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5G Improves Network Determinacy to Support Digital Transformation

by Guang Yang | 5月 13, 2020

Operators eyeing enterprise and industry IoT as growth engine

In my last blog Core Network Market to Be Extended as Digital Transformation Demand Rising, I mentioned that China Mobile sees enterprise and industry IoT as the hope of growth in 5G era. If we look at China Mobile’s financial performance in last 3 years, we could understand the choice.

China Mobile Revenue - Consumer Market vs. Enterprise Market

China Mobile’s enterprise business achieved a double digit growth in the past three years, while its consumer business grew slowly and even declined. Actually global mobile operators had the same experience. Strategy Analytics’ Global Wireless Operator Performance Benchmarking indicates that the highest growth rate of global mobile operators in the past five years was just 1.1%. Operators are keen to find a new engine to grow their businesses. Enterprise and industry IoT is currently the hope for the new engine.   

SLA as a stepping stone for service providers to enter vertical market

Unlike 3G and 4G, 5G not only can provide best effort Mobile Broadband service, but also can support Ultra Reliable and Low Latency Communication (URLLC) service. The URLLC capability, Edge Computing and Network Slicing together enable service providers to guarantee end-to-end SLA over a wireless network. The capability of SLA management can enable some mission critical applications that legacy wireless networks can’t support.

An example is the remote control of quayside container crane in the port. According to a joint whitepaper of Huawei, ZPMC, China Mobile and Vodafone, to perform the remote control of quayside container crane, the reliability of control signal transmission link should be up to 99.999% and the latency should be less than 30ms. It’s challenging for 3G, 4G or other legacy wireless technologies to provide such high reliability and low latency. On the other hand, the wireline technologies can’t provide the flexibility that quayside container crane’s operation needs, even though wireline technologies can meet the reliability and latency requirement. The combination of 5G NR, edge computing and network slicing is the unique solution in today’s communications market that can simultaneously meet the requirements of reliability, latency and operation flexibility.

The SLA capability and deployment flexibility together provided by URLLC can create broader opportunity for service providers. Let’s still take the example of a port. Beyond the remote control of quayside container cranes, there are many other applications in a port that require wireless connectivity, such as workforce communications, PTT and dispatch communications, goods tracking and management, equipment and utilities monitoring, video surveillance, ship-shore communications and the remote control application that not requires such high reliability and low latency. The overall demand for wireless connectivity in a port is huge. Traditionally the port operator deploys dedicated communication system and operates the system by themselves. Now 5G SLA capability for URLLC applications could become a stepping stone for service providers to enter the huge market and can improve the stickiness of the enterprise customer.

The COVID-19 may further boost the demand for URLLC applications. 5G enabled robots and AGVs (Automated Guided Vehicles) have been broadly used to deliver medicines, measure people’s temperature, check isolated patients, etc.  After the crisis, the relevant vertical industries such as healthcare, the First Responders, logistics, etc. are expected to accelerate their digital transformation. This could mean more opportunities for telecom service providers.

Leverage 5G deterministic network to accelerate digital transformation

5G is the first mobile system that can manage the end-to-end SLA. The improved network determinacy is important for those mission critical applications, what is called 5G deterministic network. Meanwhile, the wireless technology can provide vertical players much more deployment flexibility than wireline solutions. Therefore, 5G deterministic network has been warmly welcomed by vertical industries. Regulators of Germany and Japan have allocated dedicated spectrum for private 5G networks to support enterprise digital transformation. Telecom service providers and vertical players are actively exploring business models and deployment options for the 5G enabled vertical applications.

The scenarios of vertical applications are quite diverse. There is not a silver bullet solution for all scenarios. The explorations of business models and deployment options are all valuable for the future expansion of 5G applications in vertical market. Strategy Analytics summarized the possible deployment models in the report Where is the 5G Enterprise Opportunity for Telecom Operators?. We expect to see more practices emerging in the near future, with the growth of 5G enabled industry IoT applications.

We should also notice that software and applications are an important part of a healthy ecosystem. Telecom industry should improve the awareness of 5G SLA capability in the vertical application developers and encourage developers to leverage the new capability to improve their applications.

As pointed by my colleague Phil Kendall in his blog Should Mobile Operators Push Back 5G Plans to 2021?, COVID-19 “is causing many businesses to accelerate their plans for digital transformation and 5G has an important role to play in creating positive outcomes from current disruptions.” We expect vertical industries will have increasing demands on flexible deterministic network infrastructure. The 5G deterministic network can become an accelerator of the digital transformation process.

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