5G Development Trend Survey

Overview

The COVID-19 incident in 2020 did not weaken the global market's demand for 5G networks. The latest survey shows that the biggest challenge facing all market participants is still to find applications that can be profitable on public and private 5G networks. Most 5G network suppliers believe that real-time video streaming is the most attractive 5G application.

After the COVID-19 outbreak, 5G service providers were pleased that one-third of enterprises accelerated their 5G plans or found new use cases. The bad news is that more than one-third of large enterprises are confident in developing their own 5G strategy rather than turning to a provider for help.

Key findings

• Nearly half of operators have plans to deploy dynamic spectrum sharing (DSS), but only one-third have committed to deploying Open RAN, and one-third have no plans to deploy 5G standalone networking.
• More than half of operators that have deployed 5G said that finding a profitable business case remains the biggest challenge.
• Seven out of 10 operators believe that investing in NFV (network functions virtualization) and MEC (mobile edge computing) will help them ensure the success of their 5G services.
• Nearly a quarter of enterprise users want to customize the deployment of 5G networks, and among companies with revenue exceeding $1 billion, this proportion reaches one-third.
• When companies need to partner to launch 5G services, they are most likely to work with network equipment suppliers. Among them, large companies prefer larger network equipment companies, while small companies trust operators the most.
• In the future, six out of every ten 5G networks deployed by enterprises may be deployed inside buildings.

Origin and region of the survey subjects (Figures 1 and 2).

Recommendations for 5G network operators

• Pursuing value beyond speed. Enterprises deploying 5G are pursuing different goals than previous generations of mobile users. Rather than focusing on providing faster connectivity as a sustainable value proposition in isolation, they are investing in and creating new ways to interact, conduct business, and make money.
• Support your super fans. The survey found that the biggest supporters of carriers are small companies (typically employing a few hundred people), not large companies with thousands of employees. Providing 5G solutions to large population segments may bring in revenue faster than offering customized services to large enterprises.
• Build a partner ecosystem. Based on previous experience in the IoT market, operators do not need to do all the work. The most urgent task now is to identify the best partners in the enterprise vertical field and ensure cooperation with partners with deep vertical industry or field expertise.

Suggestions for 5G equipment manufacturers

• The market momentum will be wasted. 5G network equipment suppliers are still the most trusted partners of operators and enterprises. Equipment manufacturers can only ensure their market position by demonstrating their excellent technology and providing pragmatic practical guidance.
• Sell ​​solutions, not technology. Operators and enterprises must understand that the successful operation of 5G depends on the integration of technical solutions across multiple fields and systems.
• Invest in the channel. As global demand grows, providing professional services and knowledge is critical to customers' smooth use of 5G. Finding partners who are skilled in design, construction and implementation is now a priority. Those with managed services skills are also very important.

Advice for Businesses

• Be cautious about setting high expectations for 5G. The most valuable vendors can provide pragmatic decisions that fit your organization, not just technical considerations. For some cases, a step-by-step evolution to 5G is better than a one-step strategy. Be kind to vendors who are willing to take the time to understand your business and strategic goals.
• Skills for value integration. The enterprise digital environment is diverse and chaotic. Vendors that can achieve the transition between IT and OT are rare, but very valuable.
• Look for ecosystem builders. Enterprise 5G success is all about connecting people, processes, and technology. When selecting partners, it’s just as important to understand who they know as what they know. Given the breadth of 5G’s impact, the smartest vendors will take time to plan ecosystems and build partnerships among solution experts and other market stakeholders.

COVID-19 has accelerated the development of 5G. Many 5G market participants remain committed to delivering this technology on time. COVID-19 has affected everyone, but it has affected different organizations differently (see Figures 3 and 4).

• Just over a third of network operators said COVID-19 had impacted their rollout plans or further investments.
• Equipment vendors, meanwhile, appear to be the most resilient: only one in ten reported that their plans had been delayed. This is partly because more vendors are diversifying their risk by exploring enterprise vertical opportunities and becoming less reliant on winning operator spend.
• Meanwhile, one in five companies said their existing plans were delayed, but more said COVID-19 had helped them identify new use cases or accelerated the need for 5G. Integrators and other professional services firms appear to be the most affected: nearly 40% are scaling back 5G activities. Many manufacturers have yet to find their place in the 5G market.

