5G opportunities for local telcos
As OTT players encroach on their traditional turf, telecom operators must look elsewhere to make money from 5G, according to Vertiv
published : 23 Oct 2019 at 04:01
newspaper section: Business
The arrival of 5G technology has created huge anticipation across Southeast Asia, especially about the potential innovations it will help to make possible, according to Vertiv, a multinational provider of equipment and services for data centres.
Telecom companies, along with media and technology companies, want in on the innovations 5G technology promises -- as well as the competitive edge from being the first to market.
The huge potential of 5G may seem obvious, but is it the silver bullet that will restore much-needed vigour to the telecom sector? The answer is by no means cut and dried.
In Thailand, telcos were initially reluctant to invest the costly sums required to develop 5G. However, the government has come to their aid with a Section 44 decision that gave both telecom businesses and digital TV operators financial relief and room to adapt to the rapidly changing digital economy.
Since then, the three main mobile operators -- Advanced Info Service (AIS), True Corp and Total Access Communication (DTAC) -- have agreed to seek three licences on the 700-megahertz spectrum.
The government hopes to continue this progress with the 5G testbed launched earlier this year between DTAC, TOT Plc and CAT Telecom at Chulalongkorn University, and in the Eastern Economic Corridor.
INDUSTRY IN FLUX
To understand where the 5G opportunities reside, we first need to understand the complex set of challenges faced by telcos. This is an industry in flux.
Revenues are flattening as consumers demand more data at a static price based on competitive market conditions. Providing this data costs more for the operator, making it difficult to increase average revenue per user.
At the same time, core services such as voice, messaging and video calls are being eroded by over-the-top (OTT) players such as Facebook and Line.
However, service erosion is not the only area where telcos are under threat from OTT players. Facebook, Amazon, Netflix and Google have created innovative new services using the existing telecom infrastructure.
When it comes to video content, shopping or traditional communications, these newer players own the customer relationship, reducing the telco to a commoditised, low-profit pipeline.
With this in mind, telecom businesses need a clear understanding of where 5G innovations can help them revive their fortunes. Upgrading the network to provide 5G capabilities is a complex and costly job so there must be a clear business case to justify the investment.
Thankfully, the broadband-equivalent download speeds and low latency promised by 5G holds multiple opportunities for local telcos.
More use of IoT: First and foremost, 5G will enable the long-heralded Internet of Things (IoT). For telcos this means an opportunity to fill the network -- something that has proved challenging in recent years. With most consumers already signed up to a telco, growth from additional consumers is minimal. However, when each of these customers, especially business customers, is linking multiple smart devices to the network, the growth potential becomes phenomenal.
In manufacturing, telcos can position themselves as the backbone -- linking sensors to back-end services and empowering automated supply chain infrastructure or factory floor operations.
Similarly, network operators could play a critical role in smart city systems such as intelligent street lights and traffic control.
For telcos to capitalise on the 5G opportunity, every element of their networks must be operating at their best. For smart data centre stakeholders thinking ahead to 5G, here are some key points to consider:
Latency and edge computing: Low latency, which describes a computer network optimised to process a very high volume of data messages with minimal delay, is one of the core promises of 5G. Edge (Machine2Machine archetype) data centres will be critical for reducing latency, bringing computing power closer to end users.
Telcos are at an advantage when it comes to network edge, boasting an extensive real estate footprint ripe for conversion.
Managing multiple sites: Telcos have a unique blend of geographically dispersed, IP-connected core, edge, transmission and access sites. All of these will need to be optimised for 5G, from AC and DC power supplies to servers, racks, switches, space, power and cooling. However, one solution will not fit all. Facilities managers need to select components accordingly.
Additionally, smart data centre infrastructure management (DCIM) and security solutions will be required to monitor performance and manage threats across the network. According to a recent 451 Research study commissioned by Vertiv, 68% of respondents in Asia-Pacific saw DCIM as the most important technology for achieving operational and profitability goals around 5G.
Reducing energy costs: While the brave new world of 5G means enhancing and optimising network infrastructure, telcos must also be mindful of the other half of the puzzle -- managing costs.
Energy is typically the highest operating cost for facilities, and this is set to rise significantly as site density builds up to accommodate the additional data traffic generated by 5G.
Energy Saving as a Service is a new option worth considering. It can lock in savings across multiple sites, as well as deliver peace of mind with monitoring, maintenance and support.