5G named as key DX tech – but that’s not good news for cellcos

5G digital transformation
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ITEM: Companies undertaking digital transformation initiatives are including 5G as one of their technology options, according to a new survey. The problem: that may be better news for vendors than operators.

Earlier this week, MIT Technology Review Insights released a new report assessing the state of digital transformation in six APAC markets (Singapore, Malaysia, Philippines, Indonesia, Australia, and New Zealand). The report examines how companies are deploying ‘Fourth Industrial Revolution’ (4IR) technologies such as cloud, IoT, AI, big data, robotics, blockchain, and virtual and augmented reality, as well as how 5G is eventually going to figure into their transformation strategies.

Overall, the report says, digitalization of manufacturing and supply chains is lagging, but could be substantially accelerated by the launch of 5G.

Among the key findings:

  • Cloud and IoT are the most established 4IR technologies, with 29% and 34% of respondents having already deployed these for one year
  • Improving customer experience is the single biggest driver of technology adoption across the region, followed by increasing the speed of decision-making and increasing operational agility
  • Collaboration and ecosystem development will further fuel digital transformation – only 35% of respondents said that there is sufficient infrastructure in terms of regulation, connectivity, and public services to support further digitalization
  • The biggest challenge to digitalization: high cost of deployment.

This last point is particularly true when it comes to 5G – 82% of respondents named infrastructure upgrade costs as the key 5G hurdle that telecom operators will need to overcome. That said, 83% believe that telecoms will take the lead in the future 5G ecosystem, although 70% feel that governments have a role to play by creating a collaborative environment for 5G.

While 5G is still a couple of years away from meaningful deployment in those six markets, at least from the respondents’ point of view (65% expect 5G to be available in 2020; 18% see 2021 as a more likely date), two-thirds said they are already having active conversations inside their organizations about the future impact of 5G.

On the other hand, only 46% said they have a pretty good understanding of the benefits of 5G. The report says the manufacturing, financial services and automotive sectors are likely to benefit the most from 5G technology.

Whose 5G is it anyway?

The conclusions of the report – which, by the way, is sponsored by Huawei (although MIT Technology Review Insights stressed in the release that the conclusions are editorially independent) – raise an interesting question regarding the role of 5G as an enterprise solution for things like smart factories: who is running that network?

At this week’s Digital Transformation Asia event in Kuala Lumpur, TM Forum CEO Nik Willetts said in his keynote that operators must get to grips with the fact that their competition is not other telcos, or even hyperscale digital giants like Google and Facebook – it’s also enterprises that are deploying their own mobile solutions. For example, Audi and Ericsson recently announced a deal in which the carmaker will deploy 5G in its Ingolstadt plant for testing.

Smart manufacturing has been touted by Ericsson, Huawei and Nokia for some time as one of the key use cases for 5G, as well as other enterprise applications that can make use of 5G’s low latency and MMTC capabilities. But that doesn’t necessarily mean operators will be providing 5G services to those companies directly – enterprises can also potentially do it themselves.

This debate isn’t new – when it comes to ICT in general, the whole selling point of managed services was so enterprises could foist that task off to an expert (who also happen to own a massive global network of PoPs) and focus on their core business. The same will likely be true of 5G services targeting the enterprise (especially smaller ones that may not have the skills or the budget to do it themselves)

The difference – in theory – is that enterprises looking at 5G today have a few advantages, from the services expertise the vendors will offer in helping them install and run it, to the fact that – unlike previous Gs – 5G is coming at a time when open source and automation will make it relatively easier and cheaper to install and run your own network. Commercial 5G gear will of course be initially expensive, but that will change once the economies of scale kick in, and as open-source options from the likes of TIP become available.

In which case, what exactly do you need the operator for?

The point isn’t that operators have no chance at the 5G vertical enterprise market – it’s that they shouldn’t assume that enterprises seeking to incorporate 5G into their transformation strategy down the line will naturally turn to an operator to get it. DIY is going to be an option (and one vendors are actively pursuing), so operators should be factoring that into their own transformation plans, as well as their 5G strategies and sales pitches.

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