5G service providers face complex choices

Open RAN is a disruptive field, which includes Open RAN and O-RAN organizations. Its direction is to change the way radio access networks are provided and built, including full baseband virtualization, open fronthaul, and mixed wireless and baseband providers. Supporters believe that the benefits to operators are more suppliers, better solutions, faster development of new features and business adaptation. However, the survey found that many operators are still reluctant to publicly commit to supporting Open RAN, even though they are already deeply involved in private.

It’s worth emphasizing that Open RAN variants do exist and some respondents have considered them. Technically, some operators do run some Open RAN networks today, but they are not virtualized and do not use the fronthaul specified by O-RAN. Some Open RAN trials use closed fronthaul and a single RAN provider, such as AT&T.

The survey showed that one-third of respondents said they would deploy Open RAN, but two-thirds had not yet made a decision (Figure 5).

• 54% of operators committed to providing Open RAN plan to start deployment in 2021. One-fifth of Open RAN supporters claim to have started some level of deployment. The rest will deploy in 2022, 2023 or later.
• The region with the most support for Open RAN so far is the Americas, particularly among North American operators. One in five operators in EMEA and one in three in APAC have announced firm timelines for adopting Open RAN in the survey.

• The timetable for 5G standalone networking is getting longer. The survey results show that operators have different views on the timing of launching 5G standalone networking. One-third of the responses are still uncertain. Less than 20% will be deployed in 2020, 22% in 2021, and 28% in 2022. The survey results show that European and Asian operators will deploy 5G standalone networking the fastest, accounting for 45% and 43% respectively, and are expected to be deployed by the end of 2022.
• Dynamic frequency sharing (DSS) has the most support. Even if the solution is proven, the technology will not be implemented quickly. DSS is a breakthrough development because it allows operators to use the same spectrum when adopting different radio access technologies, such as 4G and 5G. It is an elegant and timely solution to a long-standing challenge facing operators: how to maximize the return on investment in limited spectrum. Nearly half of the respondents have committed to a launch date. But the timetable varies greatly. European operators are the most eager: 45% hope to deploy between now and 2023.
• Operators emphasize edge computing and network virtualization (NFV). Operators have a subtle idea that more than just 5G equipment is needed to successfully complete 5G deployments. In terms of complementary technologies, the survey results show that operators believe that two technologies dominate: network function virtualization and mobile edge computing (Figure 7). Interestingly, when operators emphasized the importance of edge services in 5G success, enterprises also raised a similar question, with edge computing being more important as a complementary technology. Compared with IoT, AI and big data, edge computing services may be the next area for enterprises to conduct training in the future.

Despite the promise of 5G and the excitement surrounding the technology, how to profit from 5G remains a mystery. Which customer segments are the most profitable? Equipment vendors and integrators believe that network operators and large multinational enterprises are expected to be the main sources of 5G revenue (Figure 8).

The extent of the current competitive conflict remains unknown. For suppliers, the question is how to turn potential conflict into cooperation, for example in hot areas such as private mobile networks.

Multinationals are the main target. For operators, large multinationals are also the main target. Consumers are not far behind in terms of revenue potential. 60% of operators said their 5G future depends on striking deals with large companies. According to our survey, only one-third of large enterprises currently consider operators to be trusted 5G partners.

Developing a profitable business case remains a top priority for operators (Figure 9).

Other challenges: availability of 5G equipment, complexity of network construction, availability of spectrum.

These issues are to be expected; any new technology is subject to similar uncertainty and concerns when it is introduced. However, the stakes are much higher now, and the social and economic impacts of 5G, the diversity of its beneficiaries, and the fierce competition are making those making 5G decisions feel stressed.

Shaping the value proposition. Rather than betting everywhere, operators look at how operators in different geographies rank the consumer applications expected to drive 5G uptake (Figure 10).

In the Asia-Pacific region, where esports is highly developed, gaming ranks highly. But European operators — reflecting on their recent lockdown experiences — cited on-demand content.

