COVID accelerates interest in 5G, digital transformation, and IoT

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The COVID-19 pandemic has accelerated interest in 5G, a new study suggests.

The "2021 Reimagining the Future of Industries Study" released by EY found that nearly three-quarters (71%) of companies believe that the COVID-19 pandemic has accelerated existing digital transformation plans, and 52% of companies expressed more interest in 5G and the Internet of Things.

The research found that 74% of respondents from organisations across a range of industries believe 5G will represent an opportunity to reinvent their processes over the next five years.

Joongshik Wang, EY ASEAN Technology, Media & Entertainment and Telecommunications Sector Select Leader, said: “Just as 4G networks fundamentally disrupted consumer technology, 5G will be a game-changing technology for industrial transformation across all industries.”

“Access to 5G networks will be key to realising the potential of industrial disruptive technologies such as artificial intelligence (AI) and the Internet of Things (IoT), which will enable companies to establish market leadership,” he said.

“Those lagging behind will face strong barriers to entry and will have difficulty bridging the digital divide.”

As organizations continue to develop transformation plans, 65% of respondents believe that emerging technologies will play a key role in their business recovery from the COVID-19 pandemic. However, most organizations are cautious in their deployment, with only 17% of enterprises investing in 5G currently. Meanwhile, another 73% plan to invest within three years.

64% of enterprise respondents said they are struggling to find the right vendor to address their 5G strategy, while 74% said vendors must provide a more consistent 5G vision to build a robust investment case. Respondents’ priorities when selecting 5G vendors include the vendor must deliver business outcomes as a partner, rather than pure technology superiority (79%), and end-to-end solutions are the preferred vendor attribute (30%).

Asia Pacific leads in current and future investments

Asia Pacific organizations lead the Americas and Europe in 5G investment, with 78% of organizations currently investing or planning to invest in the next two to three years, compared to 71% in the Americas and Europe.

Meanwhile, 27% of APAC organizations report a significant increase in interest in 5G and IoT since the COVID-19 pandemic, compared to 13% in the Americas and 15% in Europe. Overall, the study found that European businesses lag behind other regions in recognizing the potential of 5G: 70% of businesses believe 5G will enter the core of their business processes, compared to 80% in APAC and 75% in the Americas.

Singapore, Thailand and Vietnam have also publicly announced their 5G network deployment plans, while Malaysia aims to launch its plan by the end of 2021.

"Despite strong support from Southeast Asian governments for 5G, the region still lags behind other markets. After all, telecom operators in Southeast Asia are still recovering investments from laying out 4G networks," Wang said.

“In addition, capital expenditure for 5G technology is significantly higher than that for 4G, given that 5G business use cases are still emerging and industry demand is still nascent. Without clear and established cost benefits, overall delays in the region can be expected,” he said.

If the status quo remains unchanged and enterprises fail to adopt 5G as a key enabling technology for their digital transformation plans, this will significantly affect the region's fundamental competitiveness. The resulting polarization of technology-driven productivity may lead to a widening digital and economic gap between developed and underdeveloped countries.

Wang said solving the complex and critical challenges of enabling 5G in the region would require more than just government support.

“The successful rollout of 5G requires collective buy-in, as well as coordinated investments and efforts from enterprises, telecom operators and all stakeholders across the ecosystem.”

Telecom operators lack digital transformation expertise

The report found that only 18% of respondents view telecom operators as digital transformation experts, a critical capability that must be improved as enterprises increasingly turn to 5G to drive their transformation agenda. The majority of respondents view IT service and application/platform vendors (51% and 65% respectively) as digital transformation experts.

When asked what their top priority is with 5G, 36% of respondents said they are exploring the relationship between 5G and other emerging technologies; 38% of enterprise respondents believe that the integration of 5G with existing technologies and processes is seen as the number one challenge.

Tom Loozen, EY Global Telecommunications Leader, said: “Organizations understand the importance of 5G, IoT and other emerging technologies; however, the capability gap between vendors is a key issue.

“Telcos should take steps to improve their transformation expertise, recognizing that enterprises want vendors to act as partners that provide end-to-end solutions,” he said.

"To this end, operators should explore new ecosystem positioning while paying attention to the business model reform opportunities that 5G can achieve." (Compiled by Cassie)