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Telecom operators need to lead way in developing tie-ups to foster 5G industrial innovations

(Image credit: Future)

Without rolling out 5G industrial use cases with innovative business models in the Gulf Cooperation Countries (GCC), value chain players will find it difficult to drive revenue growth and tap into the true business potential that has to offer, industry experts said.

Although several telecom operators in the region have already soft-launched 5G services, those are primarily targeted at creating consumer awareness, measuring the usage propensity, and to demonstrate technology leadership in the market.

Previous cellular technologies such as 3G and 4G were meant for human interactions but 5G is the platform for machine-to-machine communications.

Krishna Chinta, Program Manager for Telecoms and IoT at International Data Corporation (IDC), told TechRadar Middle East that there is a need for telecom operators to make deliberate and quick strides in forming enterprise 5G ecosystems to maximise the value share of technology.

“Telecom operators should form technology partnerships to work concurrently on digital technologies as well as operational technologies pertinent to the 5G era. Telecom operators should thus lead the way in developing partnerships to foster 5G industrial innovations and be instrumental in the rollout of commercial use cases,” he said.

Tareq Al Awadi, executive director for spectrum management at the Telecommunications Regulatory Authority (TRA) of the UAE and chairman of Arab Spectrum Management Group, had urged telecom operators, recently, to make government entities and private sectors as partners and not as customers to make 5G a success.

“If you treat them as ordinary customers, you [telcos] will not succeed. You need to work with them and see their needs and treat them as partners,” he said.

5G technology is not fully evolved yet

TRA is expected to unveil the “UAE 5G Strategy” for the next five years soon and it will chalk out the roadmap to accommodate and implement 5G for the next five years.

However, Chinta said that the 5G technology is not fully evolved yet as 3GPP's release 16 standards on carrier aggregation are not expected to be available before March 2020 and release 17 standards on common API framework will only be available in 2021.

“Most importantly the business models that are being considered or adopted for the consumer 5G fixed wireless data services have not been drastically different from that of the 4G services. Thus, we do not expect to see the evolution of true 5G industrial use cases and business models before 2021,” he said.

Sukhdev Singh, executive director at research and consulting services provider Kantar, said there are two aspects for 5G to gain traction - supply side and the demand side.

“From the supply perspective, there is a gap to be covered. Provided the services are available, businesses would try to exploit before consumers side of traction. Telecom operators tend to shy away from investing a lot into the infrastructure amid the current economic environment,” he said.

That is where governments come into play, he said and helps the telecom operators to get the infrastructure up and running and make the accessibility in a bid to promote the technology adoption.

“It is also about image and ranking and TRA plays a key role as a stakeholder in the overall adoption of technology in a country. Giving them [telecom operators] a spectrum holiday for two years is a great way to get the technology off the ground and also position the UAE to be at the forefront of ICT adoption,” he said.

Two-year exemption from spectrum fees 

Saleem Al Blooshi, Chief Technology Officer at EITC, the parent company of du, said that the spectrum allocation model in the UAE is lease based as compared to auction in other countries.

“We, telecom operators in the UAE, pay yearly fees for spectrum capacity allocated to us. From the C-band in 5G, TRA has allocated 3.5GHz for telecom operators and it is free for 2019 and 2020 to push us for the rollout as real business use cases are not available,” he said.

Singh said that people would look at investing in applications and developing the ecosystem only when the technology is available.

“It will take at least two to four years for 5G to gain wider adoption in commercial space. Sectors which are more technology-dependent such as retail, automobile and healthcare will lead the way,” he said.

In the GCC region, 5G connections as a proportion of the total data connections are expected to remain very small this year.

However, Chinta expects a healthy growth rate during the 2020-23 period.

He said that the mobile data revenues across the GCC are expected to grow in single digit over the next three years.

“The growth of mobile data spending is not expected to be significantly higher in consumer segment over the business segment or vice-a-versa. Using the existing business models, telecom operators may find it difficult to add a significant amount of net new 5G connections, except for the subscribers added through migrations from 3G or 4G technologies,” he said.