5G Ecosystem The digital haven of opportunities September 2019 - Deloitte
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5G Ecosystem | The digital haven of opportunities Contents Foreword03 Message from CII 04 5G commercial launch in India: Are we ready? 05 • National Digital Communications Policy (NDCP) lays the foundation for next generation 05 • Movement/transition of data traffic to 4G 06 • Regulatory endeavour for 5G spectrum allocation 06 • Progress made on policy front to prepare for a 5G future 08 • Efforts to have an indigenous 5G technology 09 • Mega cloud push will accelerate change in India’s infrastructure 09 Encircling the seamless – what is the 5G ecosystem? 10 • Handset manufacturers geared up for 5G 10 • Equipment manufacturers - Key for new business opportunities 12 • Infrastructure providers - Expanding the network footprint 13 • Mobile network operators - Supporting the 5G ecosystem 14 • Rise of application/software providers 22 Digital transformation across industry verticals – no one wants to be left behind 24 • Manufacturing 25 • Media and entertainment 26 • Automotive 27 • Government 28 Current 5G ecosystem in India 29 Conclusion 31 Glossary of terms 32 About Confederation of India Industry 33 Acknowledgements 34 Contacts 34 References 35 01
5G Ecosystem | The digital haven of opportunities Foreword 5G will be a game changer for India with the potential to create significant social and economic impact. As the 5G ecosystem develops in the country, telcos are expected to focus beyond connectivity towards collaboration across the telecom value chain and cross-sector, leading to the creation of new business models and innovation. India is making giant strides towards cross-sector convergence, spearheading digital transformation across industries. As the nation prepares for the launch of 5G, favourable regulatory policies to develop digital infrastructure are expected to drive investments to fuel the growth of 5G ecosystem. With basic connectivity solutions already in store, more advanced capabilities with cloud, mobile edge computing, complex-converged automation, IoT, artificial intelligence (AI), and augmented and virtual reality, are expected to enable industries to drive efficiencies and unlock the full economic potential of 5G. Investments are being made for the impending arrival of 5G as much in the telecom sector as other industries, such as manufacturing, healthcare, government, and Sathish Gopalaiah retail. Partner Leader, Telecommunications The adoption of these above-mentioned capabilities, along with next-generation Deloitte India hyper-scale solutions, will not only cause a paradigm shift from traditional services to Everything-as-a-Service (XaaS) but also challenge the existing boundaries of Quality- of-Service (QoS), and personalisation and overall customer experience. This report presents a view on the following: • Progress made thus far to make 5G a reality in India • Ever-evolving 5G ecosystem and the rise of new value chain players • Telecom value chain and cross-sector player preparations to embrace 5G • Key considerations in facilitating the commercial launch of 5G in India during 2020 Policy roadmap addressing the spectrum, infrastructural, and business challenges, favourable investment climate, indigenous technology development, and customised use cases in the Indian context will help in the timely adoption of 5G in India, realising the industrial internet and digital aspirations across the connected society. We hope that you find this report insightful and enriching! 03
5G Ecosystem | The digital haven of opportunities Message from CII 5G has the potential to transform our economy. It will enable wireless broadband services to be provided at gigabit speeds, and offer low latency and high reliability to support new types of applications, connecting devices and objects through internet of thing (IoT). It will fuel the development of innovative business models across multiple sectors ranging from transport, health, and manufacturing to logistics, energy, and media and entertainment. It is an opportunity for operators to move beyond connectivity and collaborate across sectors such as finance, transport, retail, and health to deliver new and better services. It is also an opportunity for industry, society, and individuals to advance their digital ambitions, using 5G as a catalyst for innovation. 5G will naturally evolve from existing 4G networks and it will mark an inflection point in the future of communications, bringing instantaneous high-powered connectivity to billions of devices. It will enable machines to communicate without human intervention in an IoT environment capable of driving a near-endless array of services. Umang Das Chairman Although 5G will engage a new generation of consumers attracted by innovative CII Telecom Convergence services and seamless connectivity, new demands will be placed on finite spectrum Summit’19 resources. We will need greater bandwidth to meet the speed and capacity requirements of an increasingly connected society. Operators must be prepared to meet the challenges of a network designed for both people and machines. Governments and service providers must also be ready