5G is the next generation of mobile network; designed purposely to fit the advanced connectivity requirements of enterprises as well as the mass consumer market. 5G’s massive MIMO antenna arrays, wider radio spectrum, and ultra-dense networking have the capability to provide unprecedented speed, ultra-low latency, and connection to around one million devices per square kilometer. Moreover, 5G along with technologies like network slicing, software-defined networking (SDN), network function virtualization (NFV), and multi-access edge computing (MEC) are the key enablers shifting the traditional network architecture and driving business innovation across industry verticals.
5G leased line or dedicated access for businesses
Businesses having high dependency on the internet need a reliable, seamless, and robust connectivity. A leased line can cater to these requirements by ensuring high-speed communication over a dedicated bandwidth. Along with exclusive connectivity link, a leased line can also ensure stringent service levels for critical end-use applications. While a point to point leased line connects two or more locations over a dedicated line; internet access leased line connects users to the internet instead of different locations. Leased line services or dedicated access are traditionally delivered over network technologies like fiber, microwave, etc. Expansion of fiber network in remote locations is typically not viable commercially, while in-city deployment often leads to complication with municipalities. On the other hand, microwave is expensive and has higher time to market. Also, microwave is susceptible to weather conditions and can result to gradual attenuation of signals resulting to poor service quality.
Nevertheless, 5G based leased lines have the capability to offer transmission rates similar to a fiber network and significantly enhance the experience for end users. The recently finalized release 16 by the global standards body – 3GPP has set the stage for 5G to expand into different verticals and new capabilities. Key focus area of the release 16 include – industrial IoT and automotive applications, support for unlicensed spectrum, and integrated access and backhaul (IAB). Moreover, industry focused features like ultra-low latency introduced by the release 16 is bringing new benefits especially for enterprise connectivity products like 5G dedicated access. In areas lacking fiber network coverage, 5G dedicated access has the potential to become the preferred choice of network for delivering a high-speed connectivity. While in areas where fiber or microwave connectivity are already in place, 5G dedicated access can serve as a back-up link, and provide a redundant network service. End-to-end service level assurance for uptime, latency, and packet loss; enhanced agility, scalability and security are some of the key benefits offered by 5G dedicated access.
Potential applications:
- Oil and gas: Oil and gas facilities are located in remote and isolated locations with harsh weather conditions. The need for a robust communications system in these facilities is critical for not only managing the daily operations, but also for providing a resilient and redundant communication platform during emergency situations. Traditionally, communication systems connecting remote and on-shore facilities in the oil and gas industry are heavily reliant on very expensive satellite connectivity. However, it is susceptible to weather conditions and thus not always reliable for meeting the mission-critical communication requirements of the industry. These satellite links can be potentially replaced by 5G dedicated access or leased lines to ensure enhanced network availability and reliability. Moreover, with the growing adoption of smart security surveillance systems which need real-time transmission of HD video feeds; the existing oil and gas networks are getting increasingly overwhelmed. 5G dedicated access with its high bandwidth and ultra-low latency connectivity will bring a whole new avenue of growth for video security surveillance systems in the sector.
- Healthcare: The healthcare industry have been embracing plethora for digital solutions for making medical processes more seamless, fast, and efficient. Growing adoption of sensors and wearable technologies in healthcare systems is aiding remote diagnosis or tele-health services. Other transformational trends in the sector include medical robotics, which can perform from routine tasks to advanced remote surgeries. Also, technologies like virtual reality (VR) and augmented reality (AR) are increasingly adopted by the industry mainly for training medical workers and also for facilitating advanced diagnostics like image-guided surgery. These digital transformation trends in the healthcare sector is leading to the generation of large data volumes and driving continuous demand for instant and reliable connectivity. 5G leased lines can effectively cater to these communication requirements of critical healthcare services and facilitate end users with enhanced quality of service. Moreover, there has been an accelerated push towards use cases like – tele-medicine, remote temperature monitoring, etc led by the COVID-19 pandemic. In addition to critical connectivity requirements, these use cases often demand faster provisioning of service. Instead of laying cables, which is a laborious process, 5G can quickly setup the connection at any location and on a short notice, providing the advantage of mobility and enhanced flexibility in service provisioning. 5G dedicated access can also provide the highest stability and reliability for interconnecting medical facilities – clinics and hospitals to ensure seamless interaction and rapid transfer of diagnostic information.
