5G for business: An update on telco pioneers

SK Telecom, Verizon and Telstra have looked to expand their 5G networks and to provide businesses with more opportunities to take advantage of 5G. But new developments have not been ground-breaking and adoption of 5G, while growing, is off a low base.

Changes in 5G business propositions

Last year we published a three-part series taking an in-depth look at how early adopters SK Telecom, Verizon, and Telstra had evolved their approaches to 5G commercialisation since launch. This article will focus specifically on how they have grown their 5G business and enterprise propositions since the publication of those reports.

Each of the three operators has pursued a slightly different 5G strategy, reflected in the way they have enhanced their offering of 5G for business over the course of 12 months. SK Telecom has continued to promote its 5G cloud offerings and to develop its 5G-enabled smart factory solutions. Verizon has looked to expand its network coverage by adding mid-band (C-band) 5G to its spectrum ranges and is also emphasising MEC solutions. While Telstra continues to promote 5G as a part of its ‘advanced network’ foundation (though there is evidence that 5G, specifically, is enabling Telstra to broaden its solution portfolio, e.g. it has launched a new on-premise dedicated 5G network for business).

SK Telecom

Enterprise is one of five “business groups” that SKT has recently prioritised to “maximise corporate value” (drive revenues). Specific SKT Enterprise Group plans include:

  • To build data centre capacity, with integrated MECs at new sites.
  • To leverage 5G MEC, AI technology and hyperscaler collaboration to grow the cloud business (it will make equity investments to expand this internationally).
  • To extend services in select verticals – Smart Factory, Finance and Security – combining its own AI technology and its digital infrastructure (5G, Cloud and IoT).
  • Its commercial 5G offerings available on the market broadly reflect these priorities.

5G cloud products

SKT continues to promote “5GX Cloud” as the lead 5G solution area on its website. Its suite of solutions includes 5GX Public Edge (leveraging hyperscaler partnerships) and 5GX On-Site Edge (a private MEC environment for companies that require extra secure real-time data processing or cost-efficient high-capacity data transfers). 5G and MEC are explicit as the foundations for these propositions.

Recently, SKT has teamed up with Dell Technologies to launch an enterprise 5G MEC solution called “Petasus”. It combines SKT’s 5G MEC solution and Dell PowerEdge servers. The solution provides network virtualisation features designed specifically for MEC, as well as associated operational tools. SKT promotes MEC as an essential technology for application areas such as smart factories and autonomous driving (due to its ability to enable ultra-low latency communication).

5G vertical services

SKT has been building a portfolio of offerings under the 5GX Smart Factory banner. Since the previous report it has added the following solutions:

  • TV live caster: A 5G-enabled HD video control solution capturing feeds from smartphones, drones and cameras. It can be used for safety management, remote tech support and live broadcasting from public and industrial sites.
  • Die-Casting Manager: A service for die-casting facilities where thermal monitoring equipment is used to monitor operations for early problem detection and optimisation of production conditions.
  • Welding Quality Inspection Manager: A solution leveraging Acoustic Emission (AE) sensors, Machine Vision cameras and AI to determine not only external welding defects but also internal problems with industry-leading accuracy. This enables enterprise customers to reduce costs, increase work efficiency and maintain high production quality.
  • Machine Vision Solutions: Quality inspection solutions using 5G, AI and MEC tech to detect defects in the appearance of a product using AI-trained models and take appropriate action on the production line based on the results.

Figure 1: SKT Machine Vision Solution

5G business

Source: SK Telecom

Corporate actions regarding the finance and security verticals appear less 5G-inclusive at this stage. While it is leveraging AI with Kookmin Bank in the finance vertical, there does not appear to be a role for 5G in this space yet. SKT announced its intentions to become the market-leading “ICT-based convergence security specialist in Korea” in 2021 when its SK Infosec entity merged with ADT Caps. It plans to “create a safer society and lead the future security industry by combining 5G, AI and Big Data analysis technologies with convergence security and quantum cryptography technology”. STL will be watching this space.


Verizon

Over the last year, Verizon’s approach to commercialising 5G for business appears to have progressed. It has been building out its network and seems to be focusing on two main areas for monetisation: fixed wireless access and 5G Edge. It also promotes 5G’s suitability for public/ emergency services provision, though specific solutions are not evident.

5G mid-band

The most significant development that has taken place for Verizon has been the addition of mid-band (C-band) 5G to the spectrum ranges that make up its 5G Ultra Wideband (UWB) proposition. Verizon launched 5G on mmWave spectrum due to its promise of high speeds and low latency, but quickly came in for criticism as it was difficult to secure coverage given that mmWave network signals struggled to negotiate buildings and other infrastructure. This significantly limited 5G adoption.

Mid-band spectrum has become the entry point for most 5G implementations since Verizon’s launch as it offers speed and latency performance improvements over 4G, whilst being easier to propagate. Verizon’s mid-band purchase is intended to address the problems with Verizon’s UWB and expand 5G coverage.

The mid-band spectrum has been deployed more quickly than anticipated. By January 2022, Verizon announced that 100 million people were covered by its 5G UWB. It is expecting that 175 million people will be covered by the end of 2022 – a year ahead of schedule.

Figure 2:  Verizon 5G coverage map May 2022

5G business

Source: Verizon

5G UWB FWA

Verizon is currently promoting a 5G UWB fixed wireless solution as an alternative to fixed line business broadband. Its extended UWB footprint has increased its addressable market. It is trying to win market share from fixed line players with a commitment to keep its pricing unchanged for 10 years.

5G Edge

5G Edge is a focus for Verizon (the cloud opportunity appears more closely scoped than at SK Telecom). There are two variants of 5G Edge services: Public and Private MEC.

Public MEC

Verizon has expanded its 5G Edge Public MEC (Multi-Access Edge Computing) capabilities over the last year. Public MEC leverages AWS Wavelength and brings AWS compute and storage services to the edge of Verizon’s wireless network. In August 2021 it was available in 10 locations across the US and, as of January 2022, it was available in 17 locations.

Verizon provides examples of how businesses are utilising 5G Edge Public MEC to demonstrate how it can be used and to promote uptake. For example, Aetho (the company behind Beame AR telepresence solutions) is using Verizon 5G Edge with AWS Wavelength to offer students and prospects of Morehouse College virtual tours of its campus and remote learning tools. It is unclear how many companies are taking advantage of 5G Edge Public MEC, and how accessible it is to the average company.

Private MEC

Verizon has added to its Private MEC offerings since STL’s report was published in April 2021. On 31st August 2021, Verizon announced it was offering businesses an on-premise private edge compute solution that enabled ultra-low latency and allowed real-time enterprise applications.

5G vertical services

One vertical that Verizon is focusing on is the Public Sector. Specifically, it appears to be concentrating on 5G-enabled solutions for first responders. Developments are underway in the 5G First Responder Lab, a collaboration between Verizon and ResponderXLabs. Verizon says that its 5G UWB will support a range of next generation capabilities for public safety, including; real time intelligence, critical training preparedness, next-generation communications, remote asset operations and augmented reality (AR) on-the-job support.

Verizon has recently formalised its strategy to target stadium and venue customers with 5G enabled solutions to enhance the fan experience and public safety. It has started to promote a Crowd Analytics solution (which uses Public MEC capabilities) to enable better customer experience at venues and stadiums, for example analysing guest traffic to help reduce waiting times in key areas. This is likely to be a B2B play, where the services are provided by the telco to the event organiser/ broadcaster. The strategy leverages Verizon’s private 5G technology and supports its private networks, mobile edge compute and business solutions vectors of growth.

A further vertical service is Verizon’s 5G Edge Automated Guided Vehicles Management solution. This is designed to facilitate robotic fleet management for customers such as manufacturers and warehouse and logistics operators. It leverages on site 5G connectivity (private 5G network) and private mobile edge computing (the MEC is at the company location).

Telstra

Telstra’s approach to 5G for business remains to position it as part of Telstra’s “integrated solution stack based on network foundations”. In general, 5G is not singled out as a prominent component of any offering, but it is listed as an option for those businesses with specific requirements. For example, Telstra’s Adaptive Mobility connectivity plans are marketed as 5G-compatible, with “add-ons” like the Adaptive Mobility Accelerator leveraging 5G if the device and coverage allow, though it is not 5G-dependent. There is no change in this regard since last year’s report.

