As the reality of the exodus from MWC sinks in and we stare at the prospect of more tumbleweed than tapas in the avenidas of Barcelona, there will be some who are secretly relieved.
Missing a year in Barcelona will allow CSPs offering 5G services to regroup and avoid the embarrassment of demonstrating yet more hype (and not much else) around the new technology. Given that autonomous cars were recently rear ended, the auto hype will be less than believable, which leaves AI (nothing much to see), IoT (it’s just connecting stuff) and perhaps blockchain (just efficient accounting) to get excited about.
The slap in the face for purveyors of 5G comes from a study commissioned by Bearing Point//Beyond and undertaken by Coleman Parkes. The company conducted interviews with both CSPs and businesses wanting next generation solutions and it makes for pretty depressing reading.
Ever since 5G became a ‘thing’ and possible reality, the industry (with almost one voice) has been saying ‘please, oh, please, do not suppose you will make enough money on connectivity and hardware’.
And yet, according to this research, that is exactly where we are heading. Again.
In a nutshell, CSPs are banking (literally) on supplying connectivity and hardware while businesses are begging for more sophisticated business solutions as every industry on earth is trying to automate and digitise.
What CSPs need to become, and fast, according to Bearing Point/Beyond CEO Angus Ward are ‘ecosystem orchestrators’.
And they are not.
- In North America, where CSP ambition is highest, 96% [of businesses] believe CSPs have a bigger role to play – citing ecosystem orchestration, complex program management and flexibility as reasons they want to work with CSPs to develop 5G use cases.
- 40% of NA CSPs see themselves becoming ecosystem orchestrators.
- In Asia, only 17% of CSPs see themselves as ecosystem orchestrators, while 94% of businesses across the region believe that CSPs can and should provide more than simple connectivity and they should be delivering business focused ecosystems in conjunction with partners.
- In Europe, CSPs are basing their 5G business models on 4G.
- Just 10% of CSPs in the region see themselves as ecosystem orchestrators, while 92% of businesses believe CSPs have a bigger role to play, delivering intelligent solutions based on partners.
- Connectivity represents just 5% of revenue for every 5G use case.
The stark fact is that if CSPs do not deliver orchestrated ecosystems, someone else will. If that happens, we will stare once again at a new generation of OTTs and digital service providers taking the business for themselves.
Already CSPs are losing their lead. As Ward says, “in Asia, CSPs are already seen as ‘second choice’ partners for businesses building 5G use cases, in North America CSPs rank third, in Europe, fourth”.
That is a scary thought, even for industry observers suffering from deja vue but the truth is that “inaction will cost billions of dollars”, according to Ward.
The harsh reality is that CSPs might better spend the time they would have been at MWC thinking deeply about the fact that connectivity alone will not cut it in the 5G world. Not by a long shot.
Finally!. 5G is the “spine” of a virtual geography. Digital Eco-Systems will pop-up like mushrooms. More than 5G connectivity is needed. However, to facilitate the seed planting and growth of digital eco-systems are dependent on creativity and new ideas, particullariy innovative new business models. As for CSPs basing their 5G on 4G business model is highl risk, Why? because ROIC (Retun On Invested capital) has gone down over the last decade, 4g was based on the same business model as 3G ad 3G business modek based on the same business model as 2G and it goes further. The compellingness of this business model has reached its exiry date.