May 2021 Issue
FW discusses 5G businesses with Rolf Meakin, Chris Bartlett and Matthew Duffey at PwC.
FW: How would you summarise the potential of fifth generation (5G) cellular network technology for the business world? How does it differ from previous 3G and 4G technologies, to provide a technological leap?
Meakin: 5G is the next generation of mobile technology which has been developed using standards developed by the industry and is being rolled out around the world. When fully deployed, it will have vastly superior performance to 4G in terms of upload/download speed, energy efficiency, reliability, the ability to handle massive numbers of connected objects and most significantly, ultra-low latency – the response time for a round-trip communication. This ultra-low latency will ultimately allow near-real time responsiveness of communications allowing, for example, high definition (HD) virtual reality experiences with wireless headsets, remote precision control of machinery and surgical devices, and vehicle to X autonomous vehicle use cases. Over time, it will likely become the digital communication fabric of the economy, connecting and enabling other transformative technologies such as artificial intelligence (AI), extended reality (XR), robotics and edge computing.
Bartlett: 5G offers businesses significantly higher bandwidth than the previous mobile network technologies. This allows customers, employees and business partners to interact and transfer data via applications and mobile devices at much higher speeds than before, and it will help to accelerate the move of enterprise services to the cloud. In the near future, 5G will significantly enhance support for businesses with critical communication needs, providing greater reliability for mobile devices connected to the network, and reducing the time it takes for information or instructions to be pushed between devices and users on the network. These features will significantly improve productivity and operational risk for businesses in industries such as mining, utilities, transport and emergency services. In the medium term, 5G will be able to support greater innovation and the use of internet of things (IoT) devices at scale. Where earlier technologies were constrained in the number of devices in a particular area that could connect to the network, 5G will allow significantly higher numbers of connected devices, and with it bring an anticipated wave of innovation around robotics, automation, data and infrastructure that will change the way industries are defined today.
Duffey: Previous generations of mobile technology have built the foundation for high-speed data. 5G weaves in low latency and support for a large number of devices to create a wireless technology that can compete with, and in some cases surpass, the performance of fibre. This opens a huge range of business use cases that can now be supported by 5G. Low latency enables real-time interactions between people and machines to be a reality. Hence, virtual interactions can be more natural through virtual reality (VR) and augmented reality (AR) and machinery can be controlled in real-time through 5G connections. Also, the ability for millions of devices to be connected to 5G networks really brings IoT to life. Previously unconnected devices like refrigerators and heavy machinery can now be made possible, allowing them to provide real-time data flows on usage and operating conditions. Also, the low power mode that provides a 10-year battery life will enable remote sensor networks for agriculture, mining, and so on, through private 5G networks or national networks when coverage is available. Finally, network slicing will enable new business models for network operators through flexibility in pricing models and new network usage models.
“5G will result in more customer data being collected, and as such companies need to act as responsible stewards of this information.”
FW: What specific opportunities and advantages does 5G technology offer to businesses? In what ways can the technology revolutionise the way people work and companies operate?
Meakin: 5G will present opportunities to all types of business by enabling productivity improvements and new immersive customer and employee experiences. Examples of productivity enhancements include using 5G-enabled drones to inspect industrial sites and, using AI and image recognition technology, to detect defects and schedule preventative maintenance, or equipping engineers in major campus settings, such as ports, with AR glasses connected to expert systems to speed up issue diagnostics and recommend actions. Examples of new immersive experiences include using VR connected over 5G for employee training and immersive workshops or personalised sports stadium experiences.
Duffey: 5G has huge potential for the business world. 5G is an enabler of new technologies. Through the combination of high bandwidth, low latency and massive connectivity it will enable use cases and products that were previously not possible. For example, the ability for 5G to support VR means that applications like virtual stores will be a reality, meaning that a physical store-like experience can be created without incurring the cost of a physical store. This could lead to ‘branchless’ banks, for example. Also, VR and AR applications can enable remote repair and configuration of machinery, reducing down time and increasing return on investment for assets.
Bartlett: While 5G is a significant enabler of innovation and new use cases across many industries, it is not going to create new opportunities or advantages for businesses on its own. It is essentially providing a critical foundation or building block on which other technologies can evolve and deliver a wide array of use cases specific to an industry. The most exciting opportunities attributable to 5G are usually a combination of innovations and investments in other technologies, including AI, AR, VR, blockchain, drones, IoT, robotics and cloud computing. For businesses, these use cases represent significant opportunities to drive productivity and efficiency improvements, better customer experiences and new product or service offerings. Many opportunities and use cases have already been conceived or exist as prototypes, but the required infrastructure and ecosystems are still developing. Furthermore, businesses will need to develop their own appetite for change, and satisfy themselves of the business case to invest. 5G is a critical technology and enabler for change, and we should expect businesses to see more of an evolution than a revolution.
FW: Drilling down, in a world fundamentally changed by the coronavirus (COVID-19) pandemic, what does 5G connectivity mean for remote and flexible working?
Meakin: When the pandemic hit, 5G networks were not universally rolled out – and they are still not. Countries like the US, China, South Korea and the UK are ahead of most but there is still a long way to go in coverage and not all of the 5G features are currently available. So the 5G contribution to fighting the virus has been limited. In China it was used in hospital red zones to control cleaning drones and for safe delivery of supplies. The experience of remote working has accelerated the adoption of video-calling which will no doubt lead to a shift to blended office/home teamworking and means that 5G has a lot to contribute in the future. One of the most promising areas is from combining VR technology with 5G to enhance flexible working. For example, it will be possible to provide VR immersive training in soft-skills such as customer service, inclusive leadership and understanding blind spots, with employees getting feedback and recommendations along the way. Equally, multi-user meetings and collaborative workshops using VR and custom avatars to communicate and interact with people and products will be possible, enabling people to simulate natural human interaction in a virtual business context. Job simulation training will become more commonplace as VR learners have more flexibility, are more engaged and can practice on-the-job skills in safe environments.
Bartlett: COVID-19 has inarguably driven an unprecedented boost in the adoption of digital technology, and remote and flexible working. It is worth noting, however, that we did not have access to a fully operational and widespread 5G network to support this massive shift. For most developed country markets, existing fixed networks, cloud applications and collaboration tools were quickly enhanced to provide the required support for employees to work flexibly from their homes during lockdown periods. Where 5G has potential to support remote and flexible working in the future is where it is used to extend the reach of fixed networks, through fixed wireless access, for example, to more remote areas. Furthermore, 5G has the potential to enable workers to operate machinery, vehicles or drones remotely due to the great reliability and performance of the network. Imagine a business that could operate an entire mining site or agricultural farm with a remote workforce in a distant city or even in another country. Or in another case, imagine a specialist doctor remotely performing an intricate surgery on a patient living on a remote island in the Pacific.
Duffey: 5G will be a key enabler of the post-COVID-19 world. The pandemic has highlighted the importance of connectivity and revealed the connectivity disparities that exist across the US and other countries. 5G will allow fixed line-like performance to be deployed in underserved areas to provide the connectivity that is required post-COVID-19 and help close the digital divide. On top of that, the additional features that 5G will enable will increase the effectiveness of remote working. For example, VR-enabled meetings will allow individuals to interact with each other in a more natural way. Remote sensor networks will provide real-time information flows and will allow businesses to make real-time decisions. Also, drones and remote systems will enable hazardous work to be completed more efficiently, reducing the risk to humans.
“While 5G is a significant enabler of innovation and new use cases across many industries, it is not going to create new opportunities or advantages for businesses on its own.”
FW: What challenges, such as data security and regulatory concerns, are associated with 5G? In what ways can companies proactively manage these risks?
Bartlett: Achieving greater national productivity through 5G-related policies and regulation requires governments to make explicit political choices around social, economic and security goals. In addition to this political challenge, a contemporary legal and regulatory framework is also required to support those goals, and must be supported with the right funding priorities, consumer rights and data privacy policies, and integrated planning objectives. These challenges must be addressed to balance economic benefits and social risks for a particular country market. While governments seek to optimise their policy settings, companies must forge ahead to make their own choices and investments around the evolving ecosystems for specific use cases, business models and customer communities. It is a real challenge and concern that the pace of technology could outstrip the ability to adapt legal, ethical and compliance frameworks – for example regulating aerial laneways for drones, licensing doctors for remote surgeries or insuring autonomous vehicles. For companies to proactively manage risks related to evolving 5G technology and adoption, it will become increasingly important for them to shift from rules to principles, openly inform and disclose intent to customers, and ensure appropriate security protocols for customer data and access to networks.
