Ericsson promises enormous rewards for the right enterprise investments

With consumer revenues in the mobile world flat-lining, many telcos are exploring the world of enterprise services to recoup 5G investments, and Ericsson thinks it’s a pretty large pot of gold.

According to Ericsson’s ‘5G for business: a 2030 market compass’ report the question isn’t whether or not telcos are exploring how to work with enterprise customers in new and interesting ways, but more which are the ones to prioritise.

“The combination of 5G and digitalization creates new opportunities for service providers to build and extend their businesses beyond connectivity and presents a way to break the trend of a stagnant market,” Jan Karlsson, Head of Business Area Digital Services at Ericsson, said in the report.

“However, even if the rapidly changing 5G-IoT landscape offers enormous potential, it is complex and not without its challenges. Deciding on the best way forward requires a comprehensive understanding of issues surrounding the addressable markets, the driving forces and barriers for different industries to adopt 5G-enabled use cases.”

This is the challenge which many telcos will face. Enterprise services are not simply about bundling together several buzzwords, each vertical demands its own niche solution. For example, the fast-growing gaming industry is demanding low-latency driven services, while smart manufacturing depends on reliability and resilience and broadcasters are searching for the high-speeds and coverage.

With limited resources available in-house, some telcos might have to elect which niche to target. This creates the potential for a very interesting industry moving forward. Perhaps the telcos will compete for post-paid contracts in the consumer world, but the creation of niche solutions for enterprise services might force telcos down more specialist routes.

But each of the verticals are not created equal, and the nuance in opportunity in the short- to mid-term is worth bearing in mind.

According to Ericsson, while healthcare might have notable challenges, there are also some significant rewards. mHealth, eHealth and hospitals are all areas where connectivity can offer benefits and profits. In Industry 4.0, a favourite segment for 5G justification, the team suggests smart factories might gain traction sooner rather than later, though mining and utilities usecases are not gaining as much traction.

The automotive arena is an interesting area, with opportunities obvious in both the connected/autonomous vehicles segment as well as for in-car entertainment. Unfortunately for the telcos this is an area where other challengers are trying to own the ecosystem. If the telco industry is not careful, it might be relegated to nothing more than a commoditised connectivity partner.

Interestingly enough, in the retail segment, Ericsson is downplaying the opportunity for 5G in the physical stores though eCommerce certainly presents greater prospects. There could be profits for those who create the solutions and own the space, though as there are a limited number of larger retailers who would have the CAPEX to invest in such propositions as in-store mixed-reality experiences or drone delivery, it might be a tricky segment to justify.

Perhaps the most interesting takeaway from this report is the opportunity for diversification and specialisation in the enterprise services market. Some telcos might opt to chase after the same pot of gold, but strategic investments could see the right telco enter a niche will little or no competition.

O2 starts making progress in the enterprise services world

O2 might be an ‘also ran’ in the enterprise services world to date, but in being named a supplier on the Crown Commercial Service’s (CCS) new Network Services 2 framework, it is taking a step in the right direction.

As the Government agency tasked with improving government commercial and procurement activity, gaining recognition from the CCS is a notable win for O2. The Network Services 2 framework is effectively the list of suppliers public sector bodies and organizations can work with for telco services such as networks, voice and data provision, internet access and wifi.

“We know that making services easy to procure is a major priority for our public sector customers – so the news that we have been named as a supplier on the new Network Services 2 framework is a huge milestone for all of us at O2,” said Matthew Spencer, Head of Public Sector Sales at O2. “It means we can offer our entire product range of ICT services to public sector and non-profit organisations.

“Today’s announcement opens the door to all sorts of new projects and better integration for customers. As technology evolves, there is enormous potential for improved connectivity, productivity and savings across the public sector – and O2 is here to work with organisations as a digital partner, helping them reach their connectivity goals, faster.”

Originally formed in 1991 under a different name, the CCS is part of the Cabinet Office and negotiates preferred supplier lists for Government departments, agencies and non-profits. It you aren’t on the list, you will find it almost impossible to do business in the public sector.

The ‘Frameworks’ are effectively pre-negotiated template contracts for public sector organizations to use when engaging with potential suppliers for a variety of different services. In this case its telecommunications, but it could be anything from office supplies to payroll management software.

