A ‘build it and they will come’ approach won’t be enough for telcos to fully capitalize on 5G’s enormous commercial potential, according to a new global research study by Omdia and Nokia.
Instead, communication service providers (CSPs) must proactively develop 5G use cases, pursue partnerships outside their own industry sandbox, and pivot from pushing technology to solving business problems, the study concludes.
The report, which surveyed 172 CSPs around the globe, also reveals that carriers and enterprise verticals have different ideas about where 5G will have the greatest impact. For further insights on the findings, we interviewed Daryl Schoolar, a practice leader for service provider technology at Omdia and co-author of the white paper.
No waiting game
In the 1989 movie Field of Dreams, a mysterious voice commands a farmer to “build it and they will come.” Heeding those words, the farmer builds a baseball diamond in his cornfield. Miraculously, ‘they’ do come: the 1919 Chicago White Sox team and hundreds of paying baseball spectators flock to the Iowa field, bringing the farmer’s dreams to life and boosting his family business.
But Schoolar warns it’s not enough for CSPs to build out 5G infrastructure and wait for new business to come once 5G technology has fully evolved.
“Waiting until everything with 5G is ‘perfect,’ in many cases, is going to be too late,” Schoolar tells us from his office in Phoenix, AZ. “Operators need to develop commercial plans in parallel with their network build. Building the commercial offering can take just as much time as building the network. Waiting on the network just extends the time until the operator can see a return on its investment.”
To help telcos drive towards 5G commercialization now, Omdia and Nokia identified eight main categories of 5G use cases:
- Fixed wireless access (FWA)
- Video surveillance and analytics
- Immersive experiences (augmented and virtual reality)
- Smart stadiums
- Cloud robotics and automation
- Machine remote control (drones, cranes, robotic arms and heavy machinery)
- Connected vehicles
Surveyed CSPs ranked their top two 5G use cases as FWA (named by 47 percent of CSPs) and video surveillance and video analytics (cited by 38 percent of CSPs). It makes sense, given that those use cases fit with their existing business model, expertise and partnerships.
If carriers pin too much of their 5G strategy on FWA and video, however, “they’re going to leave money on the table,” Schoolar says. “If they’re just focused on selling connectivity, which is what they’re already doing, they would be making those investments [in 5]) without growing revenue on top of it.”
To capitalize on 5G’s commercial potential, carriers will have to venture beyond the comfort zone of connectivity, says Schoolar. Here are his tips for how CSPs can do that.
1 Size up your strengths
Assess where you already have depth, then expand from that place of strength.
“They should look at which verticals they already have relationships with, what problems they have and what can be done with LTE today as a way to prepare for 5G,” Schoolar suggests.
CSP must consider where they already have a footprint – whether it’s mining, finance, etc. – and how do they build upon that with 5G. They should build on existing, relevant strengths in a strategic, incremental move toward 5G use cases, rather than making a last-minute leap into the broader 5G fray.
2 Seek new dance partners
According to the Omdia/Nokia report, “CSPs will need to develop partners within and outside of their mobile ecosystems to fully commercialize 5G.” Finding use case opportunities beyond FWA and eMBB – like those in eHealth or smart stadiums, for example – may require a CSP to play in a vertical it has never entered before. That requires new partners, including vertical specialists, system integrators and platform developers.
“You also have to start working with third-party application providers or other people needed to put the whole service together. You have to build those relationships,” Schoolar says.
3 Think ‘problems, not products’
The research points out that “the views of enterprises and CSPs of 5G don’t always match.” Two key mismatches revealed are:
- CSPs believe there is much more 5G revenue potential in the finance, media and entertainment verticals than those sectors expect 5G to bring to their own industries
- CSPs underestimate the revenue potential 5G may bring to manufacturing compared with that sector’s own expectations of 5G’s future impact on its industry
This kind of disconnect requires a learning curve on the part of telcos, as summarized in the report:
“CSPs need to learn more about some of these industry verticals and do a better job of educating verticals about the ways they could benefit from 5G services. This requires an attitudinal shift from CSPs – away from thinking in terms of selling technology toward selling solutions to problems.”
4 Tell a better 5G story
To figure out what business problems enterprise verticals need to solve, CSPs must listen to them first. After hearing out their pain points, CSPs have to craft a better 5G story, explaining to those enterprises how 5G can solve specific problems in their industry, describing it all in terms of a use case they can understand.
“So many discussions about 5G are about the technology of latency or how fast 5G is,” says Schoolar. “But enterprises are investing in technology to solve a problem, to cut costs, create efficiencies, increase their own revenues. So when you start selling more complicated enterprise services to verticals, CSPs need to speak that language.”
5 Account for regional differences
CSPs should take note of regional differences – including geography, culture and regulatory rules – when pursuing 5G use cases.
For example, telcos in the United States, where healthcare is privatized, see eHealth as a top 5G use case in that market. In China and South Korea, where healthcare is publicly funded and mobile video and gaming are extremely popular, CSPs see immersive experiences as a much higher use case priority than eHealth.
Regardless of their location, all of the 172 CSPs surveyed are driving toward the same destination: 5G commercialization.
“They don’t have to get from wherever they are to point Z where they have 15 different profitable enterprise vertical services,” Schoolar says. “Take an incremental approach (based on) where you’ve been.”
While they’ll all get to commercial 5G in different ways, Schoolar recommends carriers start out in familiar territory, pair up with past and future partners to help them get there, and venture into new places that make strategic sense.
A new challenge
And now, suddenly, a new challenge for carriers, one that may be unprecedented in its impact and scope: COVID-19.
The novel coronavirus has thrown a wrench into the strategic game plans of companies in every industry, including telecom. If we simply look around, however, we all notice something extraordinary happening. As people around the world physically distance themselves from each other to avoid infection, they are turning to digital technology to stay connected during this crisis.
Doctors are conducting virtual appointments with patients through online chats or video consultations. Students are using mobile devices to watch live video lessons taught by their teachers. Companies continue to stay operational, and communicate with employees, using collaboration and conferencing tools. Since comfort is as important as continuity during a crisis, millions of people on this planet are seeking emotional refuge in movies, TV shows and virtual concerts streamed over the Internet.
By literally keeping the world connected during this pandemic, telecommunication is emerging as an essential service. As providers of digital connectivity lifelines during a global crisis, CSPs shouldn’t halt or slow their strategic plans with regards to 5G. If anything, 5G could come into even clearer focus for customers and users right now, as they realize the importance of staying connected to each other.
As people reach out to make digital connections – to their grandmas in locked down nursing homes, to their patients seeking medical advice at home, to their worried employees asking about unemployment benefits on a team conference call – they need CSPs to be here for them now more than ever. They will still need that when the darkest part of this shadow finally makes way for the sun.
You can read Beyond connectivity: CSP perspectives on higher-value 5G use cases here.