The Indian telecom industry is witnessing troubled times as the financial health of the sector continues to deteriorate. The sector is currently reeling from a debt of around Rs 3.9 trillion. In these challenging times, the emerging 5G use cases will help expand the enterprise business of telcos. 5G, unlike its preceding technologies, will be used not only to provide telecom services, but will be deployed and adopted across verticals for a diverse set of use cases. 5G will also give a big fillip to technology concepts such as IoT, machine-to-machine communication and Industry 4.0.
According to Aeris Communications, telecom revenue from the enterprise business is expected to increase 25 per cent from the current level. Telecom operators will focus more on emerging technologies such as 5G and IoT to cut down their capex to revenue ratio from about 15 per cent to less than 10 per cent over the next five years. Further, 5G will help create a whole new set of services tailored for enterprises, and telecom service providers are gearing up to capture this market.
A look at the 5G opportunities for telcos and the government’s role in promoting its uptake…
5G means more bandwidth and low latency, which can support various applications. These include autonomous cars, remote surgeries, video streaming, and advanced gaming.
According to Benoit Neel, vice president and general manager, sales, EMEAI region, Keysight Technologies, “The most advanced applications today are in the automotive space given the low latency and security requirements. This has also been proven by an industry survey around 5G conducted by Keysight in the past year. The main idea is to use 5G technology for autonomous cars to enable communication between cars. One of the key findings of the survey was that the automotive industry is a prime area from the 5G connectivity perspective. On this front, we are witnessing several collaborations and partnerships between service providers and automotive manufacturers.”
Manufacturing is another industry that will benefit immensely from 5G. Smart factory is an emerging concept that is becoming increasingly popular among manufacturing companies. Enterprises in this sector are making efforts to streamline their operations to become more efficient and agile. To this end, they are deploying smart solutions that leverage technologies such as AI, machine learning, big data and IoT. The efficient functioning of these solutions requires a robust connectivity architecture, which can be enabled by 5G.
As per industry experts, 5G can potentially transform the agricultural sector in India by enabling driverless tractors. The major impediment to driverless cars has been the lack of proper infrastructure. However, for driverless tractors, one does not need proper lanes as the chances of accidents will be less.
Given the myriad industry use cases of 5G services, the enterprise segment will be one of the key adopters and core beneficiaries of this technology. As a result, the enterprise business of telcos could significantly drive their revenues going forward. For instance, a telecom operator can help transform a factory, making its operations and offerings smarter by deploying some key solutions and providing robust and seamless connectivity via a private LTE network. In return, telecom operators can claim a share of the credit for reducing the cost of operations and generate revenue. Most of the 5G use cases call for the deployment of private LTE networks for enterprises, which is expected to emerge as a big market in the near future. In fact, telecom operators have reported an increased interest in private LTE networks from their enterprise customers.
Owing to its low latency, 5G has the potential to enable new revenue streams with applications in multiple enterprises. Meanwhile, 5G beamforming and slicing will provide a tailored experience to every service segment. According to Cisco, enterprises will significantly change the way telecom operators in India, the Japan region and rest of the Asia-Pacific earn their revenue over the next five years.
Telcos are now focusing on building partnerships and alliances to support various use cases in the enterprise segment in order to drive their capabilities. Moreover, telcos are trying to tap the complementary revenue streams of IoT, security and data centres. This will definitely lead to an upward swing in their revenues.
Going forward, the enterprise segment is going to provide much more stability and revenue generation opportunities to telcos as compared to the consumer segment. As per Cisco, in the 5G era, telcos will earn 70 per cent of their net revenue from enterprises. At present, only 30 per cent of their revenue comes from enterprises, while the rest comes from consumers.
The way forward
While the enterprise business will help telcos widen their revenue pool, operators will have to take some key measures to fully tap this opportunity. Service providers need to quickly adapt to an increasingly automated world, and transform themselves from digital service providers to digital value providers.
Moreover, in order to make 5G a success story it is important for operators to get rid of legacy limitations so that the 5G launch is not delayed, there is better return on investment and a seamless 5G service experience can be provided to end users.
In addition, telcos should work towards building the right partner portfolio and enhance their product offerings in a way that they are able to address all the concerns that their customers might have regarding their network. This includes providing data centre and cloud services to enable enterprises to store the data that is generated from these networks, and security services to protect them from cyberthreats. This will help telcos monetise the enterprise segment better. According to Anand Bhaskar, managing director, service providers, Cisco, India and SAARC, “With the convergence of 5G, AI and IoT, security is emerging as a major concern. In order to build digital trust among their enterprise customers, telcos will have to protect their networks and offer security as a service to them. Providing security atop existing connectivity services will also help differentiate them in the marketplace.”
In order to tap the enterprise business segment in the most efficient way, telecom operators will have to come up with an all-encompassing strategy to address all the requirements of enterprise customers. Also, it is essential to target the right set of customers and offer them the right suite of services. A qualitative approach instead of a quantitative one will be needed. As per some industry experts, in order to achieve disruptive growth in the enterprise business, telecom operators need to reinvent their operating models and adopt a selective approach.
The government, on its part, will also have to take measures to facilitate 5G adoption. The many benefits and opportunities provided by 5G for telecom operators can only be realised if the government is willing to introduce some favourable policy measures and reduce taxation. This will ensure the long-term sustainability of telcos’ enterprise business. The government will also have to reduce spectrum prices and increase fiberisation. This will incentivise telcos to expedite 5G roll-out.
By Diksha Sharma