Editor’s note: In the fourth part of a special report, Technology Business Research Analyst Dan Callahan spells out how high-speed 5G wireless will be deployed and used by businesses. The first three parts are linked with this report.
PLANO, Texas – Due to the numerous challenges with the business case for 5G, TBR believes the operator, or partner, IoT platform could be a path to increased adoption and monetization.
Operators and vendors can weave 5G into the technology and into their go-to-market strategies. They can message that a solution can be crafted on their platform with or without 5G, but that with 5G, the solution will be more efficient and more secure, deliver more precision, and save costs over the long run.
This is why it is so important for telecom-based vendors and operators to build out their IoT platforms, which is evidenced by the urgency behind vendors such as AT&T, Verizon (NYSE: VZ), Vodafone Group Plc (NYSE: VOD), Ericsson and Nokia Corp. (NYSE: NOK) establishing their IoT go-to-market strategies.
Some of the more popular platforms are found with vendors such as IBM, AWS, Microsoft Azure, General Electric Co. (NYSE: GE) and SAP SE that do not have as much stake in 5G.
These vendors want the customer business, and they will not push for 5G over other standards and will leverage telecom vendors or operators to facilitate the dumb pipe for connectivity — a worst-case scenario for a telecom-oriented vendor seeking to sell enhanced technology and services.
If these telecom vendors have built-out, attractive IoT solutions, they can lead engagements and help guide customers toward 5G. Most of the 5G Americas operators have announced IoT build out plans that incorporate the new 3GPP IoT technology capabilities.
- Despite the cloudy forecast for 5G, the telecom industry still has an important role to play in IoT
While 5G does not have a huge role in the IoT market in the near term, it does not mean the telecom industry is adrift. LTE will play a large role in IoT.
As TBR Senior Analyst Chris Antlitz outlined in last year’s 5G Americas event perspective: www.tbri.com pg. 5 TBR “A pervasive theme from the event was that LTE still has substantial runway and will remain relevant well beyond 2020, even in markets that aggressively deploy 5G. LTE will remain the foundational network standard and provide the base layer for all communications, with 5G serving as an overlay where capacity enhancement and or lower latencies are required.
LTE will also be leveraged for traffic fallback from 5G and will become the de facto coverage layer of the network due to its better signal propagation attributes compared to 5G.” In nonstationary IoT use cases, such as logistics, a telecom operator will be an important consultant in enabling broad connectivity via LTE. In many use cases, stationary and nonstationary, telecom vendors such as Nokia and Ericsson, will be brought into IoT engagements to build out connectivity infrastructure for whichever standard is chosen (e.g., LTE, NB-IoT, LoRa, private networks).
Network operators need 5G to handle the growing demand for bandwidth, ensuring 5G is on the road map. However, operators and vendors also hope 5G can offer additional value to businesses and consumers delivering the opportunity to farm additional revenue from connectivity. However, TBR has yet to hear a compelling story on how that will be achieved. It does not mean a solution will not emerge, but the “killer app” does not yet exist; although, one will likely emerge over the next five to 10 years.
The 5G Americas operators and vendors are confident in the 5G technology capabilities. Just as specific use cases for other generations of mobile wireless technology developed, they are confident that by addressing the three high-level families of use cases — Enhanced Mobile Broadband, Massive Machine Type Communications, and Ultra Reliable and Low Latency Communications — that more detailed use cases will ultimately occur.
But it could be many years. IoT is commonly tied to 5G, but there is still no compelling story to the importance of their linkage. IoT will be critical for operators escaping the commoditized connectivity position, and their ability to increase their platform customer base may help hasten 5G adoption though upselling its advantages. However, in essence, 5G is not linked to IoT. Current IoT use cases can operate fine without 5G, and the greater market is not demanding it, aside from a handful of precise use cases.
For certain, platform vendors such as AWS, IBM, Microsoft Azure and SAP are not waiting for 5G. 5G by itself will not drive a significant increase in operator revenue, but for operators that develop an IoT practice, 5G will increase their flexibility in delivering IoT solutions.
Additionally, regardless of 5G, the telecom industry will be kept busy through delivering and supporting technology innovations in LTE and supporting the more numerous IoT use cases that will leverage it.