that we have reached 5G. In light of extant research, it is possible that for 6G the value creation will become more human-centric and user and developer-driven, which in turn sets new demands on innovating applications and services for 6G. Furthermore, as value is continuously being created through multiple actors in ecosystems, platforms have taken over the ‘process’ of creating and capturing value. This development opens completely new venues for value co-creation as well as for sharing value between ecosystems. The managerial implications of these developments stress the necessity for strategic actions, while tailoring the companies’ servitization efforts and platform strategies to leverage these unique business opportunities.

From the value creation perspective, ‘ubiquitous wireless connectivity’ in 6G will require that mobile operators integrate networks of different scales and scopes for the various needs of applications and users—from satellite networks to drone-based aerial, national terrestrial, down to various regional and local networks, even body-area networks, which all may be used for different purposes. This increasing variety of network technologies will create a multilayered multiplatform environment and will raise challenges in terms of developing services and identifying customers for value capture.