5G FWA

Telstra promotes its Enterprise Wireless offering as bringing together “our investment in our 5G network rolling out in selected areas, simplified mobility plans, enterprise grade endpoints and managed services.” It has introduced an Enhanced Enterprise Wireless version of the service, which includes service level agreements and managed services, allowing the customer to connect to “dedicated enhanced infrastructure”. This Enhanced version is one of the few examples where a service is 5G-dependent.

Figure 3: Enhanced Enterprise Wireless

5G business

Source: Telstra

Private 5G for business

Telstra has begun offering a “dedicated private network” solution. In January 2022, Telstra and Ericsson announced the first deployment of an on-premise dedicated 5G network for business that leverages its “single-server dual mode core”. The core facilitates both LTE and 5G Standalone (SA) simultaneously, which means that 5G SA capabilities can be accessed to offer a “wireless connectivity platform for enterprise than can deliver low latency, enhanced resilience and the capacity to meet even the most demanding business operation requirements” when relevant devices are available. This should bring the full benefits of 5G for business to fruition.

5G edge

Telstra does not emphasize 5G in its cloud propositions, though it is mentioned as a connectivity option. It is also mentioned in connection with multi-access edge computing solutions.

  • Telstra has started trials of Australia’s first 5G-enabled edge compute solution for businesses, in collaboration with Ericsson. The solution is being explored in the Telstra Retail store environment, where a smart video solution is issued to simplify operations and enhance customer experience.

Telstra promotes its ability to tailor cloud offerings through its “technology services”/consulting entity, Telstra Purple. This may result in an increased consideration/inclusion of 5G as part of a cloud solution.

Conclusions: Incremental changes are evident, with MEC initiatives dominating

The portfolios of early adopters of 5G have not been radically revised over the course of the year or so, but they have each looked to improve their 5G business offerings. The improvements they have made have largely been in line with their initial 5G strategies. SK telecom has expanded its range of technologically advanced 5G solutions to address specific use cases. Verizon has looked to redress T-Mobile’s dominance in terms of 5G network coverage. Telstra has positioned itself as capable of addressing customer’s unique needs through its deployment of flexible technology solutions that can be tailored to enterprise needs.

Figure 4: How telcos are commercialising 5G for business


5G business

Source: STL Partners

One area that has seen significant developments is MEC. All three operators have expanded their MEC offerings and have clearly identified this as an important source of revenue in years to come. 5G-includive vertical solutions have become more prominent over the last 12 months, further contributing to 5G monetisation. Operators are also focusing on developing and monetising their private network solutions, which is something we will continue to follow closely.


MWC 2022 – 10 Observations

SK Telecom Stand at MWC 2022 – STL Partners

GSMA’s Mobile World Congress – MWC 2022 revealed a subtle but significant shift taking place in the telco industry, showing how the market’s need is changing to ‘connecting technologies’ rather than ‘connectivity’. This has deep implications for the industry and telcos in particular.

Here are 10 observations the STL Partners’ research team came across as they traversed the halls of the Fira Gran Via Exhibition Centre, Barcelona at MWC 2022. A full overview and analysis of the event is available in our report: MWC 2022: Sensing the winds of change

1. CAMARA, the Telco Global API Alliance

Deutsche Telekom exhibited CAMARA, a new Telco Global API Alliance, which includes many leading telcos such as AT&T, Vodafone, Telefónica and Orange, as well as technology players such as Ericsson, Google Cloud and Microsoft. DT was at pains to demonstrate that it had learned from past mistakes, emphasising the inclusion of a wide range of partners – beyond just operators. Its first API came quickly to market within six months of establishing the alliance. The “Quality-on-Demand” API prioritises data packets to ensure high reliability and stability. One proof of concept (PoC) in Munich is enabling BMW to deliver Automated Valet Parking, where a BMW driver can leave their car at the entrance to a parking lot and the car drives autonomously to an available parking spot.

2. Becoming better partners

Operator’s discussed how to partner better, both on the network technology side as operations move to the cloud, and with start-ups, content and industry specific service providers to build and expand new services. Some operators expressed their wish to kill off request for proposals (RFPs) explaining how they can limit the scope of what can be achieved in a partnership, while also taking away from the customer outcome as the priority of the partnership. Some expressed instead a need to shift away from narrow partnerships with a specific focus, to more broad ranging ones that covering multiple areas across both B2C and B2B. 

3. Metaverse

It didn’t take long to find the Metaverse at MWC 2022. As the buzzword de jour, it was pretty much everywhere, often accompanied by NFTs – non-fungible tokens or certified digital goods. MTN, SK Telecom and Telefónica were among the telcos talking up the Metaverse. MTN Group, for example, claimed to be first African company to enter the Metaverse by purchasing land in Africarare while SK Telecom presented its ifland social VR and virtual meet-up metaverse platform as part of its “4D Metaverse” exhibition which also demonstrated future urban air mobility transportation.  There was surprisingly little discussion about the one thing that will determine whether these concepts fly and flop – trust. Neeraj Roy, founder of Hungama Digital Media conveyed that it will be critical for “the seven big tech companies who’ve all sort of announced their plans of the Metaverse” to ensure their creations are interoperable – it ought to be a single Metaverse. If not, people won’t be able to move their digital identities and assets from one platform to another, limiting the usefulness of the whole concept. 

4. AR and VR Applications

Metaverse and VR applications were popular throughout the show highlighting an emerging ecosystem of VR/AR and 3D developers seeking to build metaverse applications for both consumer, enterprise and government (education). VR for enterprise solutions included facilitating company meetings, sales and marketing of products as well as company training. Meanwhile Korea Telekom (KT) also showcased its developmental K-pop dance coaching smartphone app called “KT Real Dance” which features KT video-based AI capabilities. Users dance to a virtual dance instructor displayed on their phone. 

5. Video and AI 

SKT showcased its camera and vision AI service which offers real-time safety applications for enterprise and smart city by analysing and processing live video in the cloud to monitor real-time human activity and provide alerts in cases such as patient falls in hospital settings, driver behaviour monitoring to detect when drivers’ heads drop as they are falling asleep and social distancing regulations. The camera and vision AI service is part of SKT’s efforts to enter the era of hyper connected intelligence connecting people, things and society. 

6. Sustainability

Operators such as Deutsche Telekom and Vodafone showcased their sustainability efforts which included Deutsche Telekom’s Fairphone 4, a modular 5G device with interchangeable parts that enable easy repairs and increase the overall lifetime of the device – which has a guaranteed service life of five years. Vodafone also highlighted that where customers hold on to their phone for an additional year, the device’s carbon lifetime impact is reduced by 29%. At MWC 2022, Vodafone announced its circular economy plan for extending the lifetime of devices and encourage reuse and recycling. 

7. Heavy and highly physical industry emphasis

There was a new emphasis on heavy and highly physical industries: ports, airports, mining, manufacturing, construction, energy, logistics and healthcare for example. In the next ten years STL Partners believes the efficiency and productivity issues of these businesses must be addressed. To reach sustainability and carbon goals anywhere near net-zero, the profile of emissions, waste and efficiency in these businesses must be radically improved. There were a plethora of examples and use cases on show, widely varying in quality and depth, but nonetheless demonstrating what can and is being done.

8. Telco cloud

Operators such as Telefónica outlined their progress in Open RAN deployment citing its four main markets: Spain, UK, Germany and Brazil where the operator is in its last phase of its pilot programmes. The operator indicated that carrying out interoperability testing (12 weeks minimum) is a timely exercise and that due to high integration costs, open RAN as of now is more, not less, expensive, than legacy RAN. Meanwhile, Dish Network’s Marc Rouanne spoke enthusiastically of the operator’s cloud native standalone core and open RAN architecture that delivered an all software, fully autonomous, self-healing network. Having outsourced all its cloud operation to AWS in 2020, Dish’s network architecture team consists of fewer than 20 people. 

9. Further Analytics, AI and automation use cases

Spirent, with IBM and Palo Alto Networks, demoed a slice management solution with integrated security. Spirent’s active assurance product emulates security attacks both at activation and on an ongoing basis. It also, provides assurance for validation of initial end-to-end provisioning and any further scaling by IBM Cloud Pak. Lastly, the Spirent solution emulates traffic loads that trigger faults to identify the fault, apply impact policy and automatically trigger remediation to the orchestrator.  

