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Strategy&PwC: Challenges for operators in the 5G era

Telecom leaders must be imaginative, even daring, in considering their strategic options for 5G, report Strategy&PwC

Janet Brice
|Nov 29|magazine11 min read

How will telecom leaders build and profit from the transformative technology 5G will bring? This is the question posed by Strategy&PwC in a new report.

Sink or swim, Making strategic choices for the telecom industry of the future, takes an in-depth look at 5G and how this technology, which harnesses super-high speeds, extra-wide bandwidth, near-zero latency and low electric power, will transform how consumers and businesses use data. 

“This will inevitably lead, as the internet and the smartphone did, to entirely new ways of looking at the world around us, and new telecom business models,” comment the authors of the report Wilson Chow Global Technology, Media and Telecommunications Leader, Partner PwC China and Rolf Meakin Global Telecommunications Advisory Leader.

Channels of the future

By 2025, zetabytes of data will interlace billions and billions of connected objects. This will range from HDTVs. refrigerators and clothing to industrial machines along with smart homes and connected cars, all controlled through voice-controlled smartphones and other portable devices. 

“As this entirely virtual world arises, interconnected with the analogue physical reality of everyday objects and actions, today’s telecom operators will face a challenge that shapes their business model and their enterprise,” outlines the report. 

Challenges for operators in the 5G era

The promise of 5G is huge - but fulfilling that promise will be no easy task says Strategy&. “The technology offers the potential to manage the exponential growth in demand for data across telecom networks while presenting opportunities to supply even more data.” 

According to the report this in turn enable three overarching business applications:

• Extreme mobile broadband, supporting consumer and business use cases such as virtual reality gaming and connected medical scanners

• Critical machine-to-machine communication, enabling reliable and low-latency applications such as automated factories and smart mobility

• Massive machine-type communication, supporting systems demanding high scalability and low power, such as smart cities and drone-based logistics

“The capital investment needed to fulfil 5G’s promise is huge. Low-latency applications will also require edge-computing infrastructure. Moreover, operators will need to develop or buy the software and device management capabilities needed to run 5G networks,” says the report.

Diversification

According to the report if operators are going to make the investment pay off, they must devise a strategy that will give them the right to win in their markets. Many operators have found it hard to resist the temptation to diversify into other industries such as French telecom company Orange. Although this move was a success other results have been mixed. 

“Telecom leaders considering this strategy should consider if they have the capabilities needed to compete in the industry they’re looking to enter and if the targeted industry is ripe for disruption.”

Infrastructure

The other side of the coin involves telecom companies that already possess strong infrastructure and networking capabilities and see a way forward in leveraging those capabilities. 

“By creating and maintaining industry-leading networking infrastructure; reducing costs to a minimum; and managing customer, partner, and regulatory relations skilfully, these operators can provide investors with a reliable long-term dividend stream. 

“The key to success as an infrastructure player lies in developing a network that’s fast and flexible enough to be different things to different kinds of customers.”

The capable partner

A partnership approach may be the most promising option, says Strategy&, allowing both the telecom operator and its business partners to profit from the sale of 5G connectivity. If operators are to go this route, they will have to develop and perfect their partnering capabilities. 

Securing 5G

The 5G technology will be able to connect as many as 1 million end points per kilometre. “That’s a million potential points of attack for malicious hackers and cybercriminals. Other possible victims are the hugely complex networks, cloud structures, data centres and applications that tie everything together.

“Securing all this will be difficult, to put it mildly. One solution will be to take what we call a zero-trust approach, which involves identifying, profiling, and assessing the potential security risks inherent in every device connected to the network, and then allowing access only to the services each device needs to perform its function,” comments the report.

Think imaginatively

5G networking is creating endless possibilities for telecom operators. 

“If their organisations are to grow and prosper in this world, telecom leaders must be imaginative, even daring, in considering their strategic options.”

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