5G has been launched across Asia Pacific, making it the fastest-growing 5G market in terms of adoption. South Korea, China, the Philippines and a few others have taken the lead on full implementation. The development of 5G in Asia Pacific shares its similarities and differences as in the US.
With 5G, identifying global similarities is easy, however, identifying local regional differences is harder. Examples of such differences include how industry partnerships are being forged and the focus areas of telcos in bringing the innovation to the market.
The COVID-19 pandemic has triggered sudden disruption and change in 2020. Digital transformation and 5G are now part of our new normal, including changes in consumer behaviour, needs and preferences. Apart from disrupting our lives, COVID-19 has triggered an urgent need to enhance and upgrade our digital infrastructure. It has accelerated implementations and the use of technology to ensure that our populace effectively adjusts to this “new normal”. All our assumptions about what our people and our industries need may have to be revisited. We now have a whole new world ahead of us.
For the 5G industry ecosystem to develop, it is necessary to discuss how to take 5G to the next level. A framework to expedite the incorporation of 5G into industry is crucial.
Possible regional drivers include new applications that can be monetized, solving pain points for consumers and enterprises and the inclusion of 5G in government policies and public sector projects. The preference for these drivers varies by country and vertical industry. While these points seem apparent, there is much room for improvement before 5G can truly scale, globally.
To spur market demand for 5G, the supply side needs to increase awareness and understanding of the impact of 5G within industry ecosystem. The need for 5G is closely linked to the understanding of its impact and a lack of understanding will likely lead to the lack of need for 5G. Therefore, if industry is not being able to identify the need within the various vertical industries, this will impact the timeline, drive to push for 5G and its incorporation into new concept development. Yet, this is what we are seeing happen.
But as things stand, we are still struggling with understanding of end-user segment needs, partner fit and the go-to-market (GTM) plan for an effective implementation of the technology.
The telecoms vertical and large corporations are leading the incorporation of 5G into industry but collectively, the end-user segments within other vertical industries are trailing behind. There is a supply and demand gap and the reason for that is clear. There is simply not enough evidence to cause an immediate shift from “as is” or status quo; without innovations that can demonstrate the potential of 5G, and lead to successful commercial 5G deployments.
The inability to identify the need and is affecting the expeditious implementation of 5G. It is important to note that despite levels of need and understanding not being as high as we anticipated, the level of intent to implement 5G is undoubtedly high, within the region. To drive 5G adoption and scale, it is crucial to devise new ways of thinking and working with partners to come up with end to end services. To scale 5G, there needs to be co-creation of solutions that can be used regionally across verticals. Partnerships can be better leveraged to scale proven concepts rather than showcase technology.
The telecoms vertical needs a shift from what “can be done”, to what is “the need”. Government intervention is also essential; with the inclusion of 5G within government policies and public sector projects. In order to expedite 5G commercialisation, local governments/regulatory bodies and the telecoms vertical need to have a common agenda. The difference is that the telecoms vertical is commercially driven while the governments/regulatory bodies are more focused on benefiting the country and its citizens which may or may not be commercially advantages to businesses.
The supply and demand gap mentioned above is due to differences in incentives or preferences between supply and demand. On the one hand, we have the telecoms vertical (supply side) pushing for early 5G deployment, having done tests and trials across the region. Their drive is to get the technology out there quickly to help to regain competitiveness and drive renewed growth. On the other hand, we have end-user segments (demand-side) that are not as keen, based on a recent survey conducted by Frost & Sullivan in 2020.
While the telecoms verticals on the supply side are driving use cases for “here” and “now”, the end-user segments (demand side) are pushing for the longer term to leverage innovation to transform and grow their business.
Also, while awareness of 5G as a new technology across the region is at an all-time high, only two-thirds of our sample of 108 businesses across the region understands the impact of 5G on the industry ecosystem. Only 60% of the same base says there is need for 5G. This means that there are a significant number of companies that do not yet know how to apply 5G technology to their businesses to determine whether there is a need. This also means that the need for 5G could be understated. This is where regulators and the telecoms vertical can play a bigger role.
As an industry analyst, I am already seeing the spirit of enablement taking shape across the region, so I look forward to great things as a result of 5G technology incorporation into industry. I envision that 5G will eventually drive the much-anticipated, innovative end-to-end services that have the potential to transform the world.
But before we can get there, there are some really important points that we need to address, for example, 5G monetization and demand creation.
There is still much work to be done.
By Quah Mei Lee, an Associate Director with Frost & Sullivan’s ICT practice where she leads Mobile & Wireless Research for Asia-Pacific.
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