to meet demands in the future. This transformation is not waiting for the launch of 5G. Many digital changes to our society are already underway, using existing networks. However, what additional 5G brings here is the speed, reliability, and spread they will need to reach their full potential in the future. We know where we want to go and how to get there. However, we cannot take our foot off the pedal. We need the continued commitment of industry players, policy makers, and national authorities to complete this journey. The success of 5G depends on the adoption of common global standards to ensure that all parties can begin using 5G as a platform for innovation soon at the lowest possible cost. We should work closely with members and players across the ecosystem to define the technologies, identify spectrum bands and develop business models and policy initiatives that will bring 5G to life. Through industry collaboration, we can ensure that 5G becomes an evolutionary change with a revolutionary impact. 04
5G Ecosystem | The digital haven of opportunities 5G commercial launch in India: Are we ready? In the previous convergence summit held in 2018, CII and National Digital Communications Policy (NDCP) lays the Deloitte released first in the series of the thought leadership foundation for next generation on 5G, ‘5G – The catalyst of digital revolution in India’. As we move forward, India aspires to unlock the digital The thought leadership discussed various aspects of the value chain with the recently announced NDCP and 5G India technology, its impact on various industry stakeholders, 2020 forum with an emphasis on timely development of 5G India’s preparedness, use cases that could transform various infrastructure. industries and society, and implementation challenges. Last year same time, India was planning to launch 5G in line with The policy sets directions to lay foundations for the 5G the global commercial launch. ecosystem to: • Enhance the digital communication sector’s contribution to While the global commercial launch of 5G has been seen in India’s GDP to 8%1 countries such as the U.S., Korea, and the U.K., 5G launch in • Propel India to become one of the top 50 nations on the India is slated for 2020. ICT development index of International Telecommunication Union (ITU)2 Figure 1: Goals to deliver a 5G-ready future3 Connectivity Investment for Strengthen Build capability goals innovation infrastructure setup to deliver • Create a roadmap for • Attract investments of • Set up fibre first initiative • Establish a centre of emerging technologies US$ 100 billion in digital fiberisation of at least excellence for spectrum – 5G, AI, IoT, robotics, communications sector 60% of telecom towers management, security, cloud, and M2M and next-generation • Create innovation-led • Establish a national networks • Encourage the use of start-ups in the digital grid with common open APIs for emerging communications sector service ducts and utility • Promote and create a technologies corridors fund for R&D in new • Create globally technologies for start- • Adequate licensed and recognised IPRs in India • Set up common RoW ups and entrepreneurs unlicensed spectrum for with standardisation of • Increase contribution to IoT/M2M services cost and timeline • Promote innovation by the global value chain fostering the intellectual • Ensure the availability of • Encourage and facilitate • Move towards Industry property rights regime spectrum for 5G in 6 sharing • Provide financial GHz bands • Develop standard incentive to develop SEPs • Establish a global hub for essential patents (SEPs) • Enhance backhaul cloud computing, content • Simplify the process for capacity to support next- hosting, and delivery obtaining experimental generation networks licences and establishing • Simplify the licensing and regulatory sandboxes • Review industry practice regulatory framework • Promote design-led for traffic prioritisation (security, data centres, manufacturing and for 5G-enabled and content delivery strict compliance to applications and services networks) preferential market access requirement 05
5G Ecosystem | The digital haven of opportunities Movement/transition of data traffic to 4G With 750 million unique subscribers, India has cemented its place as the world’s second-largest smartphone market. 4 Figure 2: Transition of data traffic in India across five years over technologies Data usage/volume (in billion GB) 5 100% 90% 80% 0.35 70% 0.70 2.77 60% 16.42 40.30 50% 40% 30% 0.34 1.22 20% 0.47 10% 3.18 5.65 0.47 0% 0.42 0.44 2014 2015 2016 2017 2018 2G 3G 4G The year 2018 saw users consume more data in a single month compared with the total data consumed over a period of five months in 2016. • The continued increase in 4G data consumption has been fueled by the migration of data users from 2G and 3G to 4G. The total volume of wireless data usage increased from 20.09 billion GB in 2017 to 46.40 billion GB in 2018 at a growth rate of 131%. • 4G data traffic increased by 132%, whereas 3G data traffic saw a de-growth of 1% (YoY). • 99.7% of the total data traffic, carried over mobile networks in December 2018, was driven by 3G and 4G technology users. • 4G (LTE) traffic contributed