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26 January 2021

Carriers target enterprise 5G revenues but face new competitive threats

Disruptive changes in the technological landscape can be mixed blessings for those previously well-established in parts of that domain. So it is for 5G in the enterprise sector. While 5G will improve the experience and spawn some new cases for consumers, there is widespread expectation that enterprises will drive faster growth and new revenues.

In fact, 5G is the first generation of mobile technology likely to have a greater impact on enterprises than consumers. Until now, mobile networks have supported growing rates of business-focused mobile broadband traffic, and have created security and data protection challenges for IT departments because of BYOD (bring your own device) models.

But now mobile networks will become foundational to many enterprises’ efforts at digital transformation. The main reason for the change is that, for the first time, wireless communications promises to deliver the ultra-low latency, high availability and performance previously confined to wired networks at relatively short range. This opens the door to new use cases where wired links were unfeasible in any case, such as operation of drones, for example, as well as autonomous driving.

The other factor is that the requisite technologies are coming together and converging under the banner of 5G, or more accurately the latest generation of wireless technology, because WiFi 6/6E is part of that mix. It is true 5G will be preferred to WiFi for some of the most demanding industrial IoT (IIot) use cases, such as drone control, where the very highest levels and performance and lowest latency are required, but in many scenarios WiFi 6 will present a fitting alternative, with the choice depending on other factors, such as cost and legacy.

Inhibited by the Covid-19 pandemic, deployment of those technologies has been sluggish over 2020. But that partly reflects previous overhype, which Rethink Technology Research identified in the case of AI in a 2018 report. We predicted then that there would be some casualties on the way before enterprise deployments really took off as the relevant technologies matured and coalesced after 2021.

Now there are clear signs of that happening, as BT has just identified in the UK. The operator pointed to various research indicating an uptick in 5G investment among enterprises over the next 12 months. It cited two of its own customers embarking on that path, such as Belfast Harbour deploying a private 5G network across its 2,000-acre site, and Worcester Bosch evaluating autonomous robots to transport materials and completed products around its boiler making factories.

Sweden’s Telia has also been talking up enterprise 5G with emphasis on its role in private network deployments, taking advantage of its wider Nordic base being at the head of the deployment curve. Many enterprises in its hinterland, which includes Estonia as well as Norway, Sweden, and Finland and Denmark, have been accelerating their digitization programmes during the pandemic.

This is happening particularly in healthcare, transportation and manufacturing, according to the operator, which also argued this is leading many enterprises in those sectors towards private 5G and away from WiFi as well as low power WAN protocols such as LTE-M or LoRaWAN.

“We can expect to see a flurry in this area in 2021, where large-scale dedicated mobile networks are being deployed in factories, timber yards, ports, healthcare facilities, and other similar places, replacing traditional Wi-Fi, LoRaWAN and Sigfox networks, to connect applications and systems that are part of core business processes and that require robust and disruption-free connectivity,” said  Magnus Leonhardt, head of innovation at Telia Sweden, quoted recently in Enterprise IoT Insights.

Leonhardt cited a recently announced multiyear deal with Swedish mining firm Boliden for commercial dedicated mobile network across its open-pit copper mine in the north of Sweden. That network is currently on 4G technology but ready for 5G to monitor and control machinery.

This may signal a trend towards 5G for these high-performance, mission-critical applications, while LPWAN will still maintain its hold for a lot of IoT monitoring applications in the field, and WiFi for more general corporate productivity and communication.

Inevitably though, operators are going to be fighting for business in this private 5G arena with other players including cloud companies, but also their traditional infrastructure providers in cahoots with enterprise customers. This threat of being cut out of the loop in the IIoT has been most evident in Germany where a number of major firms in several sectors, including automotive, chemical and general manufacturing, have been creating their own private networks.

These include Volkswagen, BMW Bosch , BASF and Deutsche Lufthansa, so this represents a major defection. Reasons cited for omitting telcos from these 5G private networks is lack of readiness, along with desire for control over both performance and security.

The onus then is on operators to accelerate their deployment of 5G and especially network slicing, which will enable them to hive off spectrum for private offerings within their public infrastructures with similar guarantees over quality of service and security.