Among the global telecom operators, the early adopters of 5G networks in the Middle East, China and South Korea have seen initial success, with operators in China achieving 14% and 11% growth in revenue and profitability, and in South Korea increased 5% and 40% respectively. In the Middle East region, Kuwait, the country with the earliest and fastest 5G development, achieved 4% growth in revenue and 13% growth in profitability. There are more than 9 million 5G users, including about 900K 5G Fixed Wireless Access (FWA/B2H) users. However, the new players, which are mostly the Over-The-Top (OTT) service providers have been emerging for a while and will continue to challenge telecom operators in their consumer market, causing revenue stagnation.
Telecom operators have recognised the risk of consumer revenue erosion that caused by the OTT. To tackle these, telecom operators were quick to penetrate in to the enterprise business. Leveraging exisitnig connectivity and network infrastructure operators have traditionally offered B2B services with SLA backed products and services such as voice, internet, networking, vendor IT/IP services and equipment reselling. By focusing on B2B services telecom operators have been able to monetize and use the existing infrastructure deployed for consumers but provide customized high-performance services at a bigger scale and a much better price margin.
By offering this suite of traditional ToB services, telecom operators have been able to historically unlock new revenue and position themselves as trusted ICT service providers for both public and private organizations. However, with the advent of fourth industrial revolution and changing of industry ICT spending, telecom operators have had to revamp their ToB offerings to stay relevant and to compete with other leading ICT providers.
To differentiate their offerings and demonstrate their capability to support vertical specific solutions and use cases, telecom operators around the world have started offering enterprise cloud solutions and are also heavily leveraging their deployed 5G infrastructure to offer advanced and more efficient B2B services. With a market that is forecasted to reach close $181.35 Billion by 2030, growing at a CAGR of 14.8% from 2021 to 2030, the B2B opportunity for telecom operators in huge.
Leveraging 5G and Cloud to Unlock New B2B Opportunities
As IT maturity improves, enterprises will need to deploy new technologies to digitally transform their business and deliver better services and improved process efficiency. To be successful in digitally transforming their business, enterprises will heavily rely on the capabilities of cloud solutions to store, analyse and make data highly available across all locations. Additionally, to fully realise the capabilities of advanced cloud solutions, 5G will play a key role in ensuring large amounts of data is transferred, analysed and sent back to the user at very high speeds. This synergy between 5G and cloud has enabled advanced use cases like predictive maintenance, automated guided vehicles and smart manufacturing. As enterprises across industries continue to undertake digital transformation initiatives, the demand for cloud and superior connectivity services has continuously grown. Telecom operators have capitalised on this growing demand and have diversified their service portfolio to include advanced cloud solutions and enhanced services that are delivered using 5G network infrastructure.
GCC Countries have seen an early adoption of 5G technologies in B2B, with development in 5G DA and virtual network style of deployments.
5G Backed Innovative B2B Services
Key verticals like Manufacturing, Retail, Energy & Utilities and Healthcare demonstrate many addressable opportunities for 5G-powered IoT transformation, and telecom operators are already rising to these new challenges by offering innovative B2B products and services.
DIA over 5G
Dedicated Internet Access (DIA) which is a SLA back dedicated high speed enterprise internet connection provided by telecom operators, was traditionally delivered over Microwave and Fiber. However, with 5G enabled infrastructure in place, telecom operators like leverage their 5G deployments to deliver enhanced uninterrupted DIA services to the enterprise customers. Moreover, the ability of 5G to enable and support use cases requiring high speed, low latency and high reliability, it has quickly emerged as a preferred access type to deliver DIA services to enterprise customers. Operators in the Middle East have been quick to launch 5G DIA services aimed at the enterprise market. The quality of service delivered over 5G has significantly pushed enterprises in the region to adopt DIA services from operators who are delivering this service using 5G. The success of DIA over 5G is evident from the fact that more than 20,000 5G leased lines have been installed across Middle East have helped operators increase their ARPU by atleast 5-10 times. Moreover the use of 5G leased lines in projects such as 5G leased line plus mobile video in Dubai’s large-scale event campus and 5G plus smart devices in education projects in Kuwait, have brought great social values in addition to revenue.
