Enforced changes in work patterns and the shifts to remote working imposed by the COVID-19 pandemic on large sections of the global economy has accelerated the pace of digital transformation that was already underway.
Despite the uncertainty caused by the pandemic, service providers continued to switch on 5G. Commercial 5G deployments with leading service providers took place during 2019 and 5G subscriptions have already passed 500,000.
Trends in e-health and telemedicine, pervasive video communications, e-learning, video streaming, gaming and online collaboration have seen providers of these applications and services, and the underpinning infrastructure providers enjoying a boon in demand and a rising tide of investor confidence.
While the hunt for a vaccine has naturally bolstered investor confidence in Healthcare and Pharmaceuticals, the tech sector has emerged as one of the beneficiaries of the lockdown and an even more dominant player in the global S&P 500.
Social distancing and the pervasive use of online tools from video conferencing today, to augmented and virtual reality tools in the future, will transform many workplaces, including factories and offices. The introduction of 5G technologies prior to the global pandemic offered manufacturers and telecom operators the chance to build smart factories and truly take advantage of technologies such as autonomous collaborative robotics, Artificial Intelligence, Augmented Reality for troubleshooting, and the Internet of Things (IoT).
As consumer needs, from cars to clothing and detergents to drinks, have become personalized, manufacturers are reconfiguring their aged-old factories designed for mass production, with new, wireless-enabled and sensor-driven plant and machinery to facilitate the mass customization the world now demands. In the process, manufacturers are ripping out cables for greater versatility on the factory floor and to maximize the efficient use of space and increase productivity.
For operators, 5G’s promise of accelerating the digitalization of enterprises opens up new revenue streams with high growth from traditional consumer connectivity and voice businesses well behind us. Alongside energy and utility, manufacturing represents one of the most significant sectors for new revenue potential for operators addressing industry digitalization with 5G technologies. 5G commercial IoT connections in automotive, augmented and virtual reality, smart cities, smart homes, and digital health wearables will amount to more than US$8 billion in billed operator revenues.
The next generation of manufacturing
5G technologies provide the network characteristics essential for manufacturing. Low latency and high reliability are needed to support critical applications. High bandwidth and connection density secure ubiquitous connectivity. These are requirements that manufacturers currently rely on fixed-line networks. The mobile 5G technology will allow for higher flexibility, lower cost, and shorter lead times for factory floor production reconfiguration, layout changes, and alterations.
Ericsson’s market research identifies most crucial manufacturing use case categories that 5G will enable operators to address, including:
- Industrial control and automation systems: Automation and control of robots and factories and smart logistics systems. Industrial automation is one of the industry verticals that can benefit substantially from 5G, including, for example, increased flexibility, the reduction of cables and support of new use cases.
- Planning and design systems: Simulation of factory process and training support. Augmented Reality (AR) for troubleshooting to help mitigate the cost of breakdowns – extra components, material, labour, and buffers – and reduce production downtime.
- Field devices: Applications to gather and monitor data. Enhancing connectivity and keeping workers continuously in the loop will enable manufacturers to acquire and access much larger amounts of data – at far greater speeds – more efficiently than ever before.
Opportunities for Service Providers
In a constantly changing environment, telecom operators require the best technologies to support their business needs. The onset of 5G will enhance many existing use cases as well as create new use ones that cannot be fulfilled by current technologies. This, in turn, requires evolving the network to deliver low latency and high reliability that are key to addressing manufacturing use cases.
By using 5G to meet key challenges in digitalization for industries such as manufacturing, telecom operators can act as more than network developers, addressing new revenue streams by becoming service enablers and even service creators. Digitalization of industry-specific business processes creates a vast opportunity for telecom operators to offer their customers not only ICT services but also a new strategic direction using 5G technologies to enhance efficiency and competitiveness – laying the foundation for growth.
But this cannot be treated like the commoditized business of consumer voice and broadband connectivity and requires new business models if operators are to compete in the upper layers of the value chain. Success will depend on deeper and closer partnerships along with significant investments in understanding the needs of enterprises and working in close collaboration with an ecosystem of device, platform and solution vendors.
The time to act is now. There’s no need to wait to start testing new business models, capture emerging opportunities such as IoT, and create additional revenue streams. By experimenting and rethinking what role to take, operators will be able to secure the benefits of 5G. Understanding your customers and different value chains in 5G will be imperative for building your future business.
By Ekow Nelson: Vice president of Ericsson Middle East and Africa