Boosting revenue with 5G from Asia Online Publishing Group on Vimeo.
According to a recent study by A.T Kearney, commissioned by Cisco, the rollout of 5G services will see Malaysian telecom operators boost annual revenues by as much as RM3.764 billion starting 2025. The potential of 5G seems to be substantial as it promises up to 50 times faster speeds, ten times more responsiveness and requires much lower power connectivity than 4G.
The combination of three distinctive features of 5G, which are high throughput, ultra-low latency and enhanced connectivity will help telecom operators provide super-fast Internet connections that enable streaming of high-definition videos, cloud gaming and delivery of interactive augmented and virtual reality (AR/VR)-powered content to consumers.
It will also help to fast-track the commercialisation of several advanced use cases of 5G, including smart cities, Industry 4.0, large-scale Internet of Things (IoT) deployments, and more. This will enable telecom operators to increase revenues both from consumers as well as enterprise clients.
As a result, the study expects 5G penetration to be around 25% to 40% in major countries in the region by 2025, with Malaysia seeing nearly 40% penetration. The total number of 5G subscriptions in ASEAN is forecast to exceed 200 million in 2025.
Naveen Menon, President of Cisco ASEAN, pointed out that 5G has substantial monetisation potential for ASEAN operators. While consumers are expected to provide 6% to 9% of potential revenue, the main bulk of revenue will come from enterprises which is expected to be around 18% to 22%.
This is mostly because the services and manufacturing industry are expected to provide the biggest use cases for 5G. In the manufacturing industry, remote robotics, assistive robots, remote monitoring production, automatic guided vehicles and the remote control of mobile equipment are some of the enterprise use cases that not only require 5G as an enabler but also as the main network to work efficiently.
The services industry will also see high use cases for 5G. This includes the use of 5G for autonomous drones, flying taxis, smart cities, healthcare and for augmented reality. 5G use cases can also be seen in the agriculture industry.
While the use cases seem to be there, Naveen also explained that we really may not see the full potential of 5G until 2021 as the technology is still in its testing phase not just in ASEAN, but the rest of the world as well.
“2021 is when we are expecting the rollout to happen. What we are seeing now is some use cases being piloted. We feel industries should partner with government to describe some uses cases and how they work. You’re starting to see this in Malaysia and Singapore. For example, the use of autonomous drones, flying cars and taxis. These are signals to the market of what 5G can do. Currently, most enterprises don’t know what they don’t know about 5G. Cisco can help with the use cases and prepare them for this.”
Having said that, the costs involved for 5G infrastructure, although high for now, can be eventually recovered. The study pointed out that pricing for 5G services could see an increase in fees by up to 10% by telcos. Telco operators will need to carefully construct their 5G product and pricing portfolios and migrate consumers to the high-speed network. Consumers are excited about 5G and are willing to pay for better quality, unlike 3G and 4G technology. It would be fatal for operators to engage in a price war just to attract a higher number of subscribers in the hope they can charge them more at a later stage.
At the same time, Naveen said that although many would remain sceptical towards the real use cases of 5G, there will still be that percentage of consumers and enterprises that are willing to spend more to see how 5G can benefit them. On the enterprise side, operators will need to build new capabilities and bundle enhanced connectivity with solutions and applications to help customers understand, implement, and scale up value-enhancing use cases. They will also have to contend with a new set of competitors that provide private networks to enterprises.
Interestingly, in Malaysia, Albert Chai, Managing Director of Cisco Malaysia, said the government has been very supportive of the adoption of 5G.
“The government wants to make Malaysia a hub for IR4.0. And this comes together with 5G. There is a lot of awareness in the community, especially enterprises, and among early adopters of the potential of 5G. Cisco is taking a big slice of the IP transport for 5G. We are in the project right now for what we think is the largest IP transport in Malaysia.”
While the promise of high returns from 5G is present, it is probably still too early to see how much 5G will have an impact in industries. With that said, it’s just a question of when 5G will be made available fully for consumers and enterprises.
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