Should 5G services strategy for business customers go horizontal or vertical? Mobile executives in different regions take different positions.
There is a growing consensus that vertical 5G use cases will prove important. But nearly half of survey respondents in Asia believe the better approach is the traditional horizontal connectivity approach, BearingPoint says.
One important reason some businesses do not see service providers as the most important player to help them develop 5G use cases is that they are looking to buy solutions, and service providers are looking to sell standard products, BearingPoint says.
That is not a new problem. Telcos alway prefer to sell horizontally when they can. Businesses, on the other hand, sometimes prefer a vertical approach, since that provides a “complete solution” ready to be consumed in a bite-sized way, with no upfront investment or risk.
And most buyers seem to recognize that partnerships are necessary for telcos--or any other solution provider--to create those solutions.
Many European and Asian service providers consider their knowledge and expertise of 5G technology as their sole selling point. That is dangerous, BearingPoint suggests.
“it’s the same approach that saw service providers become disintermediated during the 4G era,” BearingPoint says.
To be sure, connectivity providers have not been especially successful in most attempted solution provider roles. Their efforts to become computing suppliers, app providers, app store providers, data center operators, content creators, device manufacturers or mobile payments suppliers have generally faltered or failed.
One might therefore be skeptical of telco efforts to become edge computing suppliers or internet of things solution providers, as crucial as those initiatives might be in creating sizable new revenue streams.
On the other hand, the pattern is not monolithic. Connectivity providers have in some instances managed to become successful suppliers of subscription video services, mobile payments and banking in Africa, data center operators in some instances, successful technology integrators in some instances
So some optimism about service provider 5G business solutions is not unrealistic. In fact, a BearingPoint survey suggests potential enterprise and smaller business customers believe telcos can be solution providers.
Business customers seem to be much more confident that connectivity providers have a key role to play as suppliers of 5G-enabled solutions than many service providers do, in Europe and Asia. But service providers might be more realistic than customers are, at the moment.
Asian service providers are more likely to focus their 5G efforts on more traditional connectivity-driven models than higher value services approaches, BearingPoint says. To be sure, 46 percent of Asian service providers see themselves as solution providers, going beyond the connectivity plus IT infrastructure services that are common today.
Another 17 percent see themselves as end-to-end actors facilitating an ecosystem of providers But Asian business customers have more confidence in their service providers. Nearly all customers believe telcos are positioned to be more than communications providers.
Full 92 percent of Asian businesses would consider buying new technology solutions from service providers BearingPoint’s survey finds Enterprise and SMB customers would rather work with service providers due to their ability to orchestrate ecosystems of partners, manage complex programs, their knowledge and expertise around 5G and the fact they trust them more than other market players.
Nearly 70 percent of Asian business IT leaders think service providers should be offering 5G solutions combining connectivity with IT infrastructure, applications and other capabilities that would be offered through an ecosystem of partners.
In Europe, service providers seem even more pessimistic about moving out of the connectivity role. Just a third of service provider executives believe their role will extend beyond basic connectivity and infrastructure offerings.
Only 10 percent of European service providers believe they will enact a role of end-to-end providers facilitating an ecosystem of partners. Yet 92 percent of European businesses agree that service providers have a bigger role to play in the market than simply providing communications and connectivity.
More than three quarters of North American service providers agree that creating vertical specific solutions using ecosystems of partners represents a big 5G opportunity, though. Half of North American service providers expect to evolve into 5G solutions providers, with 40 percent of these service providers anticipating a role in which they’re end-to-end providers facilitating an ecosystem.
North American businesses are most positive about the role service providers will play in 5G, with 96 percent saying they believe telcos will do more than provide connectivity.
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