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24 August 2021

MNOs will face enterprise 5G challenges from operators in adjacent markets

We have often analyzed how telecoms operators will need to expand their services portfolio if they are to justify the investment in 5G networks and in the migration to cloud-based architectures.

But identifying new services that rely heavily on 5G, in order to monetize the new networks effectively, is not the only challenge – tough as it is for operators that have built their success on generic voice and data rather than a broad diversity of targeted offerings.

With most of these new opportunities lying in enterprise, IoT and B2B sectors, rather than with budget-conscious consumers, operators will also need to adapt to a new ecosystem. Very few will be able to address a significant number of enterprise use cases without the help of new partners with expertise in the vertical industry or in cloud/IT applications. Dividing up risk and reward, and maintaining a high value place in the value chain, will be an early challenge of enterprise 5G.

And where there are new partners and customers, there will also be new competitors, some with better-established contacts and expertise in industrial segments and cloud-centric services. Some will be completely new entrants to telecoms network services, such as hyperscalers or private network operator start-ups. Others will be companies that have been active in other areas of the telecoms/media business, and are now targeting the enterprise 5G market head-on.

They may have some of the conventional MNOs’ disadvantages, such as lack of track record in strategic enterprise technology deployments, but they will also bring a fresh view on partnerships, asset ownership and go-to-market, with less of the legacy burden of ageing cellular networks and business models. In this week’s Wireless Watch, we look at three examples of operators that are entering the 5G enterprise space sideways – a satellite operator (Inmarsat), a pay-TV provider (Dish) and a technology services company (NTT).

All of these are investing in cellular technology for the first time, directly in the first two cases, and indirectly in the third (NTT will use the network of its sister company, MNO NTT Docomo, but as a co-investor rather than merely a customer). This shows how control of advanced connectivity is becoming central to many advanced enterprise services models, and for many companies, it will not be sufficient to ride on top of a telco’s 5G network – a higher level of ability to shape the network and its capabilities to the enterprise customers’ requirements will be advantageous. That will see hyperscalers and others investing in their own connectivity, or in closely controlled partnerships, and that may open up opportunities for strategic alliances for some MNOs.

But they should not ignore the operators that exist closer to home, in adjacent TV, satellite, fiber or IT segments – either as partners, or as future competitors in the most important 5G markets.