Innovations in mobile communications have transformed how people and enterprises buy, sell and deliver goods, as well as interact with one another. As a result, more than $3.9 trillion of the world’s gross domestic product in 2018 was attributed to the mobile industry.
In spite of the prosperity created in recent years, network service providers have not shared in the party, with revenue growth either remaining flat or declining. This is about to change as the combination of 5G networks and advances in high-definition video, augmented and virtual reality (AR/VR), real-time control, automation and massive sensor-driven technologies gives birth to powerful new enterprise solutions. Forward-looking network service providers are leading the charge, setting up 5G labs with ecosystem partners to jointly develop these solutions. With all this, a staggering $700 billion in business-to-business value could be addressed by service providers by 2030.
Ericsson’s latest 5G for business: 2030 Market Compass report analyzed 10 industries: manufacturing, energy and utilities, public safety, healthcare, public transport, media and entertainment, automotive, financial services, retail and agriculture. The report highlights that 5G-driven investments overall are expected to reach roughly $1.5 trillion in 2030, with nearly half of that addressable by network providers. 5G’s advances in higher-speed and lower-latency connectivity will refuel imaginations and bring what most thought was impossible closer to reality.
That investment by key industries will be spread throughout the value chain, as they adopt solutions that drive new business results. Service providers will need to look at each industry through a separate lens to balance risk and barriers to entry with potential revenue growth potential. Here are just a few examples:
- Automotive: Investments in the automotive industry will be significant, as 5G connectivity drives a range of new solutions and innovations from self-driving cars to robust in-car entertainment options. Network operators are teaming up with car manufacturers to develop such solutions. As more cars rely on constant connectivity, there will be an addressable market of up to $81 billion for service providers.
- Manufacturing: The manufacturing industry presents $132 billion for service providers in 2030, driven by modernization towards flexible production to accommodate rapid changes to the production environment. This is where 5G can offer high and ultra-high levels of reliable connectivity without cumbersome and costly cabling, enabling modular and flexible settings. Demanding use cases, such as ultra-low latency, collaborative robots, AR/VR and remote operations through digital twins will motivate 5G investments, but cable and Wi-Fi will co-exist for legacy and IT-based operations.
- Media and entertainment: This sector requires service providers to provide high responsiveness and resolution in order to serve the enhanced VR and AR applications needed for developing technologies in e-sports and media. In early 5G markets like Korea, new subscriptions are aligned with interest in AR, VR, and mixed reality experiences, and service providers are offering packages together with content and device makers. Media and entertainment are expected to be a $73 billion opportunity for service providers in 2030.
To identify opportunities across industries, Ericsson aligned use cases with similar attributes together into a concept called “use case clusters.” Addressing these use case clusters enables service providers to target common capabilities across industries and multiple use cases thus become true “service enablers.” The top use case cluster is Enhanced Video Services, with opportunity up to $118 billion by 2030. Significant value is also offered in other use case clusters, such as Real-Time Automation at $107 billion and Connected Vehicles at $89 billion.
As service providers look beyond connectivity, there is a large opportunity in the digital transformation of a wide variety of industries. Careful analysis and a deliberate strategy will be key for network service providers to succeed in the complex and rapidly evolving world of 5G.