- Manufacturing: The fourth industrial revolution – industry 4.0 has led to the integration of several advanced technologies and development of new use cases across industry verticals. The key imperative of manufacturing industries is to improve agility and efficiency of production process. Moreover, adoption of industrial IoT technologies is leading to the embedment of more sensors into machines. Manufacturers are increasingly looking to utilize the data collected from these sensors to streamline process, prevent and detect faults proactively, and develop a cognitive ecosystem in the industrial environment. Traditional connectivity lines in manufacturing are not scalable enough to cater the evolving needs and challenges of the industry. 5G leased lines have the opportunity to replace the traditional inefficient networks and meet the current as well as future connectivity requirements of manufacturing industries. Also, 5G can support interconnection of manufacturing locations and offices through a dedicated access, providing stable and secure connectivity, and ensuring efficiency and business continuity.
Opportunity for regional telcos:
The coverage of 5G networks is expanding rapidly in the Middle East and along with it the uptake of high-speed mobile connectivity across new application areas. Enhanced mobile broadband (eMBB) is one of the initial 5G application scenario; proliferating rapidly since the commercialization of the network. As a part of their strategy to quickly monetize 5G network investments, operators have shifted focus from the consumer segment and started expanding their enterprise services portfolio for better margins. Currently, 5G leased lines are serving more than 3000 SMEs in the GCC countries, offering high-speed bandwidth, guaranteed SLA, and faster rollout for enterprise which are irreplaceable features brought by 5G. By end of 2020, number of 5G based leased lines in the region is expected reach more than 5,000 small and medium-sized enterprises (SMEs). Many regional operators are marketing 5G as “Air fiber”. The ongoing expansion of 5G network in areas with no existing fiber connectivity is driving more value for 5G leased line or dedicated access. For example, in Saudi Arabia and Kuwait, many new industrial areas with no fiber penetration are getting covered by 5G network.
While monetization potential of 5G dedicated access is immense, operators will have to figure out the right business model and pricing strategy to capitalize on this opportunity. Operators can use a premium pricing strategy for 5G dedicated internet access (DIA) and dedicated data access (DDA), with guaranteed stringent SLAs for end users. Whereas operators can charge a comparatively lower price targeting the larger market by offering 5G eMBB dedicated access on best effort basis. In the Middle East, several operators are positioning 5G dedicated access packages for enterprises at a 5-10 times the ARPU compared to the consumer packages. Moreover, as a part of an innovative business model many operators in the region are also exploring the idea of partnering with local internet service providers (ISPs) in order to increase their market reach. ISPs can benefit from cost efficiency by migrating their expensive microwave connections to 5G dedicated access, while maintaining their leased line SLAs adequately.
The COVID-19 pandemic had a dampening effect on most business services including dedicated access due to spending cuts, amid decline in activity as well as cash inflow problem. Although, in some areas with better 5G coverage, 5G realized its business value and social value during the pandemic. For instance, 5G leased line generated new services such as 5G mobile banking, unmanned delivery truck and the zero-touch body temperature test by thermal cameras and connected helmets. With the easing of lockdown, the up-take of 5G dedicated access is picking up quickly now with several hundred 5G dedicated access deployed recently across the region. Going forward, adoption of 5G dedicated access is expected to accelerate further, as the economies come back to growth in 2021.
Conclusion:
In the era of industry 4.0, the existing networks technologies like fiber, microwave, etc. are struggling to deliver the evolving connectivity requirements of new use cases across industries. 5G leased line or dedicated access can meet the advanced connectivity requirements, and also offer additional benefits like faster time to market, easy provisioning, and enhanced scalability for operators and enterprises. Moreover, as telcos eagerly wait to diversify their revenues streams, 5G dedicated access is emerging as one of the potential high-growth revenue area. An operator’s 5G coverage advantage over competition needs to be monetized quickly especially in areas lacking effective broadband connectivity. However, to capture the market potential, it will be crucial for operators to continue network investments and also figure out the right business model and pricing strategy. Delivering guaranteed SLAs can be one of the key ways telecom operators can command a premium price from enterprises for 5G dedicated access.
Authored by: Saurabh Verma, Business Head, ICT Gourab Banik, Senior Research Analyst, ICT
