Telcos and enterprise verticals: 5G is not the only opportunity

Introduction

This report outlines key challenges within selected industry verticals, and how telcos can help resolve them with three emerging networking technologies – 5G, IoT and edge computing.

This research builds on many previous reports:

Enterprise services evolve alongside communications and information technologies

The early days of 2G/3G

  • Basic M2M connectivity
  • Early versions of private networks, bypassing the internet for sensitive data transfer

Improving mobility and capacity with 4G and fibre

  • Better connectivity drives demand for video-conferencing and more sophisticated UCaaS
  • Mobile and fixed data connectivity is powerful enough to enable greater enterprise mobility and support the shift towards cloud-based services
  • Different verticals increasingly require bespoke solutions for unique needs – which are easier to deliver through the cloud

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Greater flexibility and frictionless experiences with 5G, IoT and edge computing

  • Increasing complexity of connectivity, IoT, cloud and IT ecosystems are driving demand for flexible yet seamless solutions:
    • Mobile connectivity across geographies without onerous roaming charges
    • Seamless mobile connectivity across multiple networks and technologies, especially in remote areas
    • Frictionless remote set-up of IoT devices shipped directly from manufacturer to live environment
    • Ability to migrate to new technologies seamlessly (e.g. public sector move from TETRA to cellular)
    • All of the above controlled and monitored on user-friendly, cloud-based dashboards
  • The shift from product to service-based business models means a growing number of enterprises want to embed connectivity into their offer to customers
    • i.e. demand for greater control over wholesale connectivity solutions
    • remote maintenance, asset-tracking, etc.

5G applications will arrive at different times…

evolution of 5G technology eMBB, URLLC, private 5G, massiv IoT

Source: STL Partners

…in the meantime, other technologies can help address enterprise needs

The interdependencies between 5G, IoT and edge computing

Source: STL Partners

The problem with 5G for enterprises

  • Most enterprises are not looking at 5G in isolation, but as one of many technologies that will help resolve pain points around efficiency and innovation. The Internet for Things (I4T) and edge computing are two other key technologies that many enterprises need, and which telcos could potentially provide
  • In the long term, STL Partners does not expect 5G connectivity on its own to deliver growth for telcos. So to grow enterprise revenues, telcos should also develop I4T and edge computing solutions
  • But developing expertise in 5G, I4T and edge computing will be expensive and complex to manage
  • Therefore, telcos should start by targeting their investments to meet specific enterprise pain points

This report helps telcos assess how to target their investments by highlighting key pain points in a selection of industry verticals, and how relevant 5G, I4T and edge computing are for solving them.

Sectors with strong demand for all three technologies hold the highest potential value, but this will be difficult for telcos to capture owing to strong competition in I4T and edge computing from other technology companies.

This report covers a selection of verticals that STL Partners has developed knowledge of through research and consulting activities: manufacturing, construction, utilities, agriculture, transport, automotive, healthcare, and sports, media and entertainment. 

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MWC19: What really happened and what to do about it

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Mobile World Congress 2019

According to the GSMA, 100,000 people gathered in Barcelona last week for the 2019 Mobile World Congress. It is a remarkable testament to the growth and size of the industry that the show has kept growing. I’d like to add our sincere thanks to the GSMA for partnering with STL Partners again for the event.

It was a vibrant and busy show, but what was behind all the noise and action?

While at the Congress last week, I wrote a brief pastiche of the visceral impact of the show’s 5G frenzy in MWC2019: Beyond beyond on Linked-In. On a more serious note, we’ve previously researched 5G intensively in over ten reports, including:

The point of the pastiche and these references is that 5G is both a significant development, but also at the peak of its hype-cycle. It’s being touted as the next great hope for growth for the telecoms industry, but its impact will be more piecemeal for reasons we explained in 5G: ‘Just another G’ – yet a catalyst of change. To drive more rational decision-making, 5G and telco strategy overall need to be understood within a broader context.