Nokia demoed the use of its Network Data and Analytics Function (NWDAF) product within the telco ecosystem. Nokia discussed the ability to share network insights with an ecosystem of partners; allowing them to understand real-time quality of experience and past trends. It also provides predictive analytics from the NWDAF data to allow simple controls for the partners such as spinning up new slices or traffic rerouting when future issues were expected. 

10. Xiaomi AIoT and Huawei

Xiaomi showcased a range of IoT consumer electronics, (some) with artificial intelligence (marketed as AIoT), including its popular electronic scooters. A representative of the Chinese electronics manufacturer highlighted its three-pronged strategy focuses on growing smart home, smartphone and its retail footprint (stores and telesales). The company has experienced increased demand for its smartphones, particularly from customers who were previously Huawei device owners. Huawei mobile services such as Petal Search, Petal Maps, the Huawei App Gallery (App Store) and Huawei Ads was a reminder to the removal of Google’s Android Apps and services from its devices. 

AI and the Future of Work

The Fourth Industrial Revolution is one of four major shifts that will have an impact on the Future of Work at telcos (others include societal and culture change, business environment change and pandemic related change)

The term Fourth Industrial Revolution is often used interchangeably with the technologies involved in Industry 4.0. However, in STL’s report The future of work: How AI can help telcos keep up, a broader definition is used (quoted from Salesforce):

“The blurring of boundaries between the physical, digital, and biological worlds. It’s a fusion of advances in artificial intelligence (AI), robotics, the Internet of Things (IoT), 3D printing, genetic engineering, quantum computing, and other technologies.” 

Analyst coverage of the Fourth Industrial Revolution in relation to the Future of Work focuses on the impact of new technologies on the economy, workforce and overall job market. These impacts are summarised below, and colour-coded based on the envisaged impact for telcos.

Expected impact of the Fourth Industrial Revolution

Source: Charlotte Patrick Consult, STL Partners

Economy

There are two scenarios for the world economy. The first is a boom/bust scenario caused by the rise of productivity, and in turn demand (the blue boxes), facilitated by the use of more technology and automation. The other is a period of lacklustre economic growth, which will follow if automation and technology adoption is slower. The second scenario is regarded as more likely – and the impact on telcos is expected to be less severe than the first.

Workforce

The skills shortage caused by the ongoing lag in government educational policy may be somewhat compensated for by machines in the mid-term. The Bain report Labor 2030: The Collision of Demographics, Automation and Inequality forecasts that a shortage of high-skilled workers will remain a significant issue for businesses.

Job market

The overall impact of new technology deployment may eliminate between 20% and 25% of current jobs according to MIT. But some job areas will experience growth.

Future of Work readiness

Telcos will have to respond to the changes introduced by the Fourth Industrial Revolution (and those introduced by the other shifts described above) to be ready for the “Future of Work”. Potential responses fall into three areas – strategic direction, skills development, and organisation and culture. Analytics, AI and automation (A3) tools can be useful in each. For example:

  • Data and analytics can help to improve organisational flexibility, particularly the speed of decision making in complex situations to inform strategic direction. The benefits of machine learning remain a promising future prospect.
  • More support from machines will be required to facilitate employee skills development (re-skill and upskill), plus onboard the increasing numbers of outside (contract) workers anticipated. Machines are also important to give workers the information they need to do their jobs.
  • Telcos will need to build trust levels around technology/A3 (algorithms to check machine decision making, explainable AI) to get humans and machines to work better together.

These are just a few of the ways in which A3 can help to tackle challenges of the Fourth Industrial Revolution and improve telco fitness for the Future of Work. For more, please see our report The future of work: How AI can help telcos keep up.

Live events: An opportunity for telcos

For telcos, live events present specific challenges and opportunities. Providing millions of people with high quality images and audio simultaneously can soak up large amounts of bandwidth on networks, forcing telcos to invest in additional capacity. Yet, it should be feasible to make a return on that investment: live events are an enormously popular form of entertainment on which people around the world are prepared to spend vast sums of money.

New technologies can be used to enhance live events, enabling many more people to enjoy both the immediacy and the interactivity of the event, while increasing immersion. The combination of low-cost high definition cameras and microphones, high-speed connectivity and artificial intelligence are set to dramatically improve the experience of sports, concerts and talent shows.

The most obvious advance is the ability to stream very high-definition video from multiple angles, giving the viewer the opportunity to watch the action in a more personalised and immersive manner. Added to this, artificial intelligence (AI) can be used to help automate the production and editing of this footage. For example, image recognition can be used to enable football fans to track the movements of their favourite player, automatically switching between camera angles as appropriate. Similarly, image recognition solutions are increasingly being used to support referees and judges by automatically detecting infringements in real-time.

At the same time, AI can also be used to enable real-time analysis of live action, as it unfolds. In a game of football, for example, AI can be used to show how the formation of a team changes during attack and defence or the predominant style of play of individual players. That data can also be used to enable bookmakers to offer spectators more precise odds to support in-game gambling. Real-time footage, underpinned by low latency connectivity, is a key enabler of in-game betting and in-event competitions, such as quiz questions that spectators need to answer in a short window of time or head-to-head contests between viewers. In a similar vein, low latency connectivity can support in-event messaging and social media by ensuring everyone is viewing the same action at the same time.

Telcos have many of the key technological enablers required to deliver such enhancements to live entertainment. They could and should, of course, be in pole position to provide very high-speed connectivity to the event venue. They can also provide services such as digital identification/authentication (via a one-time password in a SMS message, the Mobile Connect specification or another mechanism for matching a mobile number to a specific individual) to prevent ticket fraud, authenticate access to VIP or member areas in a venue and more.

Telcos could also provide supplementary services, such as wireless connectivity (using either Wi-Fi 6 or private 5G) within the event venue and data processing/analytics at the edge of the network. Moreover, telcos can support ticketing and in-venue payments, via carrier billing or another digital payments offering.

In the professional entertainment market, the live events opportunity is a B2B2C play: Most of the services would be provided to an event organiser/broadcaster, rather than direct to consumers. However, there is a potential direct-to-consumer (B2C) opportunity too. The table below highlights B2C services for amateur events, and the enablers that telcos could leverage to support these.

Potential telco live events services for consumers

Source: STL Partners

Some telcos already sell high definition televisions and other kit, such as virtual reality headsets to consumers. Live events services such as the above would not be out of place among them.

Hundreds of millions of people around the world participate in amateur sports, drama and concert performances. These events can be of interest to hundreds of people who have friends or relatives among the participants, as well as the athletes, performers and musicians themselves. While amateurs won’t be able to afford to employ dozens of 360-degree cameras and microphones, many could deploy two high definition cameras, such as those sold by Danish start-up Veo. Its solution is comprised of a single unit housing two 4K cameras pointing in different directions. The cameras can simultaneously film both halves of a pitch or court, without the need for a camera operator. Additionally Veo uses artificial intelligence to track the ball and produce footage of the game that follows the action. The current model costs £700 in the UK and US$800 in the U.S.. The solution is currently being used by more than 6,200 clubs.

  • Veo charges a monthly subscription fee of £36 to buyers of its cameras, which gives them unlimited access to the Veo Editor, unlimited storage of recordings and the ability to download highlights. There are volume discounts, but that subscription fee represents a major financial commitment for an amateur sports team (on top of the up-front price of the camera), suggesting the Veo is primarily aimed at serious clubs (youth academies and adults playing in competitive leagues).
  • A team can also pay an additional £10 a month for Veo Analytics service, which uses AI to create heat-maps and other stats about the game.
  • Live streaming functionality carries a £13 a month charge, and clubs will need to provide their own SIM card and data plans, if Wi-Fi coverage isn’t good enough.

If live streaming of high definition videos of amateur events becomes commonplace, it could generate a significant volume of traffic for mobile operators. However, this is not expected to be a huge opportunity in the near term, as smaller amateur events are unlikely to be streamed because there won’t be sufficient interest to justify the additional hassle and expense. In cases where an amateur event is live streamed, there may also be demand for instant replays, statistics and highlights, all of which could be generated by AI. Over time, Veo and similar systems may even be able to provide a referee with an instant replay on their smartphone so they can check a decision.

As with professional event organisers, amateur clubs and societies may wish to run competitions around events and facilitate live chat among their distributed fan base.