a major part i.e., 86.85% of the total data traffic with a volume of 40.30 billion GB in 2018. • 4G data consumption has been driven by an increase in 4G device penetration, heavy discounts and offers from telecom operators and OEMs, and a growing digital ecosystem. Regulatory endeavour for 5G spectrum allocation The Telecom Regulatory Authority of India (TRAI) had convened a workshop “Enabling 5G in India” in May 2019.6 The workshop gave an opportunity to stakeholders to present and align their considerations for the timely implementation of 5G in India.7 A need for a more harmonised spectrum and moving to higher frequency bands for capacity fulfilment requirements were identified as key enablers. India is finalising spectrum across the 600MHz, 1.4GHz, 2.6GHz, 4.8GHz, 26GHz, 31GHz, 47GHz, and E and V bands (for microwave – access backhaul traffic). Consensus over these bands will be further shared at the World Radiocommunication Conference 2019 (WRC-19) convened by ITU in October 2019.8 06
Table 1: Global comparator: 5G deployment progress9 (illustrative list) 5G Commercial Commercial South Korea Commercial Commercial Commercial EE launched Vodafone/Huawei Verizon began rolling commercial deployment deployment yet to Telecom, KT, and deployment yet to deployment yet to deployment yet to the 5G network launched the 5G out its 5G services deployment yet to be be implemented LG Uplus launched be implemented be implemented be implemented in six cities network in 15 major in Chicago and implemented the world's first (London, Cardiff, Spanish cities on 15 Minneapolis on nationwide 5G Edinburgh, Belfast, June 2019 3 April 2019 services in March Birmingham, and maturity level 2019 Manchester) on 30 May 2019 5G partial Partial Sri Lanka's Dialog South Korea China to roll out 5G NTT DoCoMo 5G MegaFon The UK operator Orange plans to AT&T rolled out mobile deployment deployment Axiata and TRCSL Telecom and nationwide (40 plans to launch 5G tested in Russia EE plans to launch 5G in Spain in 5G service in 12 US yet to be completed 5G Korea Telecom cities) 5G coverage services at venues World Cup 2018 launch 5G (in 2019 cities in December implemented transmission using showcased 5G by 1 October 2019 of the 2020 Tokyo London, Cardiff, 2018 commercial grade service at the Olympic and Russian mobile Edinburgh, Belfast, base stations and 2018 Olympic Huawei claimed Paralympic Games operators are Birmingham, and Sprint/Nokia/ end-user devices Winter Games in the world's first set to launch Manchester) on 30 Qualcomm completed in December 2018 PyeongChang 5G hardware for commercial 5G May 2019 the world's first the automotive networks in 2020 over-the-air 5G data industry (22 April Vodafone UK transmission using 2.5 2019) plans to release GHz on its commercial 5G in the Lake network in January District and 2019 Cornwall in 2019 5G test/ Bharti A successful field South Korea 5G China Mobile/ NTT DoCoMo/ MegaFon/Huawei 5G Centre for Vodafone Spain Qualcomm trials Airtel and test of the pre-5G Telecom, along ZTE completed Huawei tested 5G cellular Communication launched 5G trials Technologies tested Huawei have LTE Advanced Pro with Samsung, testing the world’s demonstrated networks via TV Systems Research in Madrid, Valencia, first 5G mobile successfully technology was Nokia, Ericsson, first pre-5G mobile internet channel "Russia (Huawei, Fujitsu, Seville, and Barcelona connection with a conducted conducted Samsung, Intel, massive MIMO speed of 3.6 Gbps 24" EE, Aircom, in June 2018 connection speed of 1 India’s first and Rohde base station in the world's first BT, Samsung, Gbit/s 5G network & Schwarz, large-scale public MTS/Nokia and Telefonica, trial under a completed a 5G network test of 5G Ericsson tested 5G Vodafone, Verizon (with Cisco, test setup field trial in Chengdu, China at the World Cup Aeroflex, and Ericsson, Nokia, soccer games in Rohde and Qualcomm, Samsung) Vodafone, The 5G NTT Russia in 2018 Schwarz) conducted 5G testing Samsung, Jio, DoCoMo/Nokia conducted 5G in "sandboxes" (small and BSNL are trial of real-time A 5G trial testing at Surrey testing areas) said to be transmission of 8K were done by University in talks for of 48 Gbps video Rostelecom with AT&T/Ericsson conducting was held on May Ericsson in St. conducted 5G trials/ 5G trials soon 19 2016 Petersburg and testing with Nokia in Skolkovo 5G research Ericsson sets Sri Lanka Telecom 5G forum IMT 2020, a 5G The Ministry of Megafon, 5G Centre for Telefonica and AT&T, T-Mobile, and up a centre and Dialog Axiata established promotion group, Internal Affairs and Rostelecom, MTS, Communication ZTE Corporation Sprint, along with of excellence undertake 5G to develop 5G was formulated Communication, and Vimpelcom Systems Research established 5G testing Nokia, Ericsson, (CoE) and research standards with supported by 5G commenced 5G focused on labs Google, and Facebook, incubation private- and Mobile Promotion research accelerating 5G commenced R&D on centre with a public- sector Forum, started field implementation 5G technologies 5G test bed at participation, trials in 2017 IIT Delhi including South Korea Telecom, Korea Telecom, and LG COUNTRIES India Sri Lanka South Korea China Japan Russia United Kingdom Spain United States 07 5G Ecosystem | The digital haven of opportunities
