Telcos, solutions providers tipped to join hands for 5G era

Singapore

SINGAPORE telcos will likely tap select tie-ups with solutions providers to deliver standout 5G use cases, analysts have told The Business Times, as Communications and Information Minister Josephine Teo on Monday reiterated calls for practical applications of the wireless technology.

"5G infrastructure itself cannot deliver magic without actual use cases being developed, tested and scaled up," she said, citing trials involving Singapore's port operations, as well as parcel delivery by robots. "This is where we need partnerships between the government, telcos, the industry, and our research institutions."

She was speaking at telco Singtel's launch of some new tie-ups for 5G-enabled services, such as a hybrid work platform with Samsung and Zoom.

Singtel chief executive Yuen Kuan Moon told the virtual event that the mainboard-listed telco plans to differentiate itself with not just multi-access edge computing infrastructure, but applications from enterprise services subsidiary NCS on top of that.

Combining 5G technology with Internet of Things and artificial intelligence capabilities "will make connectivity intelligent, and this will in turn drive new business models and value propositions", Mr Yuen said.

Even so, mobile network operators (MNOs) may eventually end up competing on similar 5G use cases.

"MNOs always run the risk of becoming dumb pipes, despite massive investments in their infrastructures," Jan Ondrus, associate professor of information systems at business school Essec, told BT. "5G is a new opportunity for MNOs to rethink their offerings and pricing strategies for enterprise and consumer use cases."

As such, industry veteran Tony May, a partner in the telecommunications practice at Bain & Co, suggested that telcos will have to differentiate themselves by their choice of enterprise solutions partners, as well as how well they integrate solutions with 5G and other tech capabilities.

"As a telco, you've got to be thinking about your role as that horizontal enabling platform, that will ultimately enable multiple solutions for multiple vertical use cases," he said.

Darren Yong, technology, media and telecommunications head at KPMG, added: "Telcos will need to prioritise and further invest in verticals, as well as co-innovate in the future ecosystem of those areas they wish to play in. ... Telcos will need more complex offers to prime and own the end-to-end customer experience."

Mr May also said that telcos "can start thinking about revenue-share models with the solution providers" if they are able to develop new business models beyond just connectivity.

Under such a model, telcos may provide connectivity to service providers, rather than end users; or work with the service providers to jointly deliver services. Though telcos may also face competition from dedicated tech players, Credit Suisse's Johnson Loh hinted at a win-win outcome if telcos can find sector-specific niches and build "a strong partnership ecosystem with selected technology companies" in these industry domains.

While telcos' business revamps can be exciting, they "will require a high degree of transformation", warned Oliver Wilkinson, entertainment and media leader at professional services firm PwC. Still, Singtel has billed 5G as a pillar of its ongoing strategic transformation, with Mr Yuen saying that "one of the ways to stimulate new growth is to reinvigorate our core business with 5G".

Repositioning their businesses could well be necessary for telcos to survive. That's as 5G will put the traditional connectivity model under pressure, if customers baulk at the premium needed to cover high network roll out costs, said Mr Wilkinson.

Meanwhile, Mrs Teo also called on the industry to enhance cybersecurity investments amid the 5G roll-out.

Such capabilities will not only build trust and confidence for 5G users, but could also "provide telcos with strategic openings into overseas markets, allowing our telcos to break new frontiers", the minister added.

Singtel closed flat on Monday at S$2.36, after the announcement.