BT is an example of an operator that is testing the live events market. In April 2021, BT announced that it had connected 70 grassroots football clubs across the UK with broadband/Wi-Fi, as part of a new initiative. The telco said it planned to connect 100 clubs by the end of the summer. The connected clubs are reported to be using the Wi-Fi for live streaming of matches, setting up contactless payments and guest Wi-Fi. As things stand, BT is providing the service on a pro bono basis: the telco is the lead partner with each of the four home nation football associations – The FA, Scottish FA, Irish FA and FA of Wales.

For more detail please see our report Telco plays in live entertainment.

What does AWS Private 5G mean to telcos and enterprise?

AWS launched its private networks service  to simplify the deployment for enterprise customers. This move further disrupts telcos’ position as the main cellular connectivity providers and lowers the entry barriers for new emergent players. But to what extent can AWS service support the diverse enterprise requirements and compete with telcos and other players in the market?

What is AWS offering?

AWS offers its new Private 5G service to customers in the US to tackle two significant issues with private networks deployments: complexity and cost. The service aims to:  

  • Simplify and accelerate the planning and deployment of networks

Private networks projects usually require collaboration among several different partners including technology vendors and system integrators to support the implementation across various phases. Enterprises invest considerable time, money and effort working with these partners and suppliers and going through several phases of planning the networks and sourcing equipment and then deploying, integrating, and configuring the network. This all might typically take weeks or months. AWS wants to streamline the process and shorten the time for customers in a way similar to how they consume computing resources through its AWS cloud services.

To order, customers use the AWS website to specify the location of their network and the capacity they require. AWS then ships the network components within days. These include small cell radios and servers as well as software to run the RAN and core network. AWS will also provide SIM cards to all the devices in the network. All components come pre-configured so that they require minimum effort from the customer aside from installing them, turning on the network and inserting SIM cards into devices. AWS will also manage the network, monitor its operations, and run software updates when needed.

  • Define and reduce the cost of deployment

This AWS streamlined procurement process is also supported by a clearer and easier pricing model that is likely to be quite attractive for many enterprises. It is a cloud-based pay as you go model with no upfront capital cost or fees per device. As opposed to per-device pricing models which can be cost-prohibitive for a network with a high number of connected devices, the AWS model only requires customers to pay for the capacity that they use. This means that they can run as many devices as they like without increasing the cost substantially, especially if these devices have simple data requirements. Customers can simply scale up or down as needed.

With this service, AWS is testing the demand for private networks and its ability to enhance its overall enterprise proposition. The service complements AWS existing services and will build on the need for edge and cloud compute, storage, analytics and other services. Similar to Wavelength proposition where AWS partner with telcos to support the delivery of network edge, AWS Private 5G can create partnership opportunities and sales channels for AWS to strengthen its enterprise business.

Where will it be launched?

The service is now available on preview to US customers only as it runs on the CBRS spectrum. The CBRS spectrum access model in the US with its two main tiers; the Priority Access License (PAL) and the General Authorised Access (GAA) has essentially laid the ground for this AWS service model by enabling access to spectrum for non-telcos. The GAA which is the lowest priority tier allows anyone to use the spectrum to deploy a private network under the management of a Spectrum Access Server (SAS). Many companies are already deploying and experimenting with LTE and 5G using the unlicensed GAA spectrum. However, GAA is still an opportunistic type of access and in some specific use cases or locations where customers might want to ensure their access, they can opt for a PAL license.

Following its US launch, AWS might want to expand their service globally. However, the disparities between countries and regions on how private networks are deployed might will not make that easy. Many countries such as the UK, Germany and Japan are allocating shared licensed spectrum for enterprises to support the deployment of private networks, but licensing models and frequency bands differ. AWS will need to understand these differences in every market and adjust its offering accordingly. In some regions where there is no enterprise shared spectrum, AWS might have to partner with or sell through telcos.

What kind of companies will deploy it?

Generally, there have been many examples of CBRS private networks across a wide range of verticals and use cases including in mining, manufacturing, transport, utilities and even healthcare and education. However, one of the challenges of private network deployments is that customers’ environments vary and there might still be planning and deployment issues that are unique to specific places and locations such as RF planning, assurance, integration with the enterprise IT and security, and coexistence with legacy radio and connectivity solutions. These deployment challenges are also affected by size of the deployment and its desired performance. While large enterprises might still leverage AWS service for its deployments, the turnkey nature of it makes more suitable for small to medium enterprises that are looking for a more reliable wireless network option.

AWS announced that its first deployment was in one of Amazon Fulfilment Centres to support reliability and mobility requirements for its warehouse operations. Dish Network and Koch Industries are both lined to become the first sales channel partners and utilise the service for their customers.

Of these two, Koch Industries in addition to Amazon’s own operation suggest that some of the use cases and sectors that AWS is targeting include factories, warehouses, and other industrial settings. In such locations, private networks can provide a level of reliability and support for mobility that Wi-Fi cannot. Amazon demonstrated how it used the technology to replace outdoor Wi-Fi coverage at a parking lot of its warehouse. The company explained that using private 5G was more cost-effective and quicker to deploy than Wi-Fi as it only required two small cells mounted on the corners of the warehouse. While to get a decent coverage with Wi-Fi, the company previously went through the trouble of mounting light poles for the equipment, extending fibre to support the mesh systems and also changing the outdoor electrical systems.

With the rise of industry 4.0 and as many companies have started going through digital transformation, AWS and other hyperscalers have managed to establish some presence in the industrial sector with their IoT platforms and solutions. This private network service, together with edge computing and other on-prem solutions, allow AWS to strengthen its position in the sector.

On the other hand, highly complex environments with very strict reliability, latency and security requirements and human safety mandates, such as transportation hubs and energy plants, are also increasingly adopting private networks to support their critical operations. The simplified AWS deployment model with its customer self-installation and pre-configuration aspects might be too generic for such scenarios. For example, Lufthansa Technik when deploying its private network in Hamburg Airport came to discover and deal with the issue of 5G signal degradation through aluminium alloy and carbon fibre and how that affects the communication between the aircraft cabin and the edge servers. It is not clear yet whether AWS will offer some additional support or customisation if certain customers require that, but this is already a big opportunity with plenty of customers that AWS can target with a horizontal offering.

Also, the ease of accessing and deploying networks in the unlicensed portion of CBRS, in general, has enabled uses cases in niche or emerging sectors such as education and healthcare including providing connectivity to students in rural counties during lockdowns or supporting hospital unit extension during crises, respectively. AWS pricing model can further support the adoption within these sectors and similar sectors where customers are severely constrained by the cost.

Are telcos losing the private networks market?

Over the last two years, telcos’ understanding of their position in private networks has gradually changed from wanting to do it all and, therefore, being highly protective of their role as the main connectivity providers to becoming more accepting of playing a collaborative role in private networks as the market dynamic changes. This has been further established as licensed and shared spectrum schemes started to become available to enterprises in different countries, easing the way to network ownership and deployment for many enterprises, especially large ones.

While telcos’ role might have been affected slightly, they have not completely lost the private networks race to hyperscalers and other emerging players quite yet. Many companies that wanted to own spectrum and build networks independently continue to partner with telcos to leverage their telecoms experience in building and managing networks. In some countries where regulators have decided against licensing spectrum to enterprise such as in China, telcos remain the main providers of private networks.

However, the AWS move represents a significant step in reshaping the market and changing thinking around private networks. It lowers the barrier to adoption and will help bring the technology closer to a wider audience, urging participation from the larger 5G and enterprise ecosystems and increasing the appetite for innovation in private networks and enterprise solutions. The service might also disrupt some of the future plans for telcos around network slicing as they aim to target SMEs with customised slices where dedicated private networks are not feasible. Also, telcos need to watch out for how AWS would structure and simplify billing for connectivity as this is something that telcos have not been good at historically.

And while AWS service might help with the rollout of many private networks, it might not be the answer to every problem. As more customers start to adopt the AWS service, there will be a better understanding of its actual capabilities, what types of deployments that customers can set up by themselves and where they need additional support, and what types of indoor environments and use cases that it is best suited for. This also will create opportunities for other stakeholders including telcos to partner with AWS or other technology providers with possibly similar offerings such as Cisco with its new hybrid 5G-Wi-Fi solution. Telcos can also develop their own solutions to fill the gaps.