5G Ecosystem | The digital haven of opportunities Progress has been made on policy front to prepare for a 5G future Figure 3: Policy landscape to steer the growth of digital revolution10 National Digital Communications Policy 2018 Draft Cloud Computing Policy National Manufacturing Policy Policy landscape Electronics Development Fund Preferential Market Access (PMA) (EDF) policy National Digital Communications Policy 2018 Promotes fiberisation Promotes effective Aims to set up 10 Establishes a and establishing global use of the E and V million Wi-Fi hotspots comprehensive data hub for cloud computing spectrum bands and by 2022 across the rural protection regime for promulgation of 5G and urban areas digital communications networks Draft Cloud Computing Policy Mandates the localisation of Promotes the identification of 20 Recommends the development data generated in India locations for data centre setup of a “national cloud strategy” Electronics Development Fund (EDF) and National Manufacturing Policy Provides companies risk capital The government of India R&D incentives and capital to develop new technologies in provides a capital subsidy of up subsidy for promoting electronics and IT to 25% for 10 years manufacturing Preferential Market Access (PMA) Provides OEM competitive advantages in Incentivising private operators to buy domestic government bids and receiving tax benefits telecom products 08
5G Ecosystem | The digital haven of opportunities Efforts to have an indigenous 5G technology Mega cloud push will accelerate change in India’s ITU plans to setup its first innovation centre in India. Ten Indian infrastructure academic institutions are expected to join ITU; the number The Indian data centre market is slated to grow at a CAGR of is expected to increase to about 40 institutions in the near about 9% to reach about ~US$ 4 billion by 2018−2024.12 future.11 Through such initiatives, India is expected to drive A key growth driver for data centre is the need for mega cloud inclusive growth to strengthen its R&D capabilities, generate environments, which have become commonplace for deploying more Intellectual Property (IP), and drive the growth of automation, AI, and machine learning (ML) for driving multiple indigenous manufacturers. use cases for 5G service across industries. The government’s ‘Make in India’ campaign aims to establish Market entry by new players, and investment across new India as a global manufacturing hub by bringing telecom hyper-scale and edge facilities against the backdrop of land, equipment, chip, and smartphone manufacturing to the power, water cooling, fibre availability, and data localisation are country. This will further help make 5G an indigenous expected to shape the dynamics of the market over the next technology. three years. India's data localisation bill, known as the Personal Data Protection Bill, is also likely to play a key role in increasing the number of data centres in the country. Figure 4: Cloud computing spend13 400 8 CAGR 16.5% pa 7.2 350 7 Cloud spending – Global (US$ billion) 345 Cloud spending – India (US$ billion) 300 6 250 5 200 4 CAGR 30% pa 187 150 3 2.5 100 2 50 1 0 0 Year 2018 Year 2022 Cloud spending - Global Cloud spending - India 09
5G Ecosystem | The digital haven of opportunities Encircling the seamless – what is the 5G ecosystem? 5G technology is expected to give a plethora of opportunities to telecom value chain players willing to increase investments in infrastructure to meet demands for 5G use cases. As 5G technology will be initially built on existing 4G infrastructure (i.e., non-standalone deployments), service providers and other value chain players can work on an incremental basis as a part of the 5G evolutionary process. Telcos are constantly innovating to minimise cost and improve time to market for delivering 5G service offerings. There are multiple cases of partnerships across the value chain to innovate solutions for 5G deployment, which leads to the growth of new business models. Figure 5: Telecom value chain players across 5G ecosystem14 Electrical Radio Network Application 3 5 6 Component Wireless device Infrastructure manufacturers manufacturers providers 1 2 Service/ 4 application End users Wireless chipset providers manufacturers/ Network equipment Mobile network handset manufacturers operators manufacturers Policy and standards framework 1. Handset manufacturers geared up for 5G According to a Global mobile Suppliers Association (GSA) report, a device ecosystem should consist of phones, hotspots, indoor CPE, outdoor CPE, modules, dongles/adapters, and USB terminals, (collectively known as form factors). Until June 2019, GSA has identified 13 such form factors, 39 vendors with available or forthcoming 5G devices, 90 announced devices, 25 phones, 7 hotspots, and 23 CPE devices.15 10
5G Ecosystem | The digital haven of opportunities Figure 6: Upcoming and existing device ecosystem (Illustrative list)16 Phone • Samsung Galaxy S10 5G • Oppo R15 >10 • LG V50 THINQ • Samsung Galaxy Fold • Huawei Mate X • Huawei Mate 20 x 5G • Xiaomi Mi Mix 3 • One Plus 7 Pro 5G >15 • ZTE Axon 10 Pro • Nokia 10 CPE • Fