Can the 5G industry really succeed?

[[419120]]

Last month, the Ministry of Industry and Information Technology and ten other departments jointly issued the "5G Application "Sailing" Action Plan (2021-2023)", which attracted widespread attention from both inside and outside the industry.

The release of this action plan is actually a signal that the key task of promoting 5G in China will shift from large-scale network construction (the number of 5G base stations in China is estimated to have exceeded 1 million) to the implementation of industry applications.

In fact, the implementation of 5G industry applications has been continuously promoted for more than two years, starting from the issuance of 5G licenses.

However, overall, the implementation of 5G industry applications so far is not very successful and can only be described as satisfactory.

Many people believe that 5G has few actual application scenarios and low user demand, so it is difficult to succeed. Others believe that 5G technology has been deliberately expanded and cannot support the needs of industry users at all, and they have to wait for 6G.

Are these views correct? In this article today, I will talk about my views on the implementation of 5G applications based on my own observations and thoughts, for your reference.

The key to 5G implementation lies in scale

From an optimistic perspective, we have some successful 5G implementation cases (more than 1,000 commercial contracts) in the fields of industrial manufacturing, ports and docks, mines and oil fields, energy and electricity, and urban governance. Some of these cases are image projects, but most of them are real commercial projects that have brought visible efficiency improvements and cost reductions to the owners, as well as returns on investment.

These projects have strengthened the industry's confidence in 5G.

However, we need to be aware that many of these early 5G pilot projects are projects that concentrate the resources and strength of Party A and Party B or even multiple parties (corporate users, operators, equipment manufacturers, governments, etc.), and are completed by Party A, the most powerful company in the industry with the best software and hardware foundation.

In other words, with unity, success is inevitable.

The success of these projects only means that 5G has passed preliminary verification, but it does not mean that 5G will definitely achieve full success. Only when most companies have successfully implemented 5G and achieved "common prosperity" can we say that 5G is successful.

Therefore, the key to the success of 5G lies in how to lower the technical and financial thresholds of 5G so that more companies can own it, and how to standardize all aspects of 5G application implementation to facilitate rapid batch replication in the industry and form economies of scale.

What are the main issues with 5G implementation?

Next, Xiaozaojun will analyze the current problems that are hindering the implementation of 5G applications from the perspectives of enterprises, operators, equipment vendors (software, hardware, solution service providers), and governments.

First of all, the enterprise.

Enterprises are the main body for the implementation of 5G applications and the core of the entire project.

The most important thing for enterprises is to figure out whether they have the ability to own 5G.

Digital transformation is an important goal for our entire society and country. Under this big goal is the digital transformation of industries and enterprises. Enterprises do not use 5G for the sake of 5G, but for the sake of digital transformation.

The digital transformation of enterprises is a marathon. Before signing up for this marathon, enterprises must conduct a complete "health assessment" and fully and clearly understand themselves. The assessment dimensions include: business model, organizational structure, process system, capital reserve, process level, supply chain, warehousing and logistics, talent reserve, etc.

Taking talent reserves as an example, client companies must have their own digital departments, sufficient digital talents, and a full understanding of existing systems in order to communicate with 5G service providers on an equal footing and cooperate to complete projects. Otherwise, it is easy to be led by the other party. Even if the project is completed, there is no way to take over operation and maintenance.

After evaluating and confirming that you are capable of 5G and digital transformation, the next thing is to patiently make the top-level design of digital transformation.

Digital transformation is a systematic project, and the most important thing is top-level design. In other words, when we build a house, we should first design the blueprint, lay the foundation, build the frame, and then lay the bricks.

The top-level design is the blueprint. 5G is a communication technology, which we can understand as a special kind of brick. However, a brick is a brick, and its priority is weaker than the blueprint.

Moreover, the top-level design should be centered on computing power. Cloud computing, big data, and AI technology are the focus of digital transformation. Connectivity (communication technology) is important, but not the core.

When we carry out digital transformation, we should make long-term plans and advance step by step, just like the Shenzhou manned space program. We should not just follow the trend every time a new technology or new concept comes out. After a noisy movement, only a mess is left.

Whether or not there is 5G is secondary. Having a top-level design for digital transformation and following the blueprint step by step is the key to success for an enterprise.

The road to digital transformation

Then there are the operators.

I personally believe that most provincial and municipal operators in China currently do not have the business capabilities to support digital transformation and the implementation of 5G applications.

First of all, it is a people problem.

Operators in different regions of the country have very different levels of economic development and regional culture, and their employees' ability and professional qualities vary greatly. Some operators' employees are proactive, while others are passive and lazy, and have lost the ability to actively refresh their knowledge and cognition.

As state-owned enterprises, operators have stable jobs, so they attract a lot of talent. However, operators are not good at tapping the talents, so it is difficult to give full play to the value of talents, and a lot of talents are wasted.

Some incompetent operators' employees, when they go to government and enterprise clients, not only fail to negotiate cooperation, but are also looked down upon by the clients. How can they sell 5G solutions and products when they don't even know what 5G is, let alone the industry characteristics of the clients? They become speechless and blush when the clients ask them a few questions.

