5G: an opportunity for the telecommunications industry
5G in telcom industry is an unmissable opportunity for companies to provide new and better services to users that help grow their business, especially on the B2B side. After all, 5G is an extraordinarily flexible technology that can be used in many sectors. But in order to fully grasp this opportunity, some conditions that depend (in part) on telcos must be met.
5G in telcom industry is one of the great priorities for all players in the sector. In fact, the innovation happening here is where business profitability is played out, also because the continuous technological evolution happening is a main lever that can be used to stay competitive for the long term.
Traditionally, the telecommunications sector is a challenging one, especially given that there are only a few players, most of them very large organizations who have considerable funds to invest in order to solidify their leadership over certain market areas. However, technological innovation has also paved the way for new competitors who are newer and more agile than traditional providers, and this has placed the industry itself in crisis. This includes OTTs, i.e. media companies that offer digital content and services through the Internet without going through traditional distribution systems.
Since they don’t require any particular infrastructure to provide their services, OTTs are better able to intercept the needs of users to provide simple, fast, and inexpensive services and, above all, to easily adapt to their needs. In addition, people have progressively changed their expectations towards telcos. Now more than ever there is a real “hunger for innovation” that characterizes almost all categories of customers and this cannot be ignored (Source: Oracle).
Also, the very level of technology offered by telcos is a factor in user retention or abandonment, as we have already pointed out in a previous post on churn rate. In light of all this, it’s clear that the theme of technological evolution is very relevant for every telco and 5G is one of the key innovations that players will have to exploit in the best possible way so as to develop cutting edge services that live up to customer expectations.
What is 5G?
Before any other consideration, it is good to start with a definition, because it is always better to make clarity. 5G, which stands for 5th Generation, is the term generally used to refer to the next-generation cellular standard after 4G and a significant evolution from 4G/IMT-Advanced technology. In other words, it’s an upgrade over current telecommunications networks that offers improvements in bandwidth, latency, and speed of data transfer from the network to various mobile devices. Suffice it to say that 5G networks offer an average data rate of several gigabits, even reaching 10 Gbps (and a theoretical peak of 20 Gbps), with a much lower latency and a very wide and stable coverage even in the most remote areas.
One of the key aspects of 5G, which allow this extraordinary efficiency, is the fact that it is based on technologies that work in synergy, such as higher frequency waves, spatial filtering, and network slicing, which can reach ten times the download speed of current 4G networks, reducing latency to 1 millisecond (Source: Red Hat).
This kind of infrastructure allows telcos to provide a very high quality connection that is capable of supporting even very heavy data transfers and to be used to perform a large amount of operations faster. That’s why you can’t wait to adopt it!
Where does 5G network implementation stand?
The prospect of being able to use these networks is undoubtedly enticing, but as always, from theory we must then move on to facts. Unfortunately, as in many other cases, also for the implementation of 5G networks, the Covid period represented a moment slowdown. For this reason, 2023 (and not 2022) is considered the turning point for the effective activation of these technologies. On the other hand, Italy’s 5G coverage reaches about 15-20% of the population. While this level of diffusion is average compared to other EU countries, it’s still far from the optimal level of adoption seen in Taiwan or South Korea, which is nearly 90% (Source: Il Sole 24 Ore).
This means that telecommunications companies must accelerate, and this translates into an increase in investment in technology. At the same time, companies must be willing to revise the limits of electromagnetic emission (from 6 volts per meter today to 60 volts per meter). This should allow telcos to make their investments more profitable, thus pushing them to change their approach so that they aren’t waiting for use cases before deciding to deploy resources.
The opportunities of a new technology: smart cities and smart roads
Investments in 5G networks are not only an infrastructural expense, they are also an opportunity for all telcos to create new services for people and companies. One promising area is undoubtedly that of mobility, and here telcos can move in synergy with other entities to create interesting projects.
For example, TIM has collaborated with the municipality of Turin to pursue the Smart Roads idea. This is a technological innovation plan for road safety that is based on the use of special sensors positioned on crosswalks to inform passing cars that a pedestrian is approaching. The project also plans to place units on vehicles and bicycles that will provide reciprocal information to each via mobile devices (such as a smartwatch) or GPS navigation systems to improve safety and avoid road accidents. All this, of course, is possible thanks to 5G technology. By reducing latency times to a minimum, information can be immediately exchanged between multiple devices simultaneously (Source: Corcom).
