Crafting a 5G Plan of Action for All Telco Players

The enterprise 5G domain is very fragmented, both in terms of its requirements for cellular network Key Performance Indicators (KPIs) and in the composition of the legacy technology landscape. This leads to a range of different recommendations for Communication Service Providers (CSPs), infrastructure vendors, hyperscalers, and System Integrators (SIs), which are addressed in this resource.

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Market Overview

  • ABI Research forecasts that 5G connectivity will add US$508 billion to global economic productivity (in terms of Gross Domestic Product (GDP)) by 2030. This is primarily driven by 5G deployments in heavily industrial environments like manufacturing, energy generation (including natural resource extraction), and logistics. Other sectors, such as healthcare and transportation, are emerging as key areas for 5G connectivity, too.
  • Additionally, we expect 5G to contribute a total of US$110 billion by means of increased automation. This is mainly driven by automation of operations in highly hazardous environments, such as mines and oil & gas fields.
  • 5G will also enable enterprises to increase their efficiency by providing highly-reliable connectivity and the ability to enable connecting to 1 million devices per Square Kilometer (km2). Providing robust signal handovers between access points further increases the efficiency of mobility use cases over other wireless connectivity technologies, such as Wi-Fi.
  • The efficiency enhancement effect of 5G deployments unfolds, particularly in the manufacturing world, where the deployment of Autonomous Guided Vehicles (AGVs) and flexible manufacturing (enabled by 5G connectivity) is forecast to increase the sector’s output by US$207 billion.
  • 5G is expected to contribute US$130 billion to global economic output through quality improvements. This is mainly driven by improvements in activities in the healthcare sector, where 5G-enabled smart diagnostics is expected to prevent up to 114 million medical interventions globally by 2030.

“First and foremost, with its unique combination of features, 5G enables enterprises to automate use cases that could not be automated with legacy connectivity technologies. The provision of eMBB capabilities, for example, allows for the transmission of particularly large data files (e.g., video footage) and, therefore, enables the automation of operations within particularly harsh environments, such as manufacturing sites, mines, or oil & gas fields. Furthermore, this can help automate loading operations within airports and seaports.” – Leo Gergs, Principal Analyst at ABI Research

 

Key Decision Items

Recommendations for MNOs

For Mobile Network Operators (MNOs), ABI Research makes the following recommendations regarding 5G services offerings:

  • Focus Enterprise Connectivity Offerings on Specific Enterprise Verticals: Different enterprises have different connectivity requirements (e.g., data security and integrity) and priorities for digitization partners. Industrial firms show a keen preference for partners that they can trust, which can help be established through vertical-tailored connectivity offerings.
  • Provide Communication Toolkits for Industrial Enterprises: This will foster enterprises’ digitization (Artificial Intelligence (AI), Augmented Reality (AR), Virtual Reality (VR), etc.) efforts. MNOs should be prepared to offer communication solutions as a toolkit to enterprises in industrial verticals (e.g., manufacturing, energy generation, or logistics) where they realistically are not expected to be overly successful in providing a private cellular network for mission-critical use cases, as handing over these critical data to network operators is often disregarded by enterprises due to a lack of trust.
  • Focus on Network Management and Operation Capabilities Instead of Licensed Spectrum Assets for Enterprises: Spectrum liberalization initiatives, such as shared spectrum and set-aside licensed spectrum for enterprise use, have led to licensed spectrum losing its appeal. Consequently, network operators should adjust their value proposition to center around their proven track record of managing and operating cellular networks for several decades.

Recommendations for Network Infrastructure Vendors

ABI Research’s strategic guidance for network infrastructure vendors embarking on their 5G ambitions is outlined below:

  • Provide Connectivity Infrastructure in an Easy to Deploy, Modularized Architecture: Given their inexperience and lack of interest in gaining experience in telecommunications, enterprises seek straightforward 5G solutions. 5G offerings should also be easily scalable as enterprise requirements change and use cases expand over time.
  • Team Up with Trusted Partners of Enterprises, such as SIs: As offering vertical-tailored connectivity solutions entail knowledge of various industries, partnerships are pivotal for infrastructure vendors to cater to industry-specific pain points. Building on an indirect Go-to-Market (GTM) channel will result in infrastructure vendors expanding their network and being better positioned to broaden their potential customer base.
  • Combine 5G Private Cellular with Wi-Fi: Enterprises will not replace all of their existing connectivity infrastructure to deploy (private) cellular, therefore, Wi-Fi and cellular will continue to coexist, each serving different applications. Reacting to this, infrastructure vendors need to accelerate their development of networking products that combine both Wi-Fi and private cellular.

Recommendations for Hyperscalers

This section provides recommendations for cloud hyperscalers operating in the 5G arena.

  • Provide Platforms and Applications for Enterprise Digitization: As already alluded to, enterprises need vertical-specific applications more than anything. Hyperscalers should use their existing experience in cloud-based application development and platform design to provide this to enterprises and open their ecosystem, even to third-party developers. As these applications carry the most tangible value proposition for enterprises (and, therefore, increase the willingness to pay), they should be provided in an Application-as-a-Service model, so enterprises can book individual applications as needed.
  • Seek Partnerships with Telco Infrastructure Vendors for Last-Mile Connectivity: While applications are the most important element of enterprise connectivity solutions, a solid product portfolio for the connectivity layer is an important foundation—a sine qua non condition, i.e., a box that needs to be ticked so that more advanced discussions around applications can take place. While different hyperscalers have different strategies regarding the cellular network core, they should all look at partnerships for the Radio Access Network (RAN) to provide an End-to-End (E2E) connectivity layer most cost-efficiently and in the timeliest manner.

Recommendations for System Integrators

Finally, this section provides critical feedback for SIs helping enterprises implement 5G connectivity.

  • Bridge Enterprise Requirements and the Telco Industry: As SIs are considered key partners for enterprise digitization, they will become even more of a mitigator between enterprise requirements and the telco industry. First, they must help translate enterprise requirements into technology requirements so that the telco industry can react and adjust their offerings accordingly. Second, they must translate technology-heavy talk around cellular connectivity features into how these features can address enterprise pain points and what can be done with them. Consequently, SIs will need to build up a second layer of “mitigator capabilities,” in addition to technology integration expertise.
  • Build Up Expertise in Cellular Connectivity to Combine with Existing Partnerships and Provide Enterprises with a Complete Portfolio of Connectivity Solutions: As SIs will become a central stop for enterprise digitization projects, they will need to build up expertise and a partnership network in different technology domains to offer the best possible solution to enterprises. From a connectivity point of view, and most importantly, this means building up a partnership network for cellular connectivity to be able to offer both cellular and non-cellular connectivity solutions to enterprises. In agreeing on a framework for these partnerships, SIs should push for revenue-sharing arrangements, as this minimizes the financial risk of upfront investment from SIs.
  • Provide Enterprise-Grade Applications on Top of Connectivity Infrastructure Supplied by Partners: With the connectivity layer only being a small part of the revenue stack of an enterprise digitization solution, SIs must focus on enterprise-grade applications and services. This can be done either in-house or through partnerships with hyperscalers and/or industrial automation vendors.

Key Market Players to Watch

Dig Deeper for the Full Picture

Learn more about the global value proposition of 5G and how telecommunications industry players can help enterprises in their digitization efforts in ABI Research’s 5G Impact on the Global Economy and Contribution to the GDP research report.

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This report is part of ABI Research’s 5G Markets Research Service and 5G and Macroeconomics Spotlight.