Achieving greater value from 5G post Covid-19
With a large percentage of the population due to Covid-19 currently conducting business, schooling and entertainment from home through online services , many companies now realise that their communication tools and networks are not as resilient as they may have previously thought. At the same time, Telcos are becoming acutely aware of the current capacity constraints within their network infrastructure and are trying to balance this with the substantial investment required in the coming years. We believe that amongst the challenges that exist, there are a wealth of opportunities for both Telcos and other companies within 5G solutions.
Current challenges with 5G
Currently, there remain several challenges for network operators in achieving widespread adoption of 5G networks, particularly in the short term. In our work commercialising the network offerings of Telcos, across technologies such as IoT, and Software-Defined Networking, there are some challenges and areas of opportunities we have identified with the transition to 5G. With the anticipated demand increase on the back of Covid-19 companies will need to fast track activities to gain market share by being customer-led and outcome focussed.
One of the most substantial challenges faced by Telcos is that the cost of the infrastructure rollout is likely to be times that of 4G. Often the focus is on making the long term business case stack up, at the expense of providing value today.
The second challenge is that 5G also brings increased competition for Telcos, as the flexibility of 5G technology results in a breaking up of the value chain further. As technologies such as private networks and network slicing become more prevalent, Telcos will need to fight greater competition from new entrants acting as Mobile Virtual Network Operators, particularly in specific industry verticals.
Finally, to date, network operators have not communicated the benefits of 5G in concrete terms for consumers and businesses. Many of the use cases advertised are too far off into the future, for example, remote surgery or self-driving vehicles. Also, many providers have not explained why current 4G/LTE solutions are suboptimal; for example, the use of 5G with IoT where high bandwidth and low-latency are required. As a result, there have been difficulties in driving near term adoption of the technology.
The opportunity for Telcos
While these factors increase the challenges with the rollout of 5G, we believe that Telcos can gain a competitive edge by focusing on B2B industry verticals that have clear pain points to be solved today. This focus will enable them to reduce the payback period on the CAPEX required in the short term, build a competitive position in industry verticals to fight off new entrants and better communicate with the market, ultimately driving more widespread adoption of 5G.
Overall this approach needs to be market-led. Who has a burning pain point? Are they willing to pay for an improved solution? How much are they willing to pay? These simple questions provide a valuable framework for assessing the opportunities across various industries and the current ability to serve these.
Below is an example of a current use case in the logistics industry. For this industry, there are three fundamental needs that, enabled by 5G and other technologies, can be solved today, and ultimately enhance the efficiency and service offerings of your customers.
“My biggest pain is the need to extract meaningful data… and get this as real-time as possible” — Head of IT Operations
Need 1: Visibility of assets and disjointed systems along the supply chain
5G enables massive machine-type communications (mMTC) as well as the ability to communicate where there is a large number of metal obstructions, as is common in industrial environments. In turn, these standards enable denser IoT deployments and greater visibility across the supply chain, particularly within logistics hubs and ports. In turn, there are resulting efficiency gains as optimisation of routes occurs.
“Cloud is a red flag for the Board sometimes because they automatically assume it is less secure.” — IT Manager
Need 2: Security of physical and digital assets
Security is paramount for the Logistics industry and critical to maintaining the trust of its customers. 5G can better meet these security challenges in two ways. Companies can better secure physical assets through protective measures which require more data, such as 4K CCTV video and facial recognition. Digital assets can also be better protected through the higher security and encryption standards of 5G, particularly as the use of sensors and IoT applications increases.
“Integrating and analysing various data sources to improve forecasting and prevent accidents is still a key requirement for [our company] but a very complex one to achieve!” — Managing Director
Need 3: Ensuring the safety of workers
Worker safety has always been vital for Logistics companies, and this is increasing as more heavy machinery and vehicles become semi-autonomous and fully-autonomous. In these environments, low-latency becomes critical in the prevention of accidents or identifying when an issue has occurred. In the future, this low latency will allow AI to be able to prevent or rectify problems in a timeframe faster than a human would be able to react.
The future is here.
Many of these solutions have been tested already in the real world. Over the last two years, the Port of Hamburg, Deutsche Telekom and Nokia have been trialling 5G use cases in a real-world environment. During these trials, they tested network slicing, IoT deployments, remote control of port traffic, 3D data and AR for construction planning.
As in the logistics industry, there are several verticals such as healthcare, retail, education, sports etc. which have real pain points that 5G technologies can help positively impact their business performance and service offerings. Telcos that can take advantage of this will reap the benefits in both the short and long term (see above graphic for more examples).
For those in Industry considering the potential of 5G; start to investigate early. Examine the possibilities for new service offerings and operational efficiencies. Implementing these technologies now will often lead to short term benefits and market differentiation. In the longer term, this better prepares companies for the full promise of the technology in the coming decade.
At Sia Partners we specialise developing customer-led propositions, services and partnerships. For further information or to discuss 5G use cases relevant to your sector, please contact aby.handler@sia-partners.com.
Authors: Brenton Kalisch and Aby Handler
