Outlook for 5G-Enabled Enterprise Solutions in 2021: The Potential Telco Game Plans

S. Soh

Summary Bullets:

  • While 5G-enabled enterprise solutions offer new revenue streams for telecom operators, they need new capabilities to develop and sell the full solutions, not just the carriage component.
  • Telecom operators will look to partnerships and/or acquisitions to gain the necessary competence to help customers in key industry verticals to transform their business operations.

Telecommunications companies (telcos) are at a crossroads as they rollout 5G and looking at how to monetize this investment. While they can continue to focus on selling carriage services, with the saturation of mobile subscription and competitive pressure, the hope of increasing ARPU from 5G connectivity remains elusive. Instead, many telcos are looking to enterprise solutions as a way to open up new revenue streams, leveraging 5G’s unique capabilities around ultra-low latency, reliability, and significantly higher throughput. Some will go even further and set new performance parameters with 5G. This shift inevitably involves moving into new territories for the telcos, including IoT, data analytics, cloud services, cybersecurity, etc., and bringing these capabilities together to solve business problems and prove outcomes. Emerging 5G enterprise solutions also tend to target specific use cases across various industries (e.g., smart factory, port automation, and connected utilities). Most enterprises do not know how 5G can help to transform their business and they rely on their technology partners to advise and show them the possibilities.

This means selling solutions such as 5G, IoT, and automation will require service providers to have a better understanding of their customers and the challenges within their industry. It will also mean showing an unprecedented willingness to partner with SIs, where the vertical knowledge set does not exist internally. It should be noted that major SIs are also building 5G capabilities and developing solutions with customers. For example, Infosys has 5G Living Labs in places such as Melbourne, Australia to combine 5G with other technologies (e.g., IoT, AR/VR and AI) and co-create solutions with customers, define the business case, and test the solutions. While most incumbent telcos would have relationships with customers across different industry sectors, they often lack industry depth or a capability that moves beyond a vanilla horizontal stack. In the utilities sector, for example, service providers need to understand the regulation and public policy (e.g., investment in green energy), existing infrastructure and assets, changes in electricity demand (e.g., electric vehicles charging), and the insights and data that are necessary to transform their operations (e.g., smart meters).

While the telcos own the 5G networks and have an edge over other service providers in delivering 5G-enabled solutions, the fact is many enterprise customers still look to system integrators and consulting firms as their partners for digital transformation initiatives. To go beyond network and communications related areas, some telcos have developed professional services capabilities to offer a wider range of digital solutions. For example, Orange Business Services now identifies itself more as a system integrator. The company has been building industry-specific solutions leveraging IoT, data analytics, cloud computing, and cybersecurity. Even outside of France, Orange has been able to win deals with the likes of McConnell Dowell in Melbourne, Australia.

There are other telcos with a similar game plan. The formation of NTT Ltd. combines the network and communications capabilities of NTT Communications with Dimension Data’s SI capabilities. Singtel has long had ICT capabilities within NCS, and the company has now expanded NCS NEXT into Australia to strengthen Optus Enterprise’s capabilities digital solutions locally (see NCS Launches NEXT in Australia and Joins Forces with Optus to Target Digital Opportunities,” December 4, 2020). Telstra has also created Telstra Purple, which brings together various ICT capabilities from acquisitions it has made in the past. The company has also recently acquired Epicon in November 2020 to strengthen its ITSM and add AIOps capabilities (see Telstra’s Acquisition of Epicon Adds a New Weapon to Its Managed Services War Chest,” December 1, 2020).

In 2021, telcos that have committed to 5G and have made significant progress in 5G deployment will look at best practices in other markets. They will need to build expertise, develop an ecosystem of partners, and work with customers on proofs of concept to demonstrate the business case for 5G solutions. It can be difficult to develop these capabilities organically because this is not just about adding headcount but also putting service catalogs, service management, new commercial models, and operational processes in place. Customer engagements from solution design to ICT buyer persona will be fundamentally different from the traditional carriage business. Many incumbent telcos in emerging markets across the Asia-Pacific region lack professional services beyond connectivity and communications. The successful telco will be able to carefully pick a few industries where it might want to position as a vertically integrated solution provider and others where it enables through a traditional connectivity play. Winning in this space, if early feedback from the market holds, is telcos offering 5G as a platform to enable an ecosystem that drives open systems, interoperability, and choices. For example, no single LP-WAN, especially NB-IoT, should be positioned as the panacea for all IoT use cases. Likewise, point products in IoT are often too prescriptive or expensive for the short shelf life they will ultimately enjoy.

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