By: Charlie Ashton, senior director of business development, Napatech

No sooner was the first 5G network launched in late 2018 than industry experts started setting the expectation that this “G” was different. While previous generations quickly brought tangible benefits to consumers, along with the much-hyped “killer apps” like Uber and Angry Birds, there was a general understanding that 5G would be an enterprise play and the big upside revenue opportunities for telcos would be in the enterprise space, writes CHARLIE ASHTON.

Evaluating the consumer advantages

While, for the most part, the new business opportunities for telcos are indeed in the enterprise space, that doesn’t mean consumers aren’t seeing tangible benefits from 5G. These benefits, however, don’t always stem from the higher bandwidth and lower latency that were originally touted as must-have characteristics. For example, 5G Fixed Wireless Access (FWA), sometimes positioned as “Fiber through the Air,” is bringing high-speed broadband to previously underserved rural communities. For many such communities, it’s not cost-effective for Communications Service Providers (CSPs) to provide access via fiber through the ground. The reliability of 5G connections promises improved video quality not only for those dreaded work-from-home Zoom calls, but also for remote learning.

While there are now more than a thousand models of 5G devices — spanning smartphones, laptops, tablets, CPEs, hotspots, dongles and drones — the absence of a killer consumer app for 5G means that consumer Average Revenue per User (ARPU) will continue its slow decline. That’s despite the massive investments by CSPs in spectrum and infrastructure. In most countries, consumers get 5G service for the same price as they previously paid for 4G and the majority of upsell campaigns have failed.

Capitalizing on the enterprise benefits of 5G

As CSPs look for opportunities to boost their ARPU, they are focusing on emerging enterprise use cases. A recent report from Markets & Markets projected that the 5G enterprise market worldwide will grow from US$2.1B in 2021 to $10.9B in 2027. That’s an annual growth rate of almost 32 per cent, which is enough to get the attention of any CSP executive who’s struggling to just maintain consumer ARPU at its present level.

The Markets & Markets report flags the emergence of Industry 4.0 or IoT use cases as being key to the growth of enterprise 5G, but of course many IoT applications can be supported perfectly adequately by fiber networks, Wi-Fi or 4G. So, the real question facing CSPs — and the vendors that serve them — is which use cases actually require 5G to maximize the business benefits that they can deliver?

The opportunity in IoT and 5G

Many IoT use cases do indeed require mobility as well as some combination of security, high-bandwidth, low-latency and guaranteed Quality of Service (QoS) – which are basically the characteristics that make 5G the networking technology of choice for these applications. Within a factory, for example, smart devices will track production data and monitor the health of manufacturing equipment. In agriculture, smart plows and harvesters will connect to smart silos, while sensors will direct automated equipment for watering and fertilizing. Smart robots will roam hazardous locations, not only performing maintenance operations, but also inspecting areas inaccessible to humans. Emerging military applications such as “autonomous mobile edge” communications will also generate hefty margins.

The list of use cases is endless: just Google “enterprise 5G” and prepare to waste the next couple of hours even if you ignore (as you should) the predictions of robotic surgery being performed on mountainsides and fully autonomous cars navigating roundabouts. The catch is that these and scores of other IoT applications typically require functions that weren’t present in the initial 5G deployments. To accelerate the launch of 5G, CSPs worldwide initially deployed the Non-Standalone (NSA) mode, in which the new 5G Radio Access Network (RAN) is connected to the existing 4G core network. 5G NSA allowed CSPs to quickly launch enhanced Mobile Broadband (eMBB) services so they could deliver 5G data speeds and boost network capacity, while leveraging their existing 4G infrastructure assets, and thereby, minimizing their rollout costs.

The higher broadband speeds of 5G NSA do enable FWA as well as improved experiences around video streaming, Augmented Reality (AR), cloud gaming and other immersive applications. However, 5G NSA doesn’t support network slicing, massive Machine-Type Communications (mMTC) or Ultra Reliable Low Latency Communications (URLLC). In other words, it doesn’t provide the features needed by the advanced IoT use cases that represent such an attractive business opportunity for CSPs.

Moving to standalone mode

We’re now seeing that CSPs are finally transitioning their infrastructure away from the legacy 4G core and deploying the Standalone (SA) mode. Omdia recently reported that, while only 11 CSPs worldwide had deployed 5G SA Core by Q1 2021, SA spending is expected to exceed NSA spending by 2023. It’s generally expected that more than 50 per cent of CSPs will have deployed SA by 2023.

The ongoing deployment of 5G SA core infrastructure during 2022 and 2023 should allow both CSPs and private network operators to start realizing the full potential of 5G in the enterprise space. This means that they will finally start realizing the actual potential of many of the use cases (smart ports, smart manufacturing, smart grids, automated mining, airports, smart stadia, healthcare, rail and construction, etc.) that have previously looked so compelling on PowerPoint slides. The new features in SA will help turn these into tangible business opportunities.

This transition to SA infrastructure also opens new business opportunities for the vendor community that supplies 5G hardware, software and services. We’ll likely see a wave of new product announcements in 2022, thanks to the deployment of enterprise use cases that actually need and leverage the differentiating features of 5G.