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: