Operators risk being cut out of enterprise 5G deals

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Telcos must shift their enterprise 5G strategies or risk losing out on billions of dollars they have pinned their hopes on, a new report suggests.

The research, carried out by Omdia (formerly Ovum), commissioned by BearingPoint//Beyond, finds that telcos are often failing to lead on enterprise 5G deals and sometimes being cut out of the equation altogether.

The Industries and enterprises are ready to reap the benefits of 5G report finds that 72% of communications service providers (CSPs) believe most of their 5G revenues will come from B2B, B2B2X or government/smart cities opportunities and previous BearingPoint//Beyond research showed that CSPs expect a 15% increase in current revenues from B2B 5G services.

However, Omdia finds that in 40% of enterprise 5G deals signed, CSPs were the secondary supplier – 32% were led by enterprises and only 21% were led by operators.

“At odds”

Angus Ward, CEO, BearingPoint//Beyond, said this suggested that “the way CSPs want to sell is at odds with the way in which businesses want to buy.”

“What’s deeply concerning is that some of these early deals, such as the ones we see in automotive, cut out CSPs entirely – even connectivity is being provided by other suppliers,” he commented, adding that, “Businesses want to buy complete solutions that fit their needs and help them solve business problems, rather than individual technology assets.”

The report urges CSPs to change their position from ‘5G-first’ to ‘business-first’ thinking, focusing on applications and vertical-specific solutions.

Evan Kirchheimer, Research Vice President, Service Provider & Communications, Omdia, said, “CSPs will only realise value from 5G if they can identify, partner, co-develop, implement and run a proposition with application-specific and industry-specific specialists.”

“CSPs that can orchestrate such a complex web of relationships will be capable of capturing a greater share of the market and will not be relegated to being one of many connectivity providers competing solely on price,” he added.

Urgency

Omdia finds that manufacturing, transport, utilities and energy/mining sectors account for nearly 80% of early enterprise 5G deals. The research group expects the COVID-19 pandemic to accelerate enterprise demand for 5G technology, making the need for a CSP strategy shift more urgent.

“Fundamentally, CSPs must become 5G ecosystem orchestrators,” said Ward. “That’s the only way they can hope to meet enterprise business needs and re-integrate themselves into enterprise 5G value-chain as the world emerges from the COVID-19 pandemic.”