Manufacturing has attracted more attention. Enterprise 5G decisions also bring challenges. As other OMDIA studies have found, the trillions of dollars in benefits expected from 5G are unevenly distributed among industries (Figure 11). But manufacturing is generally ranked first, followed by IT, media, and broadband.

Respondents were more divided about the energy, utilities and mining sectors: operators were interested, but equipment suppliers were less enthusiastic.

National conditions determine 5G

Developing a successful 5G strategy is proving to be a complex business. This is in part because of the varying policies, economic developments and demographics of countries, as well as the varying complexity of rollouts. Take the survey results with caution.

For enterprise 5G, the makeup of the local economy is particularly important. Mining is a major industry in Australia, Brazil and China, providing attractive opportunities, but this is not the case in other regions and must be analyzed on a country-by-country and industry-by-industry basis.

Buy 5G service

Most companies are still in the exploration phase. While 80% of companies said COVID-19 did not stop them from implementing 5G, the reality is that most companies have not yet established a concrete investment case. Researching and evaluating 5G capabilities remains the main activity for most of the companies surveyed.

Early 5G adopters have high expectations. In fact, the motivations of enterprise 5G deployers are also very important: the reasons for investing in 5G are mainly centered on breaking new ground. These early adopters are seeking new ways to interact, new business models, and ways to make money (Figure 12), an ambitious and complex set of technical requirements that far exceeds the usual aspirations of enterprise technology buyers.

5G vendors should take note: Successfully selling 5G to such enterprises will require more than just technical expertise. A closer and more nuanced understanding of the challenges, business processes, and how people work across industries is needed to meet expectations and earn trust in an increasingly competitive market. And, 5G vendors in particular must be willing to co-create in order to achieve the business impact that enterprises want to achieve.

Choose a trusted partner

The enterprise 5G ecosystem is fluid and evolving, but some patterns are emerging, particularly in terms of selecting the enterprise’s preferred partner. This is a key consideration given the increasing civilian availability of spectrum in some countries, enabling enterprises to build their own private mobile networks. Will they do it alone? The survey results paint a mixed picture.

Network equipment suppliers are currently the main partners of enterprises, as enterprises have run into financial difficulties due to investments in 5G (Figure 13).

It is noteworthy that the next group is a close-knit group of organizations: it includes industry solution experts, private mobile network experts and public network operators. This finding confirms that the current wave of enterprise private 5G deployments involves the collaboration of multiple partners, with equipment suppliers most likely to be the main contractors.

Large enterprises favor their own 5G. Among enterprises that have not yet deployed public or private 5G, different patterns are evident, which may unsettle some 5G market stakeholders. First, there is a clear ambition among the largest enterprises to have more command and control over 5G. More than a third of enterprises with revenue of $1 billion or more believe they are best placed to execute their 5G strategy themselves.

If they must partner, their first choice is cloud services like AWS. The second tier of partners for large companies are operators and integrators, and this division of responsibilities may limit the total contract value.

Mid-sized companies are most loyal to telecom companies. SMEs typically have revenues under $100 million and hundreds of employees. Their needs are complex, but they have fewer internal technical resources than large companies, so they look outside for assistance. For 5G, their most trusted partner choice is the carrier.

5G packaged solutions for special applications are very attractive to this segment and some service providers offer such solutions, including Vodafone. These mid-sized companies include many manufacturing companies, which are also recognized as top vertical players in 5G.

Deploy enterprise 5G. People are the top priority for 5G at present, communication between shop floor employees is the top priority, and industrial control is the second (Figure 14).

Those considering 5G for the future have another focus: improving communications within buildings. Enticing more people back to offices, stadiums, stations and other venues to create safer, smarter and more enjoyable spaces with 5G. This is a big discovery for established vendors like Honeywell, Siemens and Schneider. Like it or not, 5G brings the potential for new partnerships and service opportunities.

Don’t overlook the human element in 5G. Wi-Fi is the primary technology 5G is replacing, but some also mentioned private LTE and industrial protocols. Enterprises want 5G to support new applications: the top three are real-time video streaming, augmented reality, and enhanced security monitoring.

It is clear from deployment trends that enterprise 5G is not just about connecting devices and machines, but also about helping employees be safer, more powerful, and more creative. 5G vendors must understand how people in the industry work and understand the operational processes.