This article is an extract from TM Forum's new report Enterprise 5G: The role of the telco. Download it now for the full insight.
Most “pure” mobile operators focus exclusively on the consumer market, and all have deployed coverage based on where people are and where they go, rather than on where businesses are located. As a result, many firms ranging from companies in office blocks to those with large campuses, such as ports or stadiums, have suffered from poor coverage.
In addition, mobile devices have been built for consumers, with the two dominant app stores, Google Play and Apple, catering to them. Operators have provided services on a “best effort” basis, while many enterprises need guaranteed quality of service and service level agreements. Even communications service providers (CSPs) with strong enterprise lines of business typically run their mobile networks as standalone businesses and have had little success in integrating mobile into their ICT service portfolios.
LTE has been a huge success in terms of delivering a great experience to consumers but a failure when judged on its ability to deliver new revenue. There is no reason to expect 5G to be any different in the consumer market. It’s quite likely that the jump from 3G to 4G delivered greater benefits to consumers (who for the first time could stream video reliably) than the leap from 4G to 5G will.
Reasons for optimism
So, why are mobile operators so bullish about 5G and the enterprise market? The answer lies in three trends: Ever since work began on the 5G standard, operators have viewed it as the key to unlocking the IoT 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 processes more broadly.
Adoption of cloud computing for IT and network functions will enable CSPs to take a more flexible approach to building new products and services, and to scale them more quickly than previously possible. A fourth reason for 5G’s enterprise focus doesn’t 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.
Vertical or horizontal?
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), which we’ll define and discuss more in the next section. 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.
TM Forum is a global industry association for service providers and their suppliers in the telecommunications industry.