Global Data: 5G Enterprise Market Business Case May NOT Be Compelling

Is it possible for anyone to throw cold water on the 5G market potential  and diminish ultra hyped expectations?  YES!

5G use cases may not be compelling enough for massive uptake by businesses, according to Kathryn Weldon, technology research director at GlobalData.  Weldon offered her view on upcoming challenges for mobile operators:

“While 5G services are not yet ‘live’ this next generation of wireless technology is already top of mind for service providers, original equipment manufacturers (OEMs) and other telecom market ecosystem players. Aside from gearing up to build out the technology, they will be working together to make sure that 5G use cases are compelling – that is, different enough from 4G to matter to customers. As with any new generation of wireless, the stakes are high, and operators are hoping that they’ll make back their substantial investments in 5G. For most operators, this should come via a ‘massive’ uptake of connectivity, plus revenues from advanced services spanning both consumers and business customers.”

Operators need to move beyond their current barrage of technology build-out narratives and discussions of fixed vs. mobile services, she emphasized. “Rather, it’s the use cases and business outcomes that will make the difference. Operators need to deliver novel and compelling capabilities that change how business customers see and use cellular services.”

Enterprises have different requirements than consumers:

“As 5G communications traffic is expected from Internet of Things (IoT) sensors in industrial robots, roads, and vehicles and can leverage the technology’s reliability and low latency to control critical services and infrastructure for public safety, healthcare, government organizations, and utilities. But the ROI for these applications must be compelling.”

Weldon further acknowledged that questions remain:“Will the enterprise appetite to spend more to use these futuristic use cases exist when 5G networks become a reality? Will devices to support these applications be in place once those networks are ready? Will businesses finally see wireless as a valid replacement for wireline broadband? And lastly, will operators be able to offer all these futuristic services profitably? Only time will tell.

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Last year, Global Data said 5G networks will become mainstream by 2020, but Europe will lag behind Asia and the US, as operators seek to make the most of 4G, according to GlobalData, a recognized leader in providing business information and analytics. The company’s 5G report forecasts that while over half of all mobile subscriptions will be 5G-capable in South Korea by 2022, compared only around 7% in Europe.

5G will, for the first time, go beyond increased bandwidth and capacity, as was the focus in previous wireless generations, adding low latency, high density and high reliability. These capabilities will enable a variety of use cases, opening the door to new, predominantly business-focused services such as self-driving cars and smart cities. 5G also supports the focus that many operators have in looking for new, adjacent revenue streams, including fixed-mobile integration, digital content and the Internet of Things.

Peter Jarich, Chief Analyst for GlobalData Technology, adds: “Hopes are running high for the potential of 5G to truly transform mobile business models, and tap new revenue opportunities moving beyond consumers and into diverse digital industries. The implications go beyond any individual operator to impact national and regional competitiveness.

“Despite this, for all the efforts to fast-track early 5G deployments, it’s important to recognize that 5G rollouts will take years to complete; no region or country has won or lost the race to 5G yet.”

 

8 thoughts on “Global Data: 5G Enterprise Market Business Case May NOT Be Compelling

  1. In Search of a 5G Business Need

    “I talk to other CEOs around the world in this space, and we’ve all been struggling a little bit making the business case work,” said Gavin Patterson, CEO of the UK’s BT Group, when discussing the need for 5G at a recent conference. And he’s right to be concerned. For each previous leap in mobile technology, there was a clear-cut business use that would drive additional revenue, but with the current price wars going on, there is less of a clear revenue case for 5G.

    https://www.npd.com/wps/portal/npd/us/blog/2017/in-search-of-a-5g-business-need/

  2. 5G business case still far from clear

    CTO of China Telecom Research Institute, said he’s not concerned about a lack of proven use cases for 5G: “We didn’t have them with 3G or 4G…and we all survived.”

    “It’s possible for 5G ARPU to stay at the same level as 4G, which means it will take seven to eight years to recoup 5G investments.” He noted 4G ARPU stayed at 3G levels for a long time.

