5G enterprise trends
Mobile operators are bullish about 5G and the enterprise market because of several key trends:
- Ever since work began on the 5G standard, operators have viewed it as the key to unlocking the 5G opportunity. Other network technologies such as NB-IoT, LTE-M or LoRA may meet requirements for a lot of IoT applications, but 5G is still viewed as the long-term solution for scaling IoT and enabling high-bandwidth and low-latency applications.
- Along with other technologies such as AI and machine learning, blockchain, fintech, smart manufacturing, and IoT, 5G is seen as crucial to the Fourth Industrial Revolution or Second Digital Revolution, in which adoption of new technologies drives automation in manufacturing and industrial practices more broadly.
- Adoption of cloud computing for IT and network functions will enable communications service providers (CSPs) to take a more flexible approach to building new products and services, and to scale them more.
- The fourth reason for 5G’s enterprise focus does not necessarily benefit CSPs and could result in them losing some control of the market: New competitors including enterprises themselves see an opportunity to build their own mobile networks. Until now, the mobile industry has been shaped by national operators that have been the only companies awarded spectrum. But with 5G, the sector is becoming democratized, with regulators awarding spectrum not only to enterprises, but also to startup service providers with a focus on the B2B market.
5G enterprise offerings
There are two types of connectivity services and two types of ICT services CSPs can offer. On the connectivity side, they can deliver traditional communications services or connectivity-as-a-service (CaaS). When it comes to ICT services, they can offer platform-based services and end-to-end solutions that may or may not use a platform model.
Traditional connectivity services comprise mobile voice and data via smartphones and fixed wireless access. The key issues in assessing the potential of 5G for delivering these services are:
- Whether the characteristics and capabilities of 5G will result in any migration from fixed broadband and Wi-Fi to 5G
- Whether 5G offers B2B users the opportunity for connectivity where currently there is none (for example, if the enterprise requires temporary connectivity or the economics of 5G make it viable to deliver connectivity for the first time)
- Platform services and end-to-end solutions cover a range of use cases across vertical sectors such as manufacturing, healthcare and transportation. If the operator provides an end-to-end solution, it acts as the single point of contact for customers and is responsible for bringing together and managing all the partners needed to deliver the solution.
Platform-based and end-to-end solutions require connectivity as an enabler, but a much bigger part of the value proposition focuses on specific applications. For example, a CSP might sell an end-to-end solution for lowering the cost of air conditioning in a building or set of buildings using IoT. Or they may offer a solution that enables an automotive company to transform its operations into a smart factory or one that reduces network infrastructure required by bank branches using 5G and edge computing.
CSPs are most excited about 5G use cases that require end-to-end solutions, because they can capture a larger proportion of enterprise spending and own the customer relationship. But their success in exploiting these opportunities is by no means guaranteed. Traditional connectivity and CaaS offer a far more realistic, achievable opportunity for CSPs, albeit one with less upside and less opportunity to expand their share of total enterprise spending on new use cases.
To find out more about the types of business models CSPs are pursuing to target enterprises as 5G is deployed, download TM Forum’s latest complimentary report Enterprise 5G: The role of the telco.