Four key revenue growth opportunities from enterprise 5G

Competitive market dynamics are driving communication service providers or CSPs to build out 5G public cellular networks amidst a great deal of uncertainty on what incremental revenues that investment will drive for them.

Although 5G has been the first cellular standard designed with business needs in mind from the start, its industry-specific use cases are still marginal. A growing number of companies are exploring the potential of 5G to deliver better outcomes to specific business problems. However, few have decided to invest in private 5G.

There are several reasons many companies are hesitant to invest in 5G now. Many enterprises remain unsure of the use cases in which 5G will deliver differential business outcomes or better return on investment compared to alternative wireless or wired connectivity options. Companies may believe the technology and associated ecosystems still need further maturity.

Some enterprises mention that they lack a broad enough offering of industry-specific 5G modules for their machinery and tools. Others have concerns regarding end-to-end security and data privacy in 5G networks. Immaturity is also perceived with regard to industry-specific ecosystems, 5G spectrum allocations, public network rollouts (especially in the midband) and commercial offerings.

Therefore, 5G for enterprises is only at the beginning of its journey. As ecosystems of industry-specific 5G solutions further develop and operators deploy advanced 5G capabilities in their networks, the doors will open for true enterprise 5G monetization by the telecom industry, which is gathering this coming week in Barcelona to discuss these and other issues at MWC 2023, the former Mobile World Congress.

Four key areas emerge as key revenue drivers for CSPs investing in 5G for the enterprise:

Fixed wireless access

Enterprise wide-area networks are undergoing profound change driven by increasing cloud adoption, leverage of the internet for branch connectivity and software-defined WAN implementation. Traditionally, branch locations have been connected via various wired access transport services. Occasionally, 4G is implemented as a WAN access technology, primarily to increase site resilience with physical path diversity, for temporary enterprise locations or for rapid-install use cases. Cellular connectivity is gradually expanding in applicability within the mix of underlay connectivity options in SD-WAN use cases. The enhanced performance of 5G can further broaden these opportunities.

This is because 5G can offer more capable connections than what was offered by previous cellular standards and other wireless services. As a WAN access technology, 5G can offer improved quality of service compared with 4G. Furthermore, depending on frequency and radio propagation conditions, it can be fast enough as an alternative to DSL and fiber, and it can be faster than Ethernet and cable connectivity. Gartner expects the share of enterprise sites using 5G as fixed wireless access option in their WAN to grow from less than 1% in 2021 to 10% in 2025.

Private mobile networks

Enterprises in sectors such as manufacturing, transportation and logistics, mining and others are increasingly assessing the concept of deploying their own private mobile networks or PMNs in their working environments and production settings. In the past, the potential for PMNs was limited by spectrum availability, tight regulation, expensive proprietary equipment, complex deployment and management, an immature ecosystem and limitations from the 3GPP standards specifications. With the development of the 3GPP standards, the allocation of radio spectrum for enterprise in more countries and emerging ecosystems for every solution component, these limitations are now starting to blur.

While 4G/LTE still dominates the PMN market, Gartner predicts that by 2025 year-end, there will be at least 3,000 enterprise locations with in-production or proof-of-concept 5G PMN deployments worldwide. The main drivers for enterprise 5G PMNs include:

• Enhanced network flexibility in dynamic environments where fixed cabling is costly to reconfigure or relocate.
• High-bandwidth, low-latency use cases where companies combine 5G high speed with multiaccess edge computing for local data processing and computing.
• Greater degrees of autonomy and customization to deploy, configure, control, manage and upgrade the network to meet an enterprise’s exact specifications and evolving needs.
• Improved reliability and more predictable performance than using shared resources from a public mobile network.
• Enhanced privacy and security by ring-fencing the enterprise data to the perimeter of the private network with 5G authentication and full separation from wider public mobile networks.

Beyond private use, PMNs can also create new business opportunities for companies operating facilities such as airports and warehouses where the company can sell the connectivity to their vendors or automate business and logistics processes. As enterprise PMN adoption accelerates, 5G will become the technology of choice for use cases where existing wireless technologies cannot meet the requirements of capacity, availability, latency, density of connected devices, reliability or throughput.

Internet of things

Gartner predicts that enterprise spending on 5G for “internet of things” communication services will exceed $13 billion worldwide in 2030. The automotive industry will be, by far, the largest market opportunity for 5G in IoT use cases. Use cases will span automated driving vehicles, assisted driving services and telematics, collision avoidance for pedestrians, and enhanced navigation and infotainment services. 5G IoT use cases in other industries will also add to the opportunity in the long run. To address 5G IoT opportunities, CSPs should focus on select vertical markets to build sustainable competitive differentiation.

Mobile communications

So far, CSPs have struggled to position 5G premium costs. Most consumer and enterprise applications perform well over 4G/LTE networks with extensive coverage and enough capacity in most locations. This leaves little incentive to pay extra fees for 5G mobile services other than increased spending associated with higher data allowances. Further, 5G network coverage is still patchy, especially in the midband, and there is a large installed base of non-5G devices.

As midband coverage grows, standalone core is deployed and the installed based of 5G devices becomes predominant, CSPs will have a better chance to monetize the public 5G network for enterprise mobile communications. By 2024, 60% of smartphones produced will support 5G, and CSPs should be better prepared to exploit the rise of remote and hybrid work with bundled services. 5G provides an opportunity for CSPs to renew enterprise mobile service offerings in terms of services, packaging and pricing associated to enterprise use cases such as remote work, videoconferencing and collaboration services or, more broadly, digital workplaces.

Gaspar Valdivia is a senior director analyst at Gartner Inc. focused on the enterprise networking services market, particularly on wide-area networks, internet and private cloud connectivity as well as the adoption of 5G for enterprise services. He wrote this article for SiliconANGLE.

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