MNO IoT security roles across the IoT stack

As part of our study IoT security: The foundation for growth beyond connectivity, we looked at the IoT security services of 12 MNOs to see what they are doing to address enterprise IoT security needs beyond that of secure connectivity.

The architecture stack for an IoT solution can be simplified into four layers: Data collection (sensors, devices for data gathering), data exchange (connectivity to enable transmission), data management (organising, analysing and acting on data) and data utilisation (applications). Each layer represents a surface area for a potential security breach. For this reason, enterprise customers require visibility at every stage in the deployment of an IoT solution, in order to monitor and respond to IoT security threats.

We analysed the services of the 12 MNOs based on the architecture layer that the services provide insight into to assess their current areas of focus (beyond connectivity) from an IoT security perspective. For the purposes of the analysis, the data management layer is broken down into three sub-layers (IoT platform, cloud services and data management) to reflect the different revenue streams operators are targeting in IoT security.

MNO’s IoT security offerings by architecture layer

Source: STL Partners

IoT security beyond connectivity

China Mobile offers the richest portfolio of IoT services, with offerings that provide visibility all the non-connectivity layers of the IoT stack. It offers the most insights to its enterprise customers; whether this is translated as billable insights, as part of a security offering, is not clear. Other operators such as Verizon and Telefónica S.A. offer services in four categories.

IoT platform analytics is the most readily available asset that IoT-oriented MNOs can leverage to address enterprises’ need to continuously monitor and respond to security events in their deployments, as well as to contextualise security incidents and events. Using cloud-based platforms, MNOs can to pull together data from their connectivity services (e.g. SIM and device statuses) and apply analytics to offer their IoT customers information about their deployments, such as cloud access and authorisation, privacy management, security updates and remediation. As IoT platform capabilities expand to enable easy integration of IoT status and data directly into enterprise systems through APIs, IoT operators that have their own platforms or have influence on the development roadmaps of the platform they are licensing will be better at supporting their enterprise customers.

As operators’ IoT portfolios progress from providing connectivity for a small number of M2M SIMs to larger scale deployments with thousands of IoT connections, the requirement for more sophisticated deployment, device management and monitoring services will grow to enable more intelligent applications. Similarly, security offerings will be required to evolve from point solutions, to more coordinated, integrated, and scaled propositions that address security requirements across the stack.

For more detail on this, please go to IoT security: The foundation for growth beyond connectivity

Other reports addressing the IoT include:

Vonage: What is Ericsson’s end game?

Rationale for acquisition

In late November 2021, Ericsson announced it would purchase Vonage, a global cloud-based communications provider for $6.2bn. The acquisition is part of Ericsson’s expansion into the enterprise segment through Vonage’s communication platform as a service (CPaaS) offerings and follows on from Ericsson’s purchase of US-based Cradlepoint in late 2020. Cradlepoint’s enterprise solutions include wireless wide area networks (WAN) over LTE and 5G edge routers delivered as an all-in-one solution with more than a million (NetCloud) endpoints under subscription. Ericsson believes the enterprise market offers attractive software as a service (SaaS) revenue opportunities that can be scaled and aligned to strengthen its core business. Vonage is the latest acquisition in this strategic direction.

STL Partners has been talking extensively about the growing need for greater network intelligence amongst applications and platforms as a key opportunity to provide unique value in a B2B2X environment. We believe if Ericsson can leverage the developer community in the way it wants, it has the potential to become a strategic partner and a channel for operators to access developer communities, perhaps even challenge the hyperscalers by acting as an aggregation point for developers and network operators to engage with each other.

However, it may be too early to tell how Vonage’s existing developer community will see value and differentiation in the network APIs and 5G capabilities Ericsson and its operator base has to offer. Given many developers still do not have strong understanding of 5G technology, its capabilities and applicability to them, the opportunity for Ericsson rides on its ability to successfully encourage the developer community to see the value in leveraging these advanced network capabilities and programmability.

The Vonage Communication Platform

Founded in 2001 as a consumer VoIP provider, from 2013 Vonage has evolved through acquisitions into an integrated communications platform as a service provider (CPaaS) with sales of $1.24 billion in 2020 and $1.4bn expected in 2021. Of the company’s two business divisions, its cloud-based Vonage Communications Platform (VCP) accounted for over 73% of Vonage’s 2020 revenues serving over 120,000 customers, from SME to large enterprise business across a range of sectors (healthcare, finance, education, retail).

The Vonage Communication Platform (VCP) has three offerings:

  • Application Programming Interface (API) platform enables developers to embed communication services such as messaging, voice and video services into their applications and services. Through acquisition of Nexmo’s API platform and TokBox’s WebRTC programmable video integration, Vonage offers a range of communication APIs (such as voice, SMS, video, verify, messages and dispatch, number insight) enabling businesses to integrate programmable capabilities such as communication and authentication quickly into their products.

Vonage Communications Platform 

Vonage-vcp-platform-ericsson

Source: Ericsson Vonage Announcement Presentation November 2021

  • Unified Communications as a Service (UCaaS) – Vonage Business Communications (VBC) is the company’s cloud-native over-the-top unified communication service. Vonage also offer a Business Enterprise unified communication and collaboration service in the US (offering voice, data, video, mobile and contact centre services) for mid-market and enterprise customers delivered over a private secure IP MPLS network.
  • Contact Centre as a Service (CCaaS) solutions – Vonage Contact Centre is a cloud-based contact centre as a service (CCaaS) aimed at the middle market. The service integrates Vonage’s unified communications service and its APIs to deliver a full communication suite for enterprises.
    • Vonage’s unified communication (UCaaS) and contact centre (CCaaS) services come with third-party enterprise software applications to support workflow and productivity. Integrations include Salesforce, Microsoft Dynamics, Teams, NetSuite, Zendesk, and Hubspot, which are available via Vonage App Centre ecosystem. According to Vonage, its Contact Centre solution currently holds the esteemed position of “Premier partner status” on the Salesforce AppExchange with a five-star rating and number one ranking across 800 reviews.

In late 2020, Vonage’s API revenues overtook UCaaS and CCaas revenues highlighting the growing demand for its API solutions from its developer network. Vonage’s recent API business growth has been driven by the popularity of its messaging and video APIs. It’s API revenue grew 43% year-on-year in Q3 2021.

The Vonage acquisition offers Ericsson the opportunity to introduce network and API capabilities to a wide developer community. Announcing the acquisition, Ericsson CEO said the company’s first step will be to embed its advanced network capabilities into Vonage’s existing communication APIs which have the potential to be adopted quickly on the back of existing 4G and 5G network build outs.

API business driving VCP growth

Source: STL Partners, Vonage Q3-21 results

Multi-vendor and multi-operator developer ecosystem

In announcing the acquisition, Ericsson’s CEO pointed out how the company has already developed quality of service APIs, but up to now they have only been tested in operator networks around the world. Accessing Vonage’s developer community would put the APIs into the hands of developers and convert them from “nice to know” capabilities into user friendly and valuable APIs.

Ericsson wants an engaged developer community/ecosystem to take these APIs and advanced network features and design real-world applications leveraging the capabilities of 4G and 5G advanced networks. It believes it can unlock value from its network APIs and 5G advanced capabilities by combining its deep network expertise of 26,000 R&D specialists with Vonage’s 1.1 million global developer community, 780 API platform engineers and Vonage’s back-end connections across over 200 CSPs.

These 200+ CSP connections are made possible by underlying technology supplied by vendors such as Ericsson. The developer and API ecosystem will be open to competitor network vendors and the wider MNO community in order to ensure the fullest possible participation in 5G innovation for enterprise. Ericsson is confident its worldwide market share position (outside China) and network capabilities will give it a strong starting position in developing new applications and that the openness of this developer, vendor and MNO ecosystem will be good for the industry overall.

It is hoped this developer ecosystem can leverage next generation of 5G advanced services and functionalities such as latency (across device types for example), quality on demand and network slicing across industry verticals and that developer/enterprise innovation will drive usage of the CSPs networks, providing an ROI on their 4G and 5G network investments.

  • A key test will be whether the developer ecosystem will see the value in Ericsson network APIs and capabilities, and whether Vonage hosts the right app developers that can see value in and will actually use these new network APIs (e.g. slice configuration, dynamic traffic routing, bandwidth management etc.)

