5G is creating a new era of enterprise opportunity, but can telcos capitalise?

The enterprise market is ripe for adopting 5G services, but operators have work to do to unlock value in this growing customer segment

5G is considered the first generation of mobile tech that is set to have a greater impact on the enterprise rather than consumers. KPMG estimates that £3.35 trillion in value is waiting to be unlocked across major industries that embrace 5G such as government, finance, healthcare and manufacturing.

Ericsson, meanwhile, estimates that the addressable market for what it calls “industry digitalization” could grow to about $700 billion by the end of the decade. 

However, this opportunity has required a shift in mindset, both for operators – who are targeting a new type of customer – and for enterprises, which must weigh up how to most effectively invest in new technologies.

A recent report by the TM Forum summarises the situation as follows;

For the first time ever, the mobile communications industry is prioritizing the enterprise market. Indeed, for the past 30+ years, its whole focus has been on serving individuals and consumers, but 5G is changing the target. Now mobile operators and their suppliers believe there is more potential for revenue growth in serving enterprises than consumers.

So what is the appetite for 5G among enterprises? According to a recent study by Nokia, which conducted in-depth research with 1,000 IT decision-makers across seven vertical sectors, nearly two-thirds of companies are aware of 5G and 47 percent say they have already started planning to implement it. Encouragingly for telcos, 61 per cent of businesses said they would look to a mobile operator for advice and guidance when planning 5G deployments.

Energy and manufacturing firms were revealed to have the highest awareness of 5G (see chart). Nokia says that these verticals are exploring 5G for its potential for advanced use cases including infrastructure maintenance, remote machine control, and cloud robotics – all applications could be accelerated following the Covid-19 pandemic.

 

Source: Nokia

Video monitoring and detection was seen as the top enterprise use case with 83 per cent finding it appealing and 48 per cent citing 5G-enhanced video monitoring as a near-term opportunity. Indeed, 75 per cent of businesses surveyed already use video for monitoring purposes, and were therefore deemed able to readily grasp the additional value that 5G can bring in terms of high-quality and uninterrupted video streams.

Nokia says that larger businesses are likely to purchase 5G-enabled video monitoring and detection technology as part of a wider suite of security services, making the security industry an attractive channel to market for service providers. Other top enterprise 5G use cases identified in the survey included Connected Machinery, Fixed Wireless Access, Connected Vehicles, and Immersive Experiences.

So how will operators realign their business models to tap into these types of opportunities?

Whilst providing connectivity services will always be part of an operator’s offering, it is thought they will need to evolve to provide platform services that will allow them to focus on specific applications. According to the TM Forum, this would allow an operator to use connectivity as an enabler as part of an end-to-end solution that could, for example, provide low-cost air conditioning services in a building using IoT. Whilst this approach might capture a larger proportion of enterprise spending, the organisation believes that connectivity (or (‘Connectivity-as-a-Service’) would offer “a far more realistic, achievable opportunity for CSPs”, albeit one with less upside.

But according to a 2020 Omdia 5G report, only one in five of early enterprise deals have been “CSP-led”. Clearly, operators must seize the enterprise opportunity now or risk being outflanked by a new era of competitors.

eContact Services has 20+ years’ experience working with telcos and adapting to an ever-changing landscape. Speak to us today to discover how we can help you engage with telcos and key players from across the industry.