Within each of the frameworks, there are designated ‘Lots’. O2 has been named as a supplier for Lots 1-4 and 6-8, allowing it to offer services such as data access; local connectivity, traditional telephony, inbound telephony, mobile voice and data, paging and alerting and video conferencing. The suppliers for Lots 5, 10 and 13 will be decided in the near future, though we were not able to figure out what these Lots cover.

The supplier lists for Lots 9, 11 and 12 have also been drawn up, though O2 does not feature on these. Services covered here are audio conferencing, radio and surveillance.

At O2, this is a big step forward. The CCS has effectively given the telco its seal of approval, allowing the team to expand in the enterprise services arena.

To date, the enterprise market has been largely dominated by Vodafone and EE. O2 has been operating in the private space for some time, though it has been regularly highlighted by the management team as a significant growth area moving forward. This ambition seems to have been compounded with the looming introduction of 5G.

5G offers the telcos new avenues to work with enterprise customers above and beyond the traditional means of connectivity. With digital transformation a buzzword of yesteryear, enterprise organizations and public sector agencies are increasingly looking to technology to enhance operations. There is an opportunity for the telcos to secure a more valued position in the digital ecosystem, as well as the increased profits, if the proposition is right.

Over the last 12-18 months, O2 has been working alongside a number of the FTSE100 firms to trial usecases ahead of the 5G boom. Although details of the activities are relatively thin, the management team has boasted of its success to date.

Entry onto the preferred suppliers list might seem like little more than a box ticking exercise for some, this is a very important step forward from O2. The inclusion in the framework adds validity and credibility to the O2 enterprise services case, offering a much greater opportunity for the team to carve out market share in a, potentially, very profitable segment of the telco industry.

Europe gives Ofcom the greenlight for Dark Fibre plans

Having published new rules on Dark Fibre and ‘ducts and poles’ access in May, Ofcom has made no material changes following a review from the European Commission.

The rules are another attempt by Ofcom to encourage more competition in the fixed market and therefore increase investments made by the telcos in offering services in regions which could be deemed as less commercially attractive. Openreach might not be the happiest for the situation, but it is a step towards shortening the digital divide which has emerged in the UK.

Starting with the ducts and poles element, Ofcom has confirmed telcos laying fibre cables for broadband and mobile networks will benefit from greater access to Openreach’s existing infrastructure. The watchdog has used the phrase ‘unrestricted’ though we struggle to believe there are no loop-holes for Openreach to play around with.

This is not necessarily new from Ofcom, but it is an extension of rules which were passed last year. To this point, Openreach had been compelled into opening up access to the infrastructure for competitors serving residential customers and small businesses, though this update extends the rules to large businesses as well.

With enterprise services plugged as the biggest gain for telcos during the 5G era, the greater access to infrastructure competitor telcos have, the more attractive the business case will be for investment and therefore creating innovative services for the verticals. That said, Openreach will not be as happy as others.

This is a former-monopoly which has reaped the benefits of being the dominant player in the market. Employees will be tasked on protecting and profiting as greatly as possible from assets, though if the regulator keeps opening up infrastructure, this becomes more difficult.

The second area worth noting from this ratification from the European Commission addresses Dark Fibre across the country. This is an area Openreach has fought bitterly against though it seems it could only hold back the tide for so long.

The new rules will force Openreach to offer Dark Fibre as a product to other telcos in areas there are no rival networks present at Openreach’s exchanges. These are the areas where Openreach has a continued monopoly thanks to prior public investment and there is a risk of damaging the business case for competitors.

Under the new rules, in these areas where competition is unlikely to emerge organically, ‘dark fibre’ can now be ‘lit’ by competitors with their own equipment. Openreach will be required to give competitors physical access to its fibre-optic cables, at a price that reflects the cost of laying the infrastructure. In areas where there is competition, pricing regulations will be lighter.

Although these new rules are unlikely to be the most profitable for Openreach, there will be plenty of happy faces around the UK. Telcos have been complaining about the regulatory barriers to achieving the perfect 5G/fibre dream the Government has dreamt up, and this is one step in the right direction.