Enterprises keen on 5G, but can telcos be more than B2B bit-part players?

• New report from GSMA Intelligence says 5G is a spending priority among enterprises undertaking digital transformation
• Extensive survey reveals enhanced security is seen as the top benefit of using 5G and private networks, followed by greater cloud/network integration and better connectivity
• Operators still only play a marginal B2B role in the ‘beyond connectivity’ space, but GSMAi sees potential for telcos to be ‘tech orchestrators’, managing and integrating multiplayer ecosystems

The impact of 5G on the consumer market, in terms of average revenue per user (ARPU) uplift, has been broadly negligible so far: “A huge disappointment,” remarked the TM Forum in a recent report. Casting its eye over the telecom industry in 2023, it bleakly added that “there was little or no evidence that consumers were prepared to pay a premium over LTE for mobile broadband services”.

Can the business-to-business (B2B) sector be a more fertile 5G hunting ground for mobile network operators (MNOs)? According to GSMA Intelligence (GSMAi), the research arm of the GSMA – a trade body representing mobile operators worldwide – there appears to be some cause for optimism.  

In its report (behind a paywall) titled “The rise of digital industries: Navigating enterprise needs, investments and supplier decisions”, which canvassed nearly 4,200 enterprises across 21 countries (and 10 sectors) between June and August 2024 to gain insight into their digital transformation strategies, GSMAi found that 5G spending was a priority for the majority of organisations.

Between 2024 and 2030, according to the report, enterprises will spend a good chunk (9%) of their digital transformation budget on 5G connectivity and devices. Enhanced security is seen as the top benefit of using 5G and private networks, followed by greater cloud/network integration and better connectivity.

Moreover, while 4G and 5G “will co-exist for years”, GSMAi expects 5G spend to be 2.5 times higher than 4G spend by 2030. This reflects, says the research firm, not only a gradual shift from 4G to 5G but the growing use of 5G for connecting machines (largely unexplored in the 4G era).

When asked to assess the importance of various networking technologies (5G, 4G, fixed and Wi-Fi, and satellite) to their company’s digital transformation success – with the caveat that survey respondents must be working at organisations already using (or planning to use) the technology in question – 5G, cheeringly for MNOs, got a fairly big thumbs up: Some 47% of those canvassed said they viewed 5G as “extremely important” to digital transformation, while 38% considered it “quite important”.

Fixed and Wi-Fi networks – lumped together in GSMAi’s survey – got the most backing of all the networking technology choices by some margin: More than 60% of survey respondents thought they were “extremely important” for digital transformation success, while 32% considered fixed and Wi-Fi networks to be “quite important”.    

The ‘beyond connectivity’ challenge

What remains a challenge for MNOs and fixed-line operators as enterprises crank up their digital transformation efforts is how to grab a bigger slice of the B2B ‘beyond connectivity’ pie, which GSMAi breaks down into five categories: Edge, 4G/5G private networks, cloud, cybersecurity and internet of things (IoT).

While operators are unsurprisingly the main suppliers of mobile and fixed connectivity services, their ‘beyond connectivity’ footprint is much smaller. On average, across the five technologies flagged by GSMAi, 11% of enterprises work with operators. The research firm nonetheless takes a glass-half-full view. “This [11%] represents a solid base to build on, as major operators are increasingly targeting B2B growth beyond connectivity,” says the report.

The TM Forum, meanwhile, notes that cloud and security services are already generating strong revenue growth (between 15% and 20% per year), particularly from incumbent telcos in North America, Europe and north Asia.

GSMAi also sees potential for telcos to play an “orchestrator role” in the handling and integration of multiplayer ecosystems. “Playing a tech orchestration role brings higher value to operators and the possibility to forge long-term relationships with other suppliers and enterprise customers,” says the report. “However, competition is fierce, as other suppliers [especially hyperscalers and systems integrators] are targeting the same opportunity.”

“Enterprises of all sizes are eager to advance their digital transformation and are making the necessary investment,” says Pablo Iacopino, head of research at GSMAi. “As a result, supplier competition is fierce. Telcos need to go beyond just providing network services since enterprises are increasingly looking for partners who can help them throughout their full digital transformation journeys, combining technologies such as 5G, AI, IoT and cloud to improve efficiency, security and drive revenues.”

All players in the digital transformation ecosystem should note, however, the headline findings of GSMAi’s report if they want to cosy up more to enterprises: The top priorities for digital transformation among most enterprises are cybersecurity and revenue growth, along with improved customer experiences and competitive positioning. Cost cutting, it seems, is not a major driver for enterprise digital transformation.

- Ken Wieland, Contributing Editor, TelecomTV