Meakin: Although the 5G standard is not inherently insecure in any sense, the combination of new capabilities and network virtualisation does bring some threats. Due to its capability to handle mass IoT communications, 5G has significantly more network endpoints that can be exposed to cyber criminals, and 5G virtualisation means the whole connection is based on software, which is potentially hackable. To mitigate these risks, we recommend adopting a process based on identifying, profiling and assessing each component before it is permitted to connect to the network. Taking this zero-trust approach can help companies strike the right balance between opportunity and business risk.
Duffey: Trust and data resilience needs to be at the heart of company approaches to 5G. 5G will result in more customer data being collected, and as such companies need to act as responsible stewards of this information. Scrutiny on how customer data is handled is increasing through the data privacy laws that are being implemented around the world. As such, companies need to protect the data by building resilient networks and data storage systems, taking every precaution to protect the data and ensure that they are not susceptible to data hacking. They also need to build trust with their customers by being clear on what they are using the data for and only use it for that purpose. They must also be transparent with customers on the data they hold.
FW: As 5G capabilities continue to develop, what are your predictions for the uptake of 5G technology across industries? Which sectors stand to benefit most?
Meakin: The uptake of 5G is dependent on a number of factors. For consumers, it is dependent on network coverage and the availability of affordable devices. Increasingly, these devices will include wearables, including XR glasses. In the business market, uptake is dependent on the availability of solutions to their use case needs that combine 5G with other tech, such as XR, edge and robotics. 5G can be deployed in private, campus-based networks for larger scale businesses. In both cases, we think 5G take up will accelerate from its current low base particularly from 2023 onward. In a recently published study, we analysed the economic impact of adopting 5G use cases, both new and established, in five sectors – healthcare, smart utilities, consumer and media, industrial manufacturing and financial services – and found that, in aggregate, the adoption of 5G will add $1.3 trillion to global GDP by 2030. The sectors that will benefit the most are healthcare, utilities and the consumer and media sectors.
Bartlett: As 5G standards and network infrastructure continue to evolve over the next three or four years, companies and industries will adopt the technology to replace 3G, 4G, Wi-Fi and other mobile standards for their communication needs. It will also drive a greater need for companies to invest and accelerate their own adoption of digital technologies to remain relevant in their industry sectors. We have conducted economic analysis which identifies industries which have had low digital adoption and relatively low levels of productivity gain over the last 5-10 years, as having the greatest potential benefit from adopting 5G and related technologies. This equation identifies different sectors depending on how those factors compare in each country market. For example, in Australia the greatest opportunity areas include sectors such as mining, utilities, agriculture and construction.
Duffey: In the short term, gaming will be a big driver of uptake. The capabilities of 5G fit well with gaming through high bandwidth for graphics and low latency for real-time control. AR and VR capabilities power 5G and will also increase user immersion and bring the real world into the games through experiences. Gamers have proven that they are willing to pay for new experiences, which 5G can provide. In the medium term, healthcare will be a big sector for 5G. Wearable devices are increasing in popularity and are able to collect a lot of health-related data, including heart rate variations and respiratory rates. This data can be very beneficial to increase the effectiveness of treatments and efficiency of diagnosis, providing the potential for large cost savings. In the long term, when both 5G coverage and capacity are ubiquitous, heavy industrial applications will benefit through low power remote sensor networks and real-time remote control of machinery.
“With new technology, there is a tendency to underestimate its impact but to overestimate its speed of adoption.”
FW: In the years ahead, to what extent do you believe 5G will be a game changer for how companies run their businesses and service their customers?
Meakin: With new technology, there is a tendency to underestimate its impact but to overestimate its speed of adoption. This may well apply in the case of 5G. It is unlikely that 5G will be a game changer for businesses in its own right, but in combination with AI, XR, edge computing to help with near real-time latency and other technologies like robotics and drones, it definitely is. These technologies will work better on a low latency mobile broadband network which will allow devices, equipment, applications and workloads to be precision-managed anywhere, from anywhere. But making this a reality will require new collaborative business models to be created between the companies active in these technologies to create, enable and monetise solutions for companies, organisations and end users, no longer in a B2B or B2C way, but through ‘B2B2X’ business models.