Secondly, operators are still in the early stages of the transformation from toC to toB.

Operators have been doing more toC selling cards and promoting packages. They have also done toB, but they mainly make money by selling dedicated lines. In other words, operators are good at selling and promoting fixed products.

5G toB business is very broad in the field of industry, including finance and securities, education and medical care, industrial manufacturing, logistics and transportation, warehousing, culture and tourism, agriculture, forestry, animal husbandry and fishery, etc. Each industry has its own business model and industrial structure. If you want to do business in this industry, you must study the industry in depth and provide deeply customized products and services.

The provincial companies of operators, especially those in economically underdeveloped areas, do not have the ability to do so. They prefer to provide fixed products (such as packages, dedicated lines) and let customers adapt to the products and packages. The forms of services they provide are also relatively simple.

ToB business means that you have to make money by kneeling down to make money by lying down. All the money you earn is hard-earned and the price you pay is very high. Operators may not be able to complete such a transformation.

Third, the division of labor between the group and provincial companies.

The current organizational structure of operators is suitable for the operation of heavy asset networks, but not suitable for the development of toB business.

5G toB services require very close customer relationships with local industry clients, as well as timely communication with and even on-site presence at customers. Therefore, operators at the provincial, municipal and city levels are critical and require very high capabilities.

However, as mentioned earlier, the business capabilities of provincial, municipal and city operators are relatively weak, their understanding of 5G industry application scenarios is insufficient, their understanding of customer industries is insufficient, and their research on 5G technology involving cloud platforms, big data, and AI is not in-depth. When serving government and enterprise customers, integrated operator marketing personnel need strong support from the group.

At the operator group level, if solutions, cases, documents and technical support cannot be fully provided to local areas, provincial companies will have to fight alone and will not be able to cope with the diverse needs of government and enterprise customers.

When dealing with B-side users, operators must not only consider concentrating their strengths and focusing on the industry's top projects and customers, but also have the ability to replicate in batches and fully empower grassroots units to help them complete project delivery in more client companies.

When providing support to provincial companies, the group should not only provide support from the market and solution dimensions, but also give full play to the advantages of technology, build a unified and powerful computing, management, and operation and maintenance platform, and improve support efficiency.

In short, operators at all levels in provinces, cities and municipalities are the key to the implementation of 5G applications. Only when operators can successfully empower from top to bottom and the support system can operate efficiently, can 5G be fully developed.

Next up are the equipment vendors.

The equipment vendors here refer to the providers of 5G digital transformation software, hardware and comprehensive solutions.

As technology providers, equipment vendors have advantages in technology. They are the second party and have a natural motivation to promote commercial implementation (order contracts are performance).

For them, the most important requirement is to lower the technical threshold and price cost of the solution and improve the maturity of the technology. If the product is easy to use and cheap, more customers will naturally adopt it.

In addition, we must guard against oligopoly among technology providers to avoid technology always being concentrated in the hands of a small number of manufacturers, which would affect market fairness.

An open industry ecosystem is conducive to reducing overall costs. We should encourage the development of small and medium-sized enterprises in niche areas and support them to make the ecosystem more prosperous and everyone has a reasonable profit margin.

Finally, let’s look at the government level.

The government’s most important responsibility in promoting digital transformation is to formulate industry norms and standards, support industry start-ups, and promote healthy development.

At present, the government has accelerated the improvement of the digital standard system and specifications of various vertical industries. In the future, it should consider formulating specific and detailed digital guidelines based on the progress of digitalization of industry benchmarks to guide industry enterprises in designing digital top-level architecture.

Many companies think of government funding when they see the government. In fact, spending money is a very easy thing, but it is difficult to achieve the desired effect. It is not a good thing if the projects invested by the government are directly taken away by operators and oligopolistic equipment manufacturers. Helping in times of need is more valuable than icing on the cake. Funds should be used to support small and medium-sized enterprises and weaker industrial links.

In addition, I would like to say that our country has overemphasized the role of operators in digital transformation and 5G implementation. We can appropriately consider giving enterprises more network choices and autonomy. At present, we have not allocated 5G private network frequency bands, and the policy on related technologies for enterprise self-organized networks is also vague.

Under the premise of safety and control, can we consider not keeping all frequency band resources in the hands of operators? We can release some frequency bands for enterprise private networks. LoRa core technology is from the United States, so we should encourage domestic LoRa technology with independent intellectual property rights, so that enterprises and equipment manufacturers can directly connect and establish enterprise private networks where "data does not leave the factory" and explore the feasibility of this aspect.

Since the cloud does not necessarily need to be provided by an operator, why must the network be provided by an operator? Even if the network must be provided by an operator, it can be used for export and there is no need to use it within the factory.

Conclusion

The above are some of my thoughts on the implementation of 5G applications. Some of these ideas are immature and are for reference only. You are welcome to leave a message at the end of the article for discussion.

5G is just a part of digital transformation and an attempt. There is no need to worry too much about its success or failure.

I personally think that our country currently does not have the foundation to fully succeed in 5G, whether it is software, hardware or talent. The process of trial and error is the process of growth. In about 5-10 years, we will usher in a real explosion of 5G+AIoT industry applications.