    Lee Yong-gyoo Lee, head of KT’s 5G business unit, agreed the business case for 5G “is not clear at all” and admitted the South Korea-based operator is not yet ploughing ahead with large-scale investment in the technology, despite being a 5G front runner.

    https://www.mobileworldlive.com/blog/blog-5g-business-case-still-far-from-clear/

  3. Ronan Dunne, Verizon’s group president of wireless, outlined a number of use cases for 5G mobility technology following its expected introduction next year, saying 5G will offer a “one-to-one relationship” that will provide customized experiences for users. Specifically, he mentioned seven potential use-case areas such as retail, gaming and health care.
    https://www.fiercewireless.com/5g/verizon-s-wireless-chief-5g-use-cases-retail-manufacturing-gaming-and-more?utm_source=internal&utm_medium=rss

    https://www.telecompetitor.com/verizon-5g-will-enable-a-one-to-one-personalized-experience-making-up-for-past-mobile-sins/

  4. EMAIL FROM GLOBAL DATA:

    The ‘race to 5G’ has moved beyond the telecoms industry and become a priority for governments around the world, but it remains unclear whether the end result will ultimately be worth the effort, according to GlobalData.

    Our latest thematic research report, ‘5G – Thematic Research’ reveals that the hype around 5G has been building for so long now that it can be easy to forget that it will not become widely commercially available until 2019 at the earliest. Even then, uptake will be minimal – just 0.09% of all mobile data traffic will be carried over 5G by the end of 2019, according to GlobalData’s Global Mobile Broadband Forecast.

    • This report looks at how the major players in the global telecoms industry are preparing for the arrival of 5G, which is expected to become commercially available in 2019.

    • Highlights the main trends in 5G from a technology, macroeconomic and regulatory perspective.

    • Included in the report are forecasts for 5G subscriptions and data traffic, analysis of recent 5G-related M&A activity, and a timeline tracking key developments in 5G.

    • The report also uses a scorecard approach to illustrate the impact of 5G on telecom operators and telecom equipment makers.

    Ed Thomas, Senior Analyst for Technology Thematic Research at GlobalData, comments:

    “Plenty of people, both inside and outside of the telecoms industry, are continuing to beat the drum for 5G, but the dissenting voices are growing in volume. They fear that the positioning of 5G as a revolutionary technology that will enable fundamental shifts in how we live and work, has served to raise expectations to such a level that the only possible outcome is disappointment.”

    “With 5G services expected to become widely available in some countries next year, the lack of a killer use case could yet have serious implications for demand. The question of what 5G is actually for needs to be answered, and soon, if 5G is to have any chance of living up to the hype.”

  5. Mobile operators may be losing faith in 5G, by Dylan Bushell-Embling

    More than half of mobile operators worldwide risk putting themselves at a financial and competitive disadvantage due to pessimism about the near term potential for the technology, new research indicates.

    A survey of public statements by executives of the world’s 20 largest mobile operators, conducted by Bain & Company, found that more than half (53%) see no near term business case for 5G.

    But because 5G has the potential to dramatically increase network speed and capacity and give early adopters a competitive edge, operators left playing catch-up could face both market share and cash flow consequences.

    “Generation after generation, we’ve seen network operators invest capital to upgrade their infrastructure with the firm belief that those investments would lead to more satisfied customers, a reinvigorated top line, and higher profits,” said Herbert Blum, who leads Bain & Company’s telecommunications practice in the Americas.

    “Given the potential 5G technology has to bring about a step change in network performance and thereby new uses, the reluctance of some operators to commit to this new technology is striking.”

    Skeptics are concerned that the technologies that will require 5G, such as augmented or virtual reality streaming and autonomous vehicles, are still years from being commercially available, he said.

    But what this misses is that operators can develop a compelling rationale for 5G based on the improvements it will bring to existing services, such as by relieving 4G congestion or allowing the mobile network to act as a substitute for fixed line services.

    Concerns about the large capex requirements for 5G rollouts also tend to make the faulty assumption that a contiguous canopy of 5G coverage and that operators will need to build large numbers of 5G cell sites.

    In reality 5G can co-exist with existing 4G networks, most operators already have sufficient node density in urban markets to accommodate 5G over 3.5-GHz or even millimeter wave spectrum, and 5G is expected to evolve to be able to coexist with 4G on the same equipment.

    Indeed, winning 5G operators are expected to be those that build the networks to make full use of their existing physical and spectral assets, Bain & Company said.

    Finally, the company noted that some operators believe that the main reason to invest in 5G is to improve efficiency rather than increase revenues. But the most successful 5G operators will also use 5G deployments to increase revenue and create a cycle of 5G reinvestment.
    https://www.telecomasia.net/system/files/story/file_attachments/TA0718_digital.pdf

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