Enterprises want 5G to deliver value, not fat pipes: panel

5G enterprise
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For operators aiming to target enterprises with 5G, the good news is that enterprises see a lot of future promise in 5G. The not so-good news: they’re concerned about whether 5G will be worth what operators charge for it.

That was a key takeaway from a panel session in the Smart IoT Hong Kong track of the Cloud Expo Asia conference in Hong Kong this week.

Aditya SV, head of strategic business for APAC for Tata Communications, said that he saw automotive telematics, Industry 4.0 and augmented reality as potential initial 5G use cases that operators could deliver to enterprises. However, he added that the “trillion dollar question” (literally) is how to monetize them.

According to the panel, the answer may lie in the network edge.

5G’s basic characteristics (ultra high speeds, low latency and massive machine connectivity) are fine and well, but the value proposition for enterprises isn’t the connectivity itself but 5G’s potential edge computing capabilities that add value to that connectivity. Thus, that capability could enable new business models that charge for 5G based on the value-add rather than the connection.

Aditya noted that operators could use analytics on the edge to charge customers by outcome. For example, he said, if you’re using 5G to connect video cameras that only use network data when they send out an alert, rather than a constant stream, how would the operator charge for that? “Do you charge for the bandwidth? Or do you charge for the outcomes?” he said. “I’m thinking that the answer is in charging for outcomes.”

Another possibility is that as data centers become the edge and base stations become a virtualized edge, this enables 5G operators to partner with application providers and content providers, he continued. “We can enable them to create applications that are containerized, and charge for access to the edge because we’re delivering a richer and user experience.”

However, for the most part the 5G enterprise business model is still based more on what operators (and their suppliers) think enterprises could use it for, as opposed to what enterprises are actively asking for.

Andrew Young, associate director (Innovation) and property conglomerate Sino Land, said that he’s tracking 5G’s capabilities and the application possibilities they present, but he’s still taking a wait-and-see attitude – partly because it’s unclear to him what 5G can really deliver for the time being.

“We have not seen enough 5G applications … the innovators have not yet come up with the goods,” Young said. “ So then, we as a user need to wait for [5G offerings] to take place before we decide which way we want to go.”

Young added that a lot would indeed depend on operators’ charging models. “As a [property] developer, we’re very cost-conscious. One of the challenges we face is the value proposition compared to the cost, whatever the charges are. And the kinds of things we’re interested in investing in is like, for example, property maintenance – instead of just giving us the data, if we can also have analytics that can predict failure early on, we can reschedule the maintenance or we can maintain the assets without it going down. That brings value to us. Now, that improves the value of the return on property investment that will far outweigh the cost of paying for that.”

Young added that Sino Land – which is currently working with China Mobile Hong Kong on smart-building solutions – expects to be able to come up with a workable model for that with whatever telcos it works with, “but right now it’s still a chicken-and-egg issue.”

Alex Cheng, principal engineer at China Mobile Hong Kong, said that the operator has been looking at different possibilities for 5G charging models for enterprise customers, but cautioned it’s still early days (not least since Hong Kong won’t be launching 5G service until at least next year. “The 5G business model is still being spawned at the moment.”

That said, Cheng added that 5G charging models would likely be different from 4G models in that they could be based on usage rates or usage patterns, and support service models for enterprises such as B2B2C.

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