Up to now, telecom operators have established their own API platforms or used third-party API developer platforms to attract developers and foster innovation on their networks. Ericsson wants to ensure that it is compensated for the innovation that occurs on its next generation (5G) network equipment as opposed to losing value to over-the-top players. It may believe it can reach a more global developer community more efficiently than MNOs.

Competing with Twilio at API and ‘super network’ level

Given that Ericsson (among other vendors) supplies the underlying network technology to and has extensive relationships with network operators globally, it may be in a position to compete with other communication platform players such as Twilio by having the advantage of advanced 5G network knowledge and capabilities in addition to its close MNO relationship ties.
Twilio’s developer-first platform approach consists of four core elements; its Programmable Communications Cloud, it Super Network, its Business Model and its Engagement Cloud or Customer Data Platform.

  • Programmable Communications Cloud consists of the APIs that enable developers to embed voice, messaging and video capabilities into their applications.
  • The Super Network is Twilio’s software layer enabling its customer’s software (Amazon, Airbnb) to communicate with connected devices globally by connecting to CSP networks and internet service providers in 80 countries. Twilio has agreements in place with CSPs globally to route communication through their networks. The Super Network also contains a set of APIs giving Twilio customers access to more foundational components of the platform such as phone numbers, and SIP Trunking.
    • Twilio highlights its extensive carrier agreements ensure resiliency and redundancy for its customers. By using real-time feedback data on handset deliverability from carriers and across geographic markets, the Twilio Super Network can detect issues and make routing decisions quickly. It can optimise communications flow through its platform based on network quality and cost.
    • According to Twilio, network service provider fees account for a substantial majority of its costs particularly outside the US.
    • Twilio has said its Super Network provides it with massive volumes of data from end users, their applications and from communications. As more communication is handled by Twilio, the Super Network “becomes more robust, intelligent and efficient” improving its performance in terms of quality and cost, making it, according to Twilio, difficult for others to replicate.
  • Segment Customer Data Platform / Engagement Cloud – Twilio offers their customers (Amazon, Airbnb) the ability to gather and analyse customer data from across all their communication channels. This helps Twilio customers generate new customer insights which they can use for personalised targeted marketing communication.
  • Business Model – To empower developers to experiment and innovate on its platform, Twilio offers a low friction model that eliminates up-front costs, offers a free-trial and free developer resources, and more importantly, adopts usage-based consumption pricing.

Twilio customer engagement platform

Twilio-customer-engagement-platform

Source: Twilio investor presentation, March 2021

Mavenir and Telestax

There may be parallels between Ericsson’s tie up with Vonage and Mavenir’s (August 2021) acquisition of Telestax, a global communication platform as a service (CPaaS) enablement and application provider.

Mavenir has said it expects Telestax to enhance its Mavenir Engage solution, a cloud-based customer engagement and messaging monetisation solution offering RCS Business Messaging, A2P and P2A campaign management, templated chatbots, visual flow builders, payment integrations and advanced analytics. Mavenir’s CEO Pardeep Kohli has stated CPaaS can help service providers enhance their 5G enterprise offerings in areas such as IoT, Smart cities and Automotive. The rationale being that 5G capabilities and associated APIs will be integrated into these 5G enterprise use case verticals creating new value and new revenue opportunities.

Ericsson’s view of the market opportunity

Overall Ericsson believes Vonage will see strong growth across its three VCP offerings as enterprises accelerate their digitalisation. Ericsson cites analyst expectations of 17% growth in the CPaaS business up to 2025 and a total addressable market (TAM) worth $69 billion by 2025.

It expects Vonage to outperform due to its strong position in the API market, citing Vonage’s 7% share of the API market today. Ericsson expects the total API market to be worth more than 50% of the global RAN market by 2025 and conservatively estimated the global API market to be worth $8bn by 2030.

The question is: what role is Ericsson seeking to play as a result of this acquisition? If Ericsson is able to successfully leverage Vonage’s developer ecosystem to drive the use of 4G and 5G APIs, then it could play an interesting role as a strategic partner and channel for operators as a means of accessing developer communities. Ericsson could position itself a potential alternative to the hyperscalers as an aggregation point for developers and network operators to enable both to engage with each other. However, whether Vonage’s existing ecosystem of developers see 5G as a means of competitive differentiation (either by enabling new types of applications or enhancing existing ones) or whether Vonage’s customer base will be interested in leveraging 5G capabilities, is still up for debate.

Vonage Communication Platform future market opportunity

Ericsson-estimate-API-marketTAM

Source: Ericsson Vonage Accouchement Presentation November 2021

During 2021, Vonage found itself under the scrutiny of the activist investor Jana Partners, who urged management to consider selling all or parts of the business. The activist investor believed Vonage’s growing API business was undervalued (compared to pure play API players such as Twilio) and that its overall valuation was weighed down by its legacy consumer VoIP business for which it is better known. In February 2021, Vonage abandoned plans to sell the consumer VoIP business citing the unit’s $600m projected cash flow generation over the next five years.

Edge computing forecast 2020-2030: 20 use cases

STL Partners has developed extensive expertise in edge computing, working with telcos and tech companies to identify their strategies and select suitable use cases.

Based on our industry knowledge, we have developed an Edge computing market forecast model to estimate the size of the edge computing market over the next 10 years (2020-2030) in terms of revenue, broken down for the entire value chain: what we call total edge computing addressable revenue. Our analysis provides country-level revenue forecasts for 186 countries, 7 regions and the world. STL Partners analysed the demand for edge computing from 20 main use cases and the projected spend over the next 10 years.

These 20 use cases are listed below with In-hospital patient monitoring displayed for illustrative purposes. Our assumptions for high-income countries show how application processing will migrate from its current locations (mainly on-device and cloud) to edge infrastructure (on-prem and network edge) during the forecast period.

The use cases that represent the biggest opportunities in 2030 are edge CDN, cloud gaming, connected car driver assistance, video ingest & analysis for production and maintenance, and edge application delivery network (ADN).

You can access STL Partner’s country-level revenue forecast and 20 uses cases in our December 2021 report Edge computing market sizing forecast

  1. Advanced predictive maintenance
  2. AR/VR for training
  3. Automated guided vehicles
  4. Cloud gaming
  5. Connected car driver assistance
  6. Contextual DOOH advertising
  7. Drone inspection and navigation
  8. Edge ADN (Application Delivery Network) & web content optimisation
  9. Edge CDN
  10. Flow analysis – video ingest and analytics
  11. In-hospital patient monitoring……..(see use case graphic below)
  12. Live video/broadcast
  13. MR for working safety & productivity
  14. Production & maintenance – video ingest and analytics
  15. Real-time collaboration in design and engineering
  16. Real-time precision monitoring and control
  17. Remote monitoring and care
  18. Security – video ingest and analytics
  19. Smart city traffic management
  20. Temporary compute for events

Edge computing forecast model and use case

Source: STL Partners

Additional resources

STL Partner’s Edge Insights Service offers extensive reports and articles as well as our Edge Computing Use Case Directory and our Edge Computing Ecosystem Tool

 

Top 10 telco cloud vendors

STL Partners recently updated (November 2021) its Telco Cloud Deployment Tracker, a our comprehensive database of live, commercial deployments of virtualised and cloud native network functions (VNFs and CNFs) and SDN technologies by leading telcos worldwide. It builds on an extensive body of analysis by STL Partners over the past eight years on NFV and SDN strategies, technology and market developments with over 900 individual deployments. 

Our recent analysis of vendor deployments between 2018 and 2022 shows the current top 10 telco cloud vendors to be:

Source: STL Partners’ Telco Cloud Deployment Tracker

1. Ericsson – has come from third place in 2018 to top in 2020 and 2022, overtaking Nokia due to its greater number of 5G core deployments

2. Nokia –  remains strong in core, with several 5G SA core deployments slated for launch in 2022

3. Cisco –  has strengths in multiple parts of the telco cloud stack, particularly SD-WAN, transport SDN and orchestration

4. VMWare –  deployments both in telco cloud infrastructure and SD-WAN

5. Huawei – Huawei has declined sharply, owing to political pressures to remove its tech from Western mobile networks

6. Fortinet – has a growing presence in telco networks, linked to both SD-WAN and SASE

7. Mavenir – Open RAN and IP multimedia systems

8. Metaswitch Networks – IP voice and multimedia platforms

9. Affirmed Networks – diverse, cloud-native core and orchestration solutions

10. Juniper –  SDN and telco cloud platform components

Access a trial of our Telco Cloud Tracker here

Previous telco cloud tracker releases

Each new release of the tracker is global, but is accompanied by an analytical report which focusses on trends in given regions from time to time:

Challenges for telcos considering introducing SD-WAN

How to address some of these challenges

Lack of relevant skills or experience:

In our view, this is not a major barrier.