The question that last week’s article didn’t answer was “what were the deep and important signals that lay behind the 5G hype at MWC?”. That is what this report covers, along with recommendations for actions by telcos, vendors and indeed the GSMA.

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The Coordination Age: A fundamental change in the world economy

We’ve outlined in our previous reports The Coordination Age: A third age of telecoms and How the Coordination Age changes the game that there is a massive change underway in the way economies work.

The ongoing transition to the Coordination Age presents an opportunity for telcos to redefine their roles and create new sources of value. It may also present a possible (albeit partial) swing of advantage back towards the nationally and locally organised telcos from the centralised, global scale technology players.

The Coordination Age is a result of the combination of the changing needs and demands of the world’s people, businesses, and governments, evolving technological solutions and possibilities, and  the need to preserve the most habitable possible future environment for the world’s population.

The underlying systemic world need is to improve the efficiency of the use of its many resources, which include food, materials, fuel, land, and water. It is also necessary and important to make the use of human resources (people, time, health, money, employment, etc,) productive and rewarding.

Its principle difference from the Information Age is the need to enable the better co-ordination of ‘real-world’ resources (e.g. people, time and other assets) and digital resources (i.e. information, computing power, etc.).

Overall, there are both changes in:

  • Demand, as individuals and organisations seek to improve their resource effectiveness
  • Supply, as a confluence of technological advances including AI, automation, IoT, NFV, 5G, edge, cloud, digital twins and the broad concept of ‘digitisation’ fundamentally change the operation and business models of industry production processes.

Figure 1: Global demand and supply trends are driving the Coordination Age

supply and demand are driving need for efficiency MWC theme

Source: STL Partners

Dr Che’s triangle of needs

We had many conversations at MWC19 about the Coordination Age. One fellow traveller that we met was Dr Haiping Che, the eminent SVP and Chief Digital Transformation Officer at Huawei.

Dr Che summarised one aspect of future success for the industry in with a rather neat triangle in his notebook, which I reproduce in the following chart.

Figure 2: Dr Che’s triangle – successful strategies will serve three goals

Huawei MWC19 customer, economy, environment

Source: Dr Haiping Che, SVP Chief Digital Transformation Officer, Huawei

Dr Che also made the insightful comment that a further major change will be that collaboration needs to increase in production networks to deliver increased coordination. While collaboration is increasingly common in the sharing economy on the demand side, it is not yet as strong a feature in production.

Accelerated evolution: Technologies versus problems solved

A further trend we’ve identified is that there is a general progression in the way that the increased combination of physical and digital assets produces benefits in the supply-side of the economy.

It broadly follows the steps laid out in Figure 3, taken from work in progress on a soon to be published STL Partners report on “Why we need an Internet for Things (I4T)”.

Figure 3: How production is changing in the Coordination Age

better data visualisation, models interact with the real world internally and then externally mwc19

Source: STL Partners

The rest of this report summarises where telcos and vendors are on all this, and what should they do next.

Contents

  • Executive Summary
  • Introduction
  • Mobile World Congress 2019
  • The Coordination Age: A fundamental change in the world economy
  • Dr Che’s triangle of needs
  • Accelerated evolution: Technologies versus problems solved
  • What’s happening now?
  • Signs of change at MWC 2019
  • Where are the telcos?
  • Vendors: Going any which way to enterprise
  • What should operators do?
  • Change the mindset
  • Make 5G pay
  • Get smarter in enterprise
  • How the GSMA should evolve MWC2020
  • Next steps for STL Partners

Figures

  1. Global demand and supply trends are driving the Coordination Age
  2. Dr Che’s triangle – successful future strategies will serve three goals
  3. How production is changing in the Coordination Age
  4. Every picture tells a story – growing transport industry presence at MWC 2019
  5. Elisa Automate at MWC 2019
  6. Deutsche Telekom CEO Tim Höttges at MWC 2019
  7. Increasing telecoms capital investment is yielding lower and lower returns
  8. Three new telecoms industry business models

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