Telcos Are At A 5G Crossroads: To Plug-in Into An Ecosystem


…Or To Orchestrate It?

By Catherine Sbeglia

This is a moment of significant innovation and transformation for the connectivity sector. Enterprises are looking to bring their digitalization plans to fruition by adopting cloud, IoT and edge technologies, and 5G has the potential to accelerate these plans and provide the quality of service enterprise are seeking. Because 5G is the next generation of cellular technology, it has created a crossroads for telecom operators to either develop a business plan that simply and incrementally improves connectivity, or to do something disruptive and create a fundamentally different business model—one that places them at the helm.

Angus Ward, CEO of Bearing Point // Beyond, a Saas-based BSS and digital platform solution provider, put the choice a different way: “Are they going to be a plug-in for connectivity services into somebody else’s ecosystem, or do they want to retain the customers and create a total solution with an ecosystem of partners that solves customer problems?”

Research from Omdia reveals that so far, only 21 per cent of 5G rollouts in the enterprise space have been connectivity service provider led (CSP), while 31 per cent have been rollouts conducted by enterprises themselves.

Some of the more notable enterprise DIY private 5G networks include Volkswagen, which in April 2019, announced plans to construct of its own 5G mobile networks in 122 factories in Germany, while Audi began work on its private 5G network to replace spotty Wi-Fi in 2018.

From Ward’s perspective, these statistics suggest that carriers “need to get a move on” if they’re going to change their strategy and become ecosystem orchestrators.

“However, the problem is that CSPs just want to sell connectivity and standardized ‘connectivity plus infrastructure’ products, while businesses want to buy more sophisticated, complete solutions that better fit their needs and require the integration of multiple technologies from multiple players,” he said, adding that 95 per cent of enterprises and SMBs would rather invest in solutions that are co-created through an ecosystem of partners than 5G technologies.

“CSPs need to get out of the mindset that they are simply connectivity providers and become 5G ecosystem orchestrators,” he continued, “using their stature in the industry to build ecosystems of a wide variety of partners, whilst also working closely with enterprise customers to address their business needs.”

Even further, enterprises have faith that carriers are up to the task, with over 90 per cent of the respondents surveyed in the Omdia report stating that they believe CSPs have a greater role to play, and 88 per cent saying they believe they’re capable of doing more than connectivity.

While 70 per cent of carriers have reported they think developing new business models is the way to go with 5G, Ward remains skeptical.

“They understand the problem and they understand the opportunity, but they’re struggling to bring it to the bank, and it comes down to a willingness to change,” he explained.

If carriers don’t own the customer and they don’t create solutions for those customers, they will remain a plug-in for somebody else’s ecosystem, and this will require them to be low-cost and make them an easily replaced commodity.

“To be at the forefront of innovation and disruption in the next decade,” Ward claimed, “CSPs need to demonstrate a willingness to change and to collaborate with businesses, rapidly mastering the art of ecosystem orchestration. The risk of inaction is irrelevance.”

He added, “The risk of inaction is irrelevance.”

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