Every 10 years or so, the telecom industry witnesses a new generation of mobile technology that promises a slew of improved features. Indeed, 2G, 3G and 4G have delivered effectively on most of those promises, primarily by offering faster data connectivity speeds. As a result, the industry has matured into a robust, reliable provider of connectivity services on the go.
With 5G, things are a bit different, as it has been defined and designed with a trifecta of capabilities:
Extremely high-speed broadband.
Ultra-high reliability and low latency.
Massive machine-type communications (that is, fully automatic data generation, exchange, processing and actuation among intelligent machines).
To end consumers, these capabilities might merely mean faster video streaming. But when combined with the Internet of Things (IoT), this trifecta of capabilities assumes deeper significance. So far, the IoT has ridden on the availability of ubiquitous mobile connectivity and quickly proliferated across industries. A huge set of IoT-based devices, platforms and applications have emerged across the government, manufacturing, healthcare, financial services, life sciences and transportation sectors, among others.
Today, however, speed, latency and capacity issues around telecom networks limit the potential of IoT solutions. Similarly, existing networks are constrained by how many devices can connect concurrently to a cell site, hampering applications that require a massive number of sensors to gather and interchange data.
5G changes all this. Its new capabilities will enable high-speed video streaming everywhere, remote execution of mission-critical tasks, and the connectivity of massive numbers of sensors. This means that telcos can unleash the full potential of IoT-based services and exploit new market opportunities for their monetization.
For example, with 5G, healthcare providers will be able to perform remote robotic surgery, which has not been possible until now due to the high latency and low reliability of the underlying network. Similarly, command-and-control applications for the industrial IoT, such as connected machine tools, can use 5G to sense degradation or wear and tear in real time and take corrective action. Smart buildings can ingest and analyze data from massive numbers of sensors distributed throughout to perform structural and environmental monitoring, asset tracking, and process monitoring and optimization.
New opportunities to seize
The global Internet of Things (IoT) market will be worth $900 billion in revenue by 2025 – an almost threefold increase on 2019. However, we expect the revenue opportunity to contract by $200 billion compared to our previous forecast, on account of COVID-19. So far, telcos have been chiefly performing the role of connectivity providers for IoT. By exploring a greater share of the IoT value chain, forward-looking telcos can create new streams of high-revenue digital services.
In order to make this happen, telcos must escape the commoditization trap, seizing a more substantial role as service creators and providers for IoT-enabled industries. They must, in other words, venture “beyond the pipe.”
According to a GSMA forecast, 5G technologies are expected to contribute $2.2 trillion to the global economy between 2024 and 2034, unlocking benefits across industry verticals via cross-industry solutions and services. IoT-based platforms and services, underpinned by 5G’s capabilities, will make possible exciting new use cases in the healthcare, automotive, banking and other sectors.
Harnessing the changes
The IoT value chain comprises device-, platform-, application- and service-level stages, and each provides an opportunity for telcos to play a major enabling role. Cloud and analytics solutions cut horizontally across these stages of the value chain. Here, too, telcos can provide cloud-based services and data analytics solutions as value-added services. We recommend a three-pronged approach for telcos seeking to tap into a larger share of this composite value chain:
Serve broader, yet highly targeted, IoT requirements with network slicing.
5G has the unique capability to “slice” the telecom network into an end-to-end virtual digital infrastructure with characteristics precisely tuned to the demands of a specific industry use case. Network slicing is a key feature of 5G networks; it enables telcos to offer customized virtual networks (“slices”) on a common physical infrastructure across various industry verticals and various use case classes. This permits enterprise customers to enjoy connectivity and data handling tailored to their specific business requirements.
5G networks and the associated orchestration software allow the network operator to tune the slice for a specific use case by:
Creating/modifying/deleting a network slice.
Defining and updating a network slice’s capabilities and configuration.
Scaling resources assigned to it.
Differentiating policies and performance of different network slices.
Whether providing for low-bandwidth IoT device requirements; high bandwidth/low latency connectivity to transfer sensitive content for remote healthcare; or smart home management including streaming, smart content, smart devices and sensor networks, network slicing can deliver precisely tuned solutions that make vertical use cases possible. One example can be found in data security. As traffic is contained in a slice or a subnetwork, telcos can implement specific security measures and access-control techniques within the perimeter of the slice.
5G slicing also offers telcos a chance to maximize revenue by individualizing billing models. Under these tailored pricing plans, customer organizations’ cost would be determined by the size of the network slice they required.
Engage a new breed of partners to enter industry verticals.
Many telcos lack experience in applications and services for industry verticals. To help them expand beyond their role as pipe providers, we advise them to create joint solutions for connectivity-enabled services that engage the industry experience of carefully chosen partners who can complement and fill these capability gaps.
For example, the healthcare industry is beset by a lack of medical and para-medical professionals, relevant diagnostic equipment and timely delivery of care. As providers seek to offer real-time healthcare monitoring and remote diagnostics/consulting/surgery, telcos could assist by providing services with guaranteed service-level agreements to customers regardless of their location. Envision a 5G network slice that connects monitoring equipment and wearables with a network of trained professionals; such an offering could provide real-time alerts and data to the healthcare provider and lead to more timely patient care.
In the online gaming and sports industry, telco services could support new augmented and virtual reality offerings and real-time, live fan engagement analytics through an ultra-low-latency 5G slice. Moreover, they could couple these services with cloud and security platform solutions as joint offerings with partners.
Offer new data services and capabilities through “API-fication.”
Global telecom application programming interface (API) revenue is estimated to reach $368.25 billion by 2023. The telecom APIs are a means to enable the utilization of telco’s data or assets for other purposes in a controlled way. The unique assets that a telco possesses revolve around data: customer data (including their interactions and behavior-related data), network data, and so on. With open APIs and API gateways, telcos can enable upstream value-chain players, third-party platforms, applications and devices in the IoT world to pull data and use it for various purposes.
The tradeable asset for telecoms is data. With real-time data being generated by the IoT devices and connected things, the IoT data-as-a-service (DaaS) market is growing rapidly. Telcos could harness this data through ingestion and analytics platforms, then expose it through open APIs to third parties. In addition to IoT-generated data, telcos could also monetize all the customer and network usage data at their disposal within the ambit of the regulatory regimes like General Data Protection Regulation (GDPR), with appropriate data anonymizations. For example, telcos could create DaaS offerings centered around customer profiles, enabling media companies to generate contextual and targeted advertising with hyper-personalized recommendations.
Looking ahead, as telcos invest in building their 5G infrastructure, they should weave IoT enablement into their platforms from the ground up. They should examine open flexible MDM strategies linked to robust IOT business cases – and remain agile to capitalize on yet to be seen business cases. It is critical that telcos look at 5G and IoT as a holistic ecosystem play where everyone needs to see value, in order to build robust industry solutions.