  1. Leading SD-WAN vendors collaborate closely with telcos to facilitate integration of their platforms with telcos’ networks and services.
  2. SD-WAN platforms provide management interfaces that are easy for non-technical staff to operate, and offer visibility into application workflows and network KPIs.

For example, Juniper SD-WAN uses Mist AI for network insights and automated troubleshooting; Contrail Orchestration provides automated implementation and assurance, with a customer portal for end-to-end WAN management.

How to differentiate SD-WAN service:

There are many mature SD-WAN vendors and platforms to choose between, and many types of offering.

  1. Ensure you choose an SD-WAN platform that suits the key needs of your customer base.
  2. Differentiation can also be achieved through the services telcos and vendors offer around SD-WAN products, e.g. good local market and language support.

Many major SD-WAN platforms do not offer technical documentation or support in local languages – providing this for enterprises could be a USP for operators launching SD-WAN in developing markets that are not yet well served.

Find more recommendations and detailed analysis in our report Delivering on SD-WAN: How to choose the right partners which assesses the different choices for SD-WAN platform?

See our other in-depth research on SD-WAN:

What has Microsoft done in telecoms?

The last couple of years has seen Microsoft and Azure increasing their involvement in telecoms infrastructure and software while building partnerships with telcos around the world. This march into telecoms stepped up a level with Microsoft’s acquisition in 2020 of two independent virtual network function (VNF) vendors with a strong presence in the mobile core, among other things: Affirmed Networks and Metaswitch. Microsoft was not previously known for its strength in telco network software, and particularly the mobile domain – prompting the question: what exactly was it doing in telecoms?

The graphic below illustrates some of the key milestones in Microsoft’s partnerships and acquisitions from 2018 to 2020 that contributed to the development of a multi-faceted offer to telcos on Microsoft’s part, involving services and partnership options ranging from cloud delivery of telco network functions to supporting the delivery, and even co-developing, compute-driven services from the telco edge.

Microsoft’s move on telecoms microsoft telecoms

These milestones are discussed analysed in greater depth in our report Microsoft, Affirmed and Metaswitch: What does it mean for telecoms?

See our other in-depth research on telco edge computing and hyperscalers:

The adoption of private networks and 5G in airports

Much of the analysis on the private networks market assumes that a network will service a relatively homogeneous set of use cases. However, in practice, many deployments will be in locations that serve multiple types of stakeholders, all with very different requirements in terms of security, reliability, latency, etc.

We explore a few case studies of private networks deployments in airports because they are among the most complex campus environments, with different types of user groups and operational zones. The network (or perhaps several separate networks) serving such an environment will have to accommodate the varying and, sometimes competing, critical requirements across all these end users efficiently and cost effectively.

This level of complexity might make it harder for traditional players such as public network operators and vendors without vertical knowledge to move quickly into these specialised areas. For example, Air France, which collaborated with Ericsson and other airport stakeholders to deploy private networks in Paris-area airports, has highlighted this challenge from a customer perspective. In that example, the airport stakeholders had to provide the necessary vertical-specific expertise, realising that telco vendors, while being experts in deploying public networks, lacked the full vertical knowledge to lead the project single-handedly.

Given the aviation industry’s current economic woes, it would be unsurprising if some private network owners – perhaps including airlines like Lufthansa and Air France – attempt to monetise their early experience by offering consulting or deployment services to other airports.

Examples of airport private network projectsprivate networks airports

Our report Airports: The roles of 5G & private networks is a deep dive into the role of 5G at airports, and the scope for specialised deployments and solutions. It also highlights potential new classes of partnerships – and the need to understand cellular in a wider context of wireless, spectrum management and applications.

See our in-depth case studies on private cellular networks

5G-aliser: Can telcos launch new services without standalone 5G?

5G-aliser: Can telcos launch new services without standalone 5G?

This quarter we drop two of our wildcard factors in favour of two newcomers, and discuss how telcos are developing their 5G services ahead of the launch of standalone 5G cores.

New factors on the scorecard

  • This quarter we dropped COVID-19 and 5G conspiracy theories in the wildcards factors, as these have largely stabilised and are less relevant than newly emerging ones;
  • The first new addition is the IT / billing stack for advanced communications;
  • 6G is the second new factor;
  • We also retitled “US/China tradewar and other geopolitical issues” to Geopolitical tensions, which better reflects the multi-faceted regional tensions affecting 5G development, ranging from security to competitive dynamics in network equipment and software, as well as net neutrality.

5G-aliser-stl-partners-July 2021

Over a year into tracking 5G development, the bottom line remains that the disruptive and innovative elements of 5G are not possible without a standalone core and reliable indoor coverage. This is reflected in the results of the 5G-aliser analysis, where supply has increased from 10% to 19% y-o-y to July 2021, but demand has grown more slowly from 10% to 16%, mostly due to progress in factors that affect both supply and demand, rather than from purely demand-side factors (shown in red).

Another key enabling factor is implementation of next generation billing IT stacks that can handle much more dynamic, flexible and modular connectivity services. For example, leading Asian operator we spoke with is leveraging its 5G network to offer premium connectivity services, including a gaming optimiser solution for consumers, but its billing platform is the main roadblock to being able to commercialise some of them.

Although MWC didn’t bring too many real industry breakthrough announcements, TelcoDR’s $100mn investment in upstart billing platform Totogi did make a splash and is illustrative of the growing importance of the billing IT stack to monetisation of 5G services. STL Partners’ analysts are sceptical that an AI-infused billing platform that can adjust rates in accordance to a telco’s local market dynamics will raise ARPUs significantly, but the ability to bill for services in a more flexible and modular way will soon be table stakes for telcos.

Until the technology matures, 5G services will remain limited

Telcos’ ideas of what they want to do are starting to crystalise, but actual 5G services beyond cloud, early edge, and FWA are not convincing.

Key points of consideration in services are:

  • AR/VR: Some telcos are making bets here, experimenting with some initiatives, but nothing at scale. Orange, NTT Docomo, China Mobile are the biggest experimenters, while BT also launched AR features in its sports app.
  • 5G devices: There is a risk that semi-conductor chip shortages will impact some devices. This could also hit high value devices such as smartphones as well as lower cost IoT sensors and V2X communications. Last week (July 27) Apple’s CEO noted “supply constraints” will affect iPhone and iPad sales.
    • Aside from the chip shortage, the other challenge with 5G devices is that few (or none) of them are compatible with all spectrum bands
  • Moving from premium to mass market: Some telcos (e.g. Telstra – see STL Partners’ profile) have taken a premium approach to 5G services, but don’t have a clear strategy for how to adapt from a premium to a mass market strategy for consumers.

Addressing the infrastructure and skills costs

Finally, and linking back to the question of 5G standalone cores and network coverage, many movements in the industry are fundamentally about overcoming infrastructure costs and skills shortages.

  • Huawei, Ericsson and Nokia are all making noise about their sub-20kg 5G base stations. This is important because the lower weight means that a single engineer can install the base station instead of needing to hire a crane.
  • AT&T’s deal with Microsoft and DISH’s deal with AWS – both are about how to address the cost of network technology development at scale. AT&T has been a huge proponent of a DIY approach to developing its NFV / SDN technology. However, its deal with Microsoft suggests that it was reaching an inflection point, where it is potentially beginning to compete with major vendors. While it has built up a very large software team, realistically it can’t compete with global vendors? By offloading its Network Cloud technology to Microsoft, AT&T is securing much more significant funds and skills to scale its work. The ultimate question is that if AT&T judges that it cannot truly be its own software player, is it viable for any other telco?

Commercial 5G: Factors influencing the approach

5G monetisation

The commercial 5G services of 5G pioneers SK Telecom, Verizon and Telstra focused on 5G-ready versions of mobile and data plans across consumer and business segments, with SK Telecom the only operator promoting 5G-specific plans and applications early on. Some are now moving beyond the premium propositions that targeted early adopters/heavy data users with speed and data generosity, towards a mainstream audience as device pricing has come down and coverage increased. Efforts to secure new revenues have centred around FWA, Cloud/edge computing and private network services (skewed towards Enterprise).