But that’s not all. The same plan also includes the Urban Georeferenced Alert. Telcos can use this to monitor work in progress, queues, delays, and more in real time and then communicate this information to nearby users to make movement and transportation more fluid and safe. There are so many innovations possible with 5G that can make smart cities a reality thanks to the power of next-generation networks: think of streetlights that independently report failures, traffic lights that record changes in traffic flows and communicate them to motorists, or the ability to include information (perhaps via augmented reality) in historical monuments, making the tourist experience more interactive.
5G gives a boost to the automotive sector
Another extraordinary opportunity that opens up for telcos is linked to the automotive sector: 5G will play a crucial role in the construction and operation of smart cars and especially those with autonomous driving. Autonomous driving vehicles will need to rely on the 5G network since it is the most efficient technology for transferring large amounts of data quickly, constantly, and in a stable way. Indeed, the delay in the release of these models is linked (in part) to the slowdown in the implementation of fifth generation network infrastructure.
4G is fast enough to work, stream high quality audio and video, play online games, but not to allow huge amounts of incoming and outgoing data traffic between vehicles in transit, which must be able to communicate with each other in real time. Considering that there will be lots of hardware that must be able to communicate with each other (cars, smart devices, horizontal and vertical signage, etc.), telcos who are the first to adopt 5G technology will be the first to provide a network large and powerful enough to process all of this data and, above all, to be able to reproduce the human reflexes that allow us to avoid an accident and to perform normal driving actions.
This represents a formidable business opportunity for telcos who can help revitalize an industry that sees technological evolution as a driving force for its recovery. Obviously, 5G is not the only technology required for this kind of business. Telcos will also need to invest in edge computing, i.e. of “decentralization” of their servers using autonomous data sorting and management hubs so as to extend and enhance the 5G network and ensure the proper functioning of cars and other devices everywhere.
5G opens the door to home automation
5G in the telecommunications sector is also the key to expanding another increasingly promising sector: home automation. Among all the digital trends of 2022, having a more connected and efficient home is one of the most promising for telecommunications companies; moreover, thanks to the home automation tax benefit that is available in some countries, the deductions for smart devices is increasing demand (Source: Agenda Digitale.eu).
As a result, consumers increasingly need to rely on a provider that offers a network that is capable of guaranteeing secure, stable, and fast exchange of data. Once again, the answer lies in 5G, which telcos must also implement in order to provide customers with a data traffic package for the home. After all, “home” IoT has the same needs as smart roads: when the number of devices communicating with each other multiplies (refrigerators, shutters, doors, radiators, light bulbs, etc.) the data exchange increases exponentially and 4G may no longer be sufficient for providing a smooth and adequate experience.
5G in the telco industry strengthens collaboration with businesses
In general, 5G represents a strategic asset for companies that want to reorganize their business in a truly competitive way. IoT isn’t just about household applications. It also covers goods in the warehouse, monitoring the production chain (from the receipt of raw materials to packaging) and the incoming and outgoing movements of suppliers are just some examples of how a company can integrate the Internet of Things within its business. All of this obviously requires a secure technological infrastructure that is efficient and able to withstand and support the rhythms of industrial production.
In this sense, the opportunity for telcos is really interesting, because they have the possibility to provide companies with a complete and organic service offer that includes 5G, the cloud, broadband, and IoT systems implementation, thus carving out the key role of partners in the digital transformation of a company. This kind of collaboration can happen in every sector: from manufacturing to finance and banking, from retail to healthcare, from agriculture to energy and utilities. For the telco sector, 5G represents a significant driver to push B2B activities, which certainly represent the most promising area in which to implement these technologies.
The conditions for real benefits
It’s clear that 5G brings many benefits to users, but even more so to telcos, in terms of economic growth. However, as with anything, these benefits are not “free.” On the contrary, there are several conditions that need to be met to make sure that all these benefits are real, consolidated, and that they actually benefit the traditional telcos (such as the OTTs we mentioned above). First of all, networks are no longer sufficient; they must be accompanied by ad hoc devices and services. After all, it is the ecosystem that creates the real advantage for companies. Similarly, telcos can no longer afford to build infrastructures that are “exploited” by others – such as Facebook, Netflix, Google – but must move to offer their own native services or play at least a role of aggregator of the offer (Source: Corcom).
Another key condition is that telcos take part in “positive lobbying”, pushing Europe to move toward 5G also through regulatory and bureaucratic simplification, which in recent years has led to a delay of 5 years compared to the initially planned roadmap. Finally, still on the subject of regulation, Europe must put telcos in a position to be able to make strategic acquisitions and mergers, which can help consolidate technological implementation, increase the efficiency of networks, and ensure a higher quality of coverage while maintaining lower prices for users.