We’re taking a deep dive into the 5G revolution. In part 1 of this series, we focus on why B2B is such an exciting early opportunity for telcos.
5G promises major technology disruption. Its pervasive and versatile connectivity will drive waves of digital transformation across enterprise and consumer sectors. 5G’s speed and capacity will address the exponential growth of mobile data traffic. It will also enhance customer experience and support innovations such as mobile cloud gaming, augmented reality (AR), and virtual reality (VR).
But a stronger 5G revenue upside lies in industry verticals. In fact, Capgemini research reveals that a majority of manufacturing leaders believe 5G will be a key enabler of digital transformation over the next five years. 5G even ranks higher than artificial intelligence (AI) and advanced robotics. You can learn more in the Capgemini Research Institute report, “5G in industrial operations: How telcos and industrial companies stand to benefit,” which will become available June 6. With these realities in mind, vertical-industry executives need to ask two questions:
- What does 5G offer, and when will solutions be implemented?
- Where is the greatest 5G value and opportunity?
The 5G proposition and roadmap
5G will deliver faster wireless connectivity, lower latency, greater reliability, and improved security, all in a more flexible way. 5G involves new radio technology and a new network architecture that will provide a step-change improvement over 4G in key areas:
- Speed – The technology enables users to upload and download data more quickly.
- Latency – The 5G network is more responsive when making connections.
- Density – The network supports more simultaneous connections.
- Distributed intelligence – The network involves more nodes for processing data at the edge.
- Mutualisation – The core network is mutualised across multiple access technologies, supporting 5G radio, 4G, narrowband IoT, and Wi-Fi.
- Software enablement – 5G is natively software-driven, enabling the network to adapt to real-time demand and specific application requirements.
- Network slicing – The same physical network can be partitioned into multiple virtual networks, each optimised for different applications, enabling guaranteed quality of service.
But while 5G technology is revolutionary, its roll out will be evolutionary. First, reaching large-scale 5G coverage (nationwide, or greater than 90%) will take several years. Telcos will need to upgrade their radio sites and backhaul, and in some cases will need to add new radio sites.
Second, not all 5G features will be available from day one. Greater speed and capacity will immediately support bandwidth-hungry services, such as instant download or video live streaming. However, low latency and network slicing won’t be ready for two or three years, as they require the roll-out of a 5G-specific core network and distributed edge capabilities.
In confined areas such as industrial sites, a dedicated or private network could give companies 5G benefits including speed, reliability, and edge computing. However, investing in a dedicated-network rollout and the operations behind it will come at a cost.
The 5G prize: B2C and B2B
While 5G holds promise in consumer markets, monetising consumer services won’t necessarily be easy. South Korean mobile operators such as SK Telecom and LG Uplus have launched 5G content services such as AR, VR, and live broadcast in ultra-high definition. It remains an open question whether consumers will pay for these services.
Commercial launches by Verizon in the United States and by Swisscom and Sunrise in Switzerland emphasize 5G speed, with a price premium. However, maintaining this premium in competitive markets over time might call for continuous enrichment of the customer value proposition. In fact, Verizon temporarily backpedaled one month after launching 5G mobile services, removing the $10 premium in light of its limited 5G coverage.
That’s why telcos should start by targeting their 5G investments at industries such as manufacturing, healthcare, transportation, and energy and utilities. All these sectors have unique connectivity needs that 5G addresses head-on. More and more industrial and technology-dependent processes are connected. When the network sputters, productivity suffers. When the network goes down, operations cease. Connectivity is becoming mission-critical.
5G addresses the most pressing connectivity pain points that trouble organisations: interference, lack of signal robustness, limited bandwidth, gaps in interoperability, lack of mobility, and more. Imagine a shop floor where robots, machines, and employees move and interact flexibly, with safety and connectivity tailored to each application.
5G can enable many innovative new uses cases:
- AI-enabled image processing for real-time quality control in high-precision manufacturing
- Self-operating and teleoperated vehicles such as autonomous guided vehicles (AGVs), robots, and drones
- Unenclosed “fenceless” robots, or “cobots,” that collaborate with workers
- AR for remote-expert assistance
- Massive IoT for real-time monitoring and remote control of operations.
5G can unlock new sources of competitive advantage, from efficient operations to innovative services to transformational business models. Telcos that act now have the potential to capture industry market share and accelerate revenue growth.
Want to find out more? The new Capgemini Research Institute report, “5G in industrial operations: How telcos and industrial companies stand to benefit,” will become available on June 6. Find out how to access the report.