Multiple factors are influence the approach that operators can take in terms of 5G monetisation: some constrain the choice of approach, while others enable new options. These factors can shift in intensity and change over time.

SKT was initially constrained by device availability and cost (it offers 5G-specific plans which would be of no interest to customers without a device). It offered generous subsidies to overcome this, but is now facing government pressure over those subsidies, as well as plan pricing as government wishes to democratise 5G access further. The South Korean 5G market is also highly competitive, which further impacts pricing possibilities. SKT is choosing to leverage several commercial enablers in order to extract revenue from its 5G network investments. Examples include providing unique 5G-optimised content (e.g. it has its own studio to create mixed-reality content), using non-communications specific capabilities (AI, robotics, cloud) to deliver 5G enterprise solutions and packaging up compelling 5G-inclusive propositions to address identified use cases.

Verizon’s choice of 5G spectrum constrained its commercial approach, particularly due to mmWave’s range and propagation issues. This has resulted in the sacrifice of some of its first mover advantage to T-Mobile, whose 5G mid band coverage is now wider. Verizon offers a “multi-band” 5G proposition, which has the potential to confuse customers as to the value of 5G (particularly versus its 4G network). On the plus side, it does offer a range of devices to improve 5G affordability and is leveraging unlimited data allowances and quality of service advantages in its 5G-inclusive propositions (particularly for 5G Ultra wideband offerings). It is also offering broad propositions for use cases including fixed wireless access and 5G Edge (it has initiated commercialisation of a 5G-inclusive IoT solution, venue/stadium specific services and private 5G, though these do not appear to be mainstream in the US yet).

Factors that confound 5G monetisation at Telstra include network coverage (5G coverage lags that of 4G) and market competition (competitors include 5G in all plans, while Telstra does not). Telstra has chosen to leverage its 5G leadership to boost the perceptions and performance of its network as a whole. Many of its propositions are not singled out as 5G services, though they may depend on the cost efficiency, capacity and performance improvements that are delivered by 5G (e.g. Network Optimisation Services, such as the Adaptive Mobility Accelerator). Telstra is focused on ensuring customer 5G readiness (it offers a wide range of devices) and 5G network development to maintain network leadership. It is building its understanding of 5G capabilities with new services and laying the foundations for new business models. Adjacent capabilities (provided by Telstra Purple) are a further monetisation enabler.

Operators are working to minimise the impact of constraining factors (e.g. extending device ranges, securing additional spectrum) whilst building/leveraging the enablers to provide a 5G monetisation toolkit. Their commercial 5G journeys continue.

See our in-depth case studies on commercial 5G

Strengths and capabilities of different private network stakeholders

The different private network requirements and vertical dynamics, along with the need for flexible private network deployment options and scenarios, will drive various opportunities and business cases for new operators and owners to emerge across these industries. Traditional and new telcos have varying strengths and limitations across spectrum holdings/access, asset ownership, and telecoms and vertical expertise.

In addition to leveraging spectrum and public network infrastructure to support different deployment scenarios, MNOs’ major advantage over other players is that they know how to build and manage a cellular network, which grants them a leading role in many private network projects even if the deployment uses local spectrum and is isolated from the public network. Traditional telcos can also leverage private networks to access new regional markets where they do not own spectrum but want to support their international enterprise clients. An example is Verizon which is looking for private network opportunities in Europe.

In contrast, vertical players usually lack telecoms expertise, but their knowledge about specific industry applications, IT networking and stakeholders’ requirements is often a crucial factor in successfully designing and building a private network. Some players in industries such as railway and utility services often already have experience using wireless networks and technologies, and have highly specialised and mission-critical needs, and will therefore be less inclined to engage with telcos when developing their private networks.

Our report Private networks: Lessons so far and what next explores the recent developments in the private network market, regulatory activities and policies on local and shared spectrum, and the different deployment approaches and business cases for traditional telcos and the expanding range of other stakeholders.

See our in-depth research on private networks

Commercial 5G at Telstra

Telstra’s 5G commercial approach involves propositions in each of the highlighted categories below:

Telstra commercial 5G

Given that four of the top five key purchase criteria across all Australian telco customer segments are network-related (i.e., coverage, speed, reliability and security), Telstra strives to be the market’s network leader. It views its early and continuing investment in 5G as enabling it to stay ahead of customer expectations as they evolve.

Network leadership has been the foundation of its commercial approach to 5G for customers to date. Due to the lack of early and obvious 5G use cases and less than ubiquitous coverage, Telstra has refrained from singling out 5G-specific propositions, emphasizing its network superiority as a whole.

From a consumer perspective, Telstra monetises 5G by promoting 5G-ready mobile and data plans to more premium customers (5G is not available on prepay or sub-brands). It also offers fixed wireless access services to a targeted customer set. Additionally, Telstra does not subsidise 5G devices and receives a nominal revenue contribution from device sales.

Its small business approach broadly reflects that of the consumer, however its enterprise portfolio demonstrates some differences. Telstra’s Adaptive Mobility solution, with mobile, data and enterprise wireless components, allows customers to select and change solution components and service tiers month to month. Tiers of services are defined by size of data allowance and speed caps (while 5G is not specifically called out, plans are marketed as “5G-compatible”).  Telstra has also introduced an Adaptive Mobility Accelerator add-on feature which boosts speed based on available networks (both 4G and 5G).

Telstra’s network-agnostic, flexible approach continues through to its network and technology solutions and managed services, i.e., the Telstra SD-WAN solution, cloud services (including edge computing) and private hybrid networking solutions (favouring consumption-based business models). Additionally, it leverages its technology services provider, Telstra Purple, to create bespoke over-the-top solutions (based on its adjacent expertise, e.g. AI, software development, cloud) that may/may not include 5G.

While Telstra does not currently offer bundled 5G-specific solutions, it is championing the concept of network-aware services facilitated by a modular, adaptable service infrastructure. This should stand it in good stead to develop and deliver new use cases (e.g. those leveraging network slicing) by combining network capabilities in different ways. 5G-specific solutions may be an aspiration going forward.

This July 2021 Report: Telstra’s journey in commercialising 5G examines the market factors that have enabled and constrained Telstra’s 5G commercial approach up to now and identifies lessons in the commercialisation of 5G for operators that are on their own 5G journey.

See our in-depth 5G research and our coverage of 5G monetisation so far:

4 digital healthcare application focus areas for telcos

In April 2021, STL developed a new sizing model for 217 digital healthcare markets that reflects the recent impact of the COVID pandemic on the health sector, with the goal of identifying the new opportunities and risks presented to operators and others attempting or considering investment in the market.

Our model focuses specifically on four application areas within the digital healthcare space that we believe are most relevant for telecoms operators:

1. Remote monitoring;
2. Virtual care and telehealth;
3. Diagnostics and triage, and;
4. Population level data and analytics.

Within these four application areas, we then mapped out and listed 12 detailed use cases that we believe will have the most significant impact on healthcare delivery and estimated the pre- vs post-COVID penetration of digital health solutions and their impact on patient use of healthcare resources.

In the UK, diagnostics and triage account for by far the largest share of the value in terms of potential cost savings through digital health care. This is because a large proportion of patients attending A&E (accident & emergency) could be treated more effectively and cost efficiently through other healthcare services.

COVID impact on use of healthcare services in triage and diagnostics (UK analysis)

COVID-advanced-healthcare-model-stl

Source: STL Partners

Our forecasts for the potential impact of diagnostics and triage on healthcare costs in the UK are based on a range of supporting research from local digital health players and the NHS. For example, DoctorLink, which provides online and urgent care triage solutions to the NHS, estimates that approximately 4mn out of 25mn individuals who attended A&E in 2019/2020 could have been avoided.

This report and the accompanying database breaks application areas out into seven regions globally, and to country level data for Canada, China, India, UK and the US. Get in touch with the author to see country level data for other markets: amy.cameron@stlpartners.com

Further Research

For the last five years STL Partners has researched the opportunity for telecoms operators in healthcare, through case studies on leading operators such as TELUS in Canada and Telstra in Australia, and analysis of the digital health market landscape to understand where operators can play across the value chain and in specific application areas.