OYSTER BAY, NY — Mobile service providers investing heavily in 5G networks will need to focus on the enterprise market to see a return on their investment any time soon, according to new research from global tech market advisory firm ABI Research.
In fact, if MSPs rely solely on consumers to justify their investments in 5G rollouts, it could take up to 15 years to realize any ROI, ABI Research said in a news release that outlined some of the findings from its recent The Five Myths of 5G whitepaper.
The use cases for 5G across different vertical markets, such as industrial automation, cloud gaming, private LTE, and smart transport systems, will become pervasive and will unlock new business opportunities for MSPs along the way, ABI Research said.
However, MSPs may be hampered in their efforts to capture enterprise customers due to how 5G technology has been rolled out. That’s because early 5G implementations were designed to fit the needs of the consumer market first, ABI Research said.
“The intent was to allow MSPs and their technology suppliers to harvest the low-hanging revenues of the consumer space before gradually extending the network’s capabilities to meet the needs of the enterprise,” explained Stuart Carlaw, chief research officer at ABI Research, in the news release. Unfortunately, this process has proven a lot more costly and time consuming than initially thought, according to ABI Research’s findings.
One of the expectations placed on 5G is that it will help MSPs to reduce the cost per gigabyte of bandwidth, in addition to improving the average revenue per user (ARPU) compared to existing access technologies. However, 5G technology is expected to be much more expensive compared to its predecessors, due to the network densification it requires and the addition of a great number of new functions, both at the core and the access sides of the network. As a result, the implementation and democratization of 5G will come at very high costs, notably operational expenditures, which are already increasing at a very alarming rate, ABI Research said.
“This raises the question, ‘What incremental consumer average revenue per user (ARPU) will 5G create?’ The answer is, undoubtedly, ‘Not enough,’” Carlaw said in the news release.
Enterprise-focused telcos could potentially become the new cash cow for securing 5G ROI, ABI Research said. Indeed, 5G is positioned to be a major component of enterprise digital transformation and a reliable wireless communication platform that could create trillions in economic value across many enterprise verticals, according to ABI Research.
However, 5G implementations for enterprise applications are far from optimized currently, leaving MSPs unable to accelerate the enterprise digital transformation and unlock new opportunities in this environment.
“Network architecture flexibility, interoperability with legacy operation processes, cost effectiveness, network determinism, security, and reliability will be equally important for the enterprise as providing bigger pipes — a value proposition that has long resonated well within the consumer market but is unlikely to attract industrial verticals,” Carlaw said.
The idea of building a 5G network capable of accommodating the needs of multiple markets and industries is a big fantasy of MSPs, ABI Research said.
“The reality is that the implementation approaches that have been designed for the consumer market will not adequately serve enterprise verticals. The ‘build it and they will come’ approach is simply unrealistic and is one of the myths holding back the 5G market,” Carlaw concluded.
To learn more about ABI Research’s findings, download its free The Five Myths of 5G whitepaper here.
