The 5G revolution demands a new kind of telco

The rollout of the 5G (or fifth-generation) mobile network is a game-changer. But whose game will it change most?

The 5G network is a family of capabilities that will prove utterly transformative. Users will be able to download data between 10 and 20 times faster than at present. Latency – the time lag between call and response – will fall dramatically. The number of devices a network can handle will rise from 100,000 per square kilometre to a million. And 5G networks will be as close to 100 per cent reliable as makes no difference.

The consumer mass market will embrace 5G for its speed. But the real 5G revolution will be the emergence of a new kind of digitalised industrial economy. This technology will likely become part of the communications backbone wherever mobility is critical or fixed networks are not economic.

Beyond the consumer model

Incumbent mobile operators dominate the consumer market, but with slender margins. In the UK alone providers will probably have to invest almost £10 billion in 5G by 2025. More than half the UK population now has access to 5G, but on average consumers pay no more than for previous-generation 4G.

So to profit from the opportunity of 5G, communications service providers (CSPs) will need to target a different set of potential customers: businesses that want to use it, to completely overhaul the way they work and the services they offer.

Business needs are very different, needing transformation partners not commodity providers. This creates a vast opportunity for CSPs to grasp an entirely new role, developing and delivering ‘smart services’ for other organisations. To do so they will need to be agile and collaborative, and capable of operating in a technology ecosystem that binds together development, sales and delivery. This is likely to prove a greater challenge than the technology itself.

Every industrial business is in some ways unique, with a particular mix of needs for connectivity and applications. The challenge for the CSP is to meet those bespoke demands in a way that can be scaled up and reused across the industrial market.

This will require a change from the traditional supply-driven mentality of developing products to sell, to a demand-led approach enabling them to offer differentiated products for individual clients – at scale. From product development to service design and composition. This is enabled through the use of composable micro-services with sustainability benefits built in – potentially decreasing development and deployment time by anything between 40 and 70 per cent and ensuring sustainable goals are met from development, deployment and management.

The playing field has changed

The market for 5G applications is already diverse and evolving very fast, resembling an app store rather than a service catalogue. In markets such as Germany, France, the UK, Japan and the US, deregulation is already allowing individual industrial customers to create their own 5G networks and run their own ecosystem of applications. Capgemini research shows that 35 per cent of global industrial companies are already planning to build private networks using their own radio spectrum.

The ’composable’ world

This calls for a new kind of flexibility in developing a palette of services: we call it the composable services model. This model calls for CSPs to develop their own reusable and adaptable library of interoperable base services – for example object recognition – that can be combined with external partner services and applications to create new services which match evolving customer needs. If a CSP spots the opportunity for a new service, it can be designed, built, tested and deployed at speed, drawing upon existing resources, internal capacity and third-party developer support – and added to its catalogue.

The CSPs come to the 5G market with unparalleled consumer brand power. Adopting a composable service offer would give them an opportunity to leverage their brands and re-establish primacy on new terms in the huge industrial market of tomorrow.

Mix, match, create

The composable service is not a product or an application, but a ‘solution creation process’. Industrial customers identify problems that they know smart services can solve; what they don’t know is how the problem should be solved. The critical role of the CSP should be to find the solution, brand it, guarantee it, deliver it and, if necessary, orchestrate its evolution.

The composable service model meets the need for new solutions. It should be primarily driven by the sales team and delivered by service designers drawing on the ‘base service library’ and enhancing it with new components. It also feeds existing service modification, enabling existing base services to be reconfigured to support additional requirements.

The composable service model allows elements of bespoke smart services applications to be scaled up and reused. Where this service model has been adopted, it has increased speed to market and cut development costs by 30-40 per cent compared to conventional approaches.

It’s already real

We have already used the composable service model to build and deploy new ways of doing things that 5G makes possible. In manufacturing these include remote assistance and training, quality control and anomaly detection. We have also built applications for remote healthcare clinics, managing smart cities, and virtual and augmented reality retail tools. We are working on composing many more to meet individual client demands at pace and scale.

We calculate that the market for 5G-enabled applications will be worth $700 billion per annum by 2030, with 60 per cent of that value concentrated in just three sectors – manufacturing, financial services and the public sector. It is a market that mobile telecommunications providers cannot ignore.

To capture that market incumbent CSPs will need to use their existing capabilities in a new way – one which allows a democratised development process within the global platform. The challenge is to create a service development model that is flexible enough to flourish in a multi-party ecosystem, but too good to bypass.

That is a change of mindset – from being commodity service providers to becoming true digital transformation partners.

But changing mindsets is our business.