5G will ramp up digitisation efforts in many areas of society

Across the Asia Pacific region, the economy is undergoing unprecedented change as a result of digitisation, hyper-connectivity, 5G and big data convergence. The cost of rolling out and implementing 5G across all sectors of the economy globally is expected to reach at least US$2.7 trillion by the end of 2020, according to research from finance house Greensill. The telecommunication sector alone is investing an estimated US$1 trillion by 2020 to implement infrastructure upgrades.

In this new operating environment, where the speed and low latency of 5G will trigger a wave of innovative applications and services, organisations need to rethink their business and operating models to drive revenue.

Digitisation and the rise of Industry 4.0

The enabler for the new wave of globalisation is digitisation and, to a greater extent, the emerging phenomenon known as Industry 4.0. We’re now in an era where mass connectivity will give rise to intelligence and capability never before experienced, and to survive in Industry 4.0 companies need to fundamentally transform their mindset and culture as well as their existing operator models along with the underpinning strategy and structure.

Mobile Network Operators (MNOs) used to take decades to grow in new markets. With digitisation, new entrants can launch in multiple markets within months. Digitisation also enables closer links with consumers, eliminating many parts of the traditional supply chain at a stroke, while data analysis gives organisations instant insights into consumers’ preferences and desires.

Operators recognise that 5G is not a new network; it is another layer on top of a secure 4G network. The challenges of legacy and the introduction of new technologies to compete more effectively are focus areas for all operators.

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Telstra is investing more than US$300 million in building Australia’s first 5G network and a further US$1 billion in digitisation capability to connect more people through a greater number of services available on a variety of devices. The rise of 5G has given the opportunity to diverge traditional business models.

However, operators face the constant challenge of significant capital investment to build on top of 4G as well as prepare their networks for the arrival of 5G. The ROI in capital invested in most telecommunications companies is in the 4-5 per cent range across the APAC region. Telcos need to consider opportunities to become differentiated rather than continuing to invest in a deflationary economic model. The line between free and paid services are becoming a greater area of concern for MNOs.

Big data

Big data will power every decision organisations make and the way they interact with consumers. Today, consumers are wanting control of their data. Data portability should and will continue to add value to the daily lives of consumers.

5G will open the gates to enable richer and immersive entertainment, breakthroughs in health, and improvements in education. IOT will make our cities smarter by allowing driverless cars to connect to smart streets, smart shops, and more. Outside smart cities, in more remote areas, 5G will enable the 1.7 billion people without a mobile phone who are significantly underserved to finally have access to services that 3G and 4G could not provide, including access to education.

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Singtel is doubling down its efforts to take advantage of hyperconnectivity and big data. Speaking at this year’s Mobile World Congress in Barcelona, the company shared its plans to focus its business on three key areas: creating intelligent connectivity through analytics and automation; building stand-alone, cloud-native digital business applications that enable richer engagement opportunities with customers; and building regional digital ecosystems across payments, IOT and analytics to create additional sources of revenue and engagement opportunities for operators and their partner ecosystem.

Mobility

Mobile revenue growth is stagnating. The average revenue per user is declining across most operators. Mobile data traffic will be 4x higher than it is today as the world now works with data. Telecommunications companies across the globe are at the core of this and are sitting on a gold mine of data about consumer behaviours. However, traditional mobile revenue growth is expected to shrink from 5 per cent to 1 per cent. The commoditisation of connecting is becoming a huge issue as we move from transactional connectivity to intelligent connectivity.

The value creation which needs to be provided is taking place through significant investment in cloud-native applications, platforms and services. In the era of data, intelligent connectivity will be key to stopping commoditisation. It will be a new way of differentiating.

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The ability to monetise the platform at speed and scale will be key. Providers will need to build new applications using cloud-native principles, so that these use cases can be taken to the customers, leveraging a common framework.

The network should be virtualised and be in containers. The purpose behind cloud-native is scale, reuse and the ability to run in any environment. To accommodate these, MNOs are dealing with flexible business models to stay ahead of the competition.

MNOs need to build software using cloud-native principles and agile methodologies. This together with an open source PaaS platform, such as Pivotal Cloud Foundry (PCF), will enable MNOs to build rich cloud-native services as well as help deal with legacy software through industry-leading containerisation capabilities.

This will ultimately bring services closer to the edge, all enabled by 5G.

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