Duffey: 5G will increase the number of touch points that businesses have with their customers. 5G-enabled devices will become ubiquitous in everyday life. These devices will be much more than the phone everyone carries today and will range from smart glasses to wearable health trackers to connected vehicles. Each device will create a customer touch point that allows the business to interact with and increase the understanding of its customers’ behaviours and likes. These new devices will allow online and remote interaction points to become more dynamic, allowing for a richer experience and reducing the need for physical locations.
FW: What steps should a business take now to prepare for the 5G network, so it is ready to leverage the benefits? How important is it to involve staff in the transition process?
Meakin: The first step, which should be a ‘no regrets’ move for all businesses, is to factor 5G into technology strategic planning and product roadmaps and to think about it in combination with AI, XR, robotics and IoT. 5G’s full impact may be still some years out, but it will take off within a typical company’s three-year planning horizon. During the next five years we will see continued social and behavioural changes, accelerated by the pandemic, radically different uses of cities and commuting patterns, demands to massively increase access to healthcare and major drives to decarbonise societies. In this context, the emergence of an ‘internet of skills’, where anyone can deliver his or her skills as if they were physically present, from anywhere, and the proliferation of new immersive customer, employee and citizen digital experiences will catalyse a step change in global economic productivity. And far-sighted businesses that spot these opportunities and use technology to go after them will gain a competitive advantage.
Bartlett: Companies should be focusing on innovation broadly, and constantly monitor ways in which technology can help them operate more efficiently and deliver better products for their customers. 5G provides one of many lenses for companies to leverage in their innovation process. In many cases, companies will be able to leverage 5G-related product and service offerings from their telecommunication service providers as they become available on the network, and the network slicing feature of a 5G core will provide companies with greater choice around the level of service they would be willing to pay for. For companies that have sufficient scale and appetite to operate their own private communications networks, they should start to consider the investment case now to upgrade their legacy radio or mobile networks, taking advantage of the benefits from 5G and securing their return on this investment into the future.
Duffey: Companies should be preparing now. The coverage and capacity of 5G networks is increasing daily. Hence companies should be looking at how 5G can be used to enhance their products, services and business processes. Once they understand where 5G can work for them, they need to be thinking about how to partner with 5G network providers and other players in the 5G ecosystem to get access to the products and services they need. B2B2X business models, where businesses partner with 5G providers, will be critical. Developing the right partnerships will reduce the cost to develop 5G-enabled products and services and reduce the lead time required to get a product to market. Several 5G operators are opening up to partnerships with businesses of all sizes through innovation ecosystems that simplify the partnership process. It is also critical that staff are trained to understand what 5G is and its benefits, so they can identify how the power of 5G can be captured in their business.
Rolf Meakin is a partner in PwC’s Strategy& practice based in London. He advises telecoms and tech companies on their market and investment strategies and works with them to design operating models that drive out efficiency and enable new business models. In a career spanning more than 20 years, he has worked in over 60 countries, designed award winning new business ventures, and helped clients achieve a step change in their financial performance. He has published widely on 5G. He can be contacted on +44 (0)7801 247 667 or by email: rolf.e.meakin@pwc.com.
Chris Bartlett is a partner in PwC’s Strategy& practice based in Sydney, Australia. He advises major players in the telecoms and technology sector across the Australia, South East Asia and New Zealand markets on their strategic agendas, with a particular focus around market entry, product and asset portfolios, acquisitions, digital capabilities and inorganic growth. Prior to joining Strategy&, he worked as managing director of Bartek Consulting, offering technology expertise to various clients in the telecommunications industry across Australia, the US, Latin America, Malaysia, Indonesia, Spain and Austria. He can be contacted on +61 414 835 935 or by email: chris.bartlett@pwc.com.
Matthew Duffey is a partner at PwC based in Dallas with over 15 years of consulting experience, serving a variety of high-tech and telecom companies. He specialises in go-to-market, pricing and service operations. He also advises companies on corporate strategy, including in M&A and the integration and separation processes. He can be contacted on +1 (210) 748 2378 or by email: matthew.s.duffey@pwc.com.
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