As enterprises continue to deploy Industry 4.0 use cases, organizations have strong demand to have uninterrupted dedicated connectivity that can support these deployments while maintaining security. In addition, these deployments need high-speed internet, high reliability, ultra-low latency, and the ability to support a large number of devices at the same time. These requirements motivated telecom operators to leverage slicing capabilities of 5G to carve from their 5G deployment a virtual network that is dedicated only for one specific enterprise use.
To distinguish themselves form their competitors and achieve process efficiency, industries in all key verticals are rapidly deploying Industry 4.0 uses cases. To successfully deploy and reap the benefits of these advanced Industry 4.0 use cases organizations need to implement several emerging technologies that need to work in harmony to truly unleash the potential of these uses cases. For these emerging technologies to seamlessly work and interact with one another they require uninterrupted dedicated connectivity that is highly secure and has the capability to deliver high-speed internet, high reliability, ultra-low latency, and can support a large number of devices at the same time. These complex and demanding requirements arising from the Industry 4.0 use cases cannot be met by traditional internet connections delivered over 4G or LTE. Thus, only the telecom operators who had already deployed their 5G infrastructure have been able to cater to these requirements which have allowed them to unlock a highly potential stream of revenue. These innovative telecom operators were able to leverage the slicing capability of 5G to carve out from their exisitnig 5G deployments a Virtual Network that is dedicated for a particular enterprise and has ability to support all of its complex use cases.
5G Virtual Private Networks
Virtual Private Network are dedicated private networks carved out from exisitnig 5G consumer network and can only be accessed by devices belonging to a particular enterprise. Given the quick commercial roll out of 5G services in the Middle East, operators have been able to explore the B2B opportunities by positioning 5G Virtual Private Networks. Currently, in the Middle East, three 5G virtual networks are in operation that provides connectivity for eight 5G industry use cases, such as:
- Drones and vehicle-mounted cameras are using 5G connectivity to improve campus security.
- 5G has enabled the use of AI and real-time HD video in checking the health and safety status of on-site workers in remote and hazardous locations. This has helped organizations in improving personnel safety, maintaining safe working conditions and ensures HSE compliance.
- AR platforms driven by 5G allow experts to efficiently guide remotely located on-site workers to tackle complex problems without being physically present on-site. This saves cost of dispatching experts to remote sites
These 5G use cases have been deployed in Digital Oil & Gas and Smart Port and can be replicated in more industries. They have brought new revenue streams to the telecom operators and have enabled them to participate further in the digital transformation of some of the key sectors. The emergence of 5G presents a brilliant opportunity for telecom operators. By leveraging their installed based and trust built with clients over the years, telecom operators are using 5G to ramp up their B2B offerings and create new ecosystems in which they can operate. However, to be able to support more use cases and offer new innovative B2B services leveraging 5G, telecom operators in the region must continue to strengthen and expand their the 5G infrastructure and continue invest in new technologies.
Cloud Unlocks Multiple B2B Avenues for Telecom Operators
Cloud has been the catalyst for digital transformation in many organizations. From simply storing data on the cloud to having advanced or critical run applications on cloud, enterprises have realized the value and benefit of this technology. Today cloud takes a centre stage when it comes to deploying any new technology or advanced Industry 4.0 use cases. Telecom operators who have invested in setting up their datacentres have been able to leverage their connectivity infrastructure and datacentre assets to offer cloud services to their enterprise clients. However with growing IT maturity and rapid digital transformation enterprises are demanding for advanced cloud solutions specific to their vertical. Thus telecom operators have had to look beyond traditional cloud services such as Hosting, Disaster Recovery & Back-up etc. To keep up with this evolving demand and to position themselves as an Industry specific ICT provider telecom operators have significantly invested in new cloud technologies and have also partnered with hyperscalers like AWS and Azure and other cloud-based technology providers thereby acting as system integrator for their solutions.
Cloud services and solutions have always brought in the biggest share of revenue for telecom operators who offer cloud solutions as part of their B2B service portfolio. This trend will continue to dominate even in the coming years, owing to growing adoption of cloud-based telecommunication services across various industries. In 2021, the Middle East Cloud market stood at US $2.3 Billion posing a massive opportunity for cloud providers in the region, this market is expected to further grow and reach a staggering US $5.6 Billion by 2025. The cloud presents a fantastic opportunity for telecom operators who can penetrate the market by aligning their services and offerings with cloud strategies of enterprises. Telecom operators should engage with enterprises in the following ways:
- ‘One-to-One’ Approach: As part of this approach, telecom operators can provide a private on-premises cloud by positioning a BOT model (Build, Operate, and Transfer), comprising of system integration and managed services. This approach will particularly benefit enterprises with more strict requirements on security and real-time services and have the intention to invest in an enterprise edge.
- ‘One-to-N’ Approach: This approach uses the telecom edge where the datacenter availability is within the country. A cloud platform for centralized management needs to be built, corresponding to a cloud stack solution. This approach will also allow large enterprises, governments, finance industries, etc., to share within the country platform, with moderate security and service requirements. Operators can provide reliable infrastructure and XaaS to end-users leveraging their capabilities and ecosystems to provide end-to-end cloud solutions.
- ‘N-to-N’ Approach: With the help of public cloud, in this approach, operators can integrate cloud services for an enterprise, in collaboration with multiple cloud providers. The principal value proposition of this approach is service availability. In addition, public cloud cooperation helps operators develop new markets, brand recognition. Moreover, this approach can also be used to build the foundation for developing the One-to-One approach.
In comparison, with the second and third approaches, operators have more advantages than other providers who can fully leverage the value of cloud-network collaboration and leverage operators’ 5G, ecosystem and partner, campus network, professional service, managed service, and consulting capabilities to provide end-users with comprehensive and competitive solutions, empowering the industry digitization.
Telecom operators have an advantage over other providers when it comes to deploying the ‘One-to-N’ or ‘N-to-N’ approach. Telecom operators can fully leverage the value of cloud-network collaboration and their 5G ecosystem which includes partners, campus networks, professional services, managed services, and consulting capabilities. Thereby, providing end-users with a comprehensive and competitive solution, this empowers digitization in enterprises.
As the cloud industry is rapidly changing, so is the adoption of cloud services evolving, enterprises today are adopting multi-cloud and hybrid cloud setups to cater to their requirement. It is expected in the coming years each enterprise will have atleast five different cloud deployments. This change in adoption models creates two main challenges:
- Accessing multiple cloud networks would need multiple private lines, which often results in multiple subscriptions and slow provisioning. In many cases these separate subscriptions may not have similar and standard services or costs and could take as long as 2-3 months for service provisioning.
- Best-effort networks cannot guarantee the Quality of Service (QoS) required by enterprise customers. Also in many cases cloud service providers often lease the connectivity resources from operators, which cannot treat the service requirement differently but can only conduct best effort forwarding based on fundamental principles which cannot guarantee SLAs
However, by using one-stop cloud network synergy solutions, telecom operators have the unique advantages to address these issues in enterprise multi-cloud access. Enterprises only need to negotiate services with one operator and can have the network and cloud access services provisioned quickly from end to end. Telecom operators looking to grow their B2B business need to offer innovative and competitive cloud solutions to ensure revenue growth. Cloud has in the recent past and will continue to capture the biggest portion of the B2B revenue for a telecom operator.
The Way Forward
Over the years telecom operators have built capabilities in deploying, running, operating and optimizing network in a secure and a reliable manner and have ultimately built a strong position in the market with both infrastructure assets and a foundation as a secure and trusted provider offering B2B services. This has in turn helped them, win business from Governments and large enterprises.
However, to stay completive in the market and maintain a leadership position, telecom needs to offer advanced cloud services while leveraging innovative 5G use cases. Although telecom operators are transforming their business, the transition from a telecommunications provider to an integrated ICT services company can often be challenging. To quickly launch new services for enterprise customers, telecom operators should continue investing in new technologies and strengthening their infrastructure layers such as 5G, Optical networks, Datacenters, and cloud infrastructure. As enterprises continue to improve their IT maturity and digitally transform their business, their expectations from their telecom service providers are evolving. B2B customers expect the ease of self-service and convenience. They want to work with providers with existing relationships and with ones who specialize in their verticals and can offer industry-specific solutions. While 5G has broken into the enterprise market in the Middle East, it has yet to succeed in the enterprise high margin services that occupy a large share of its ICT spending. The telecom industry can unlock more capabilities and play a more critical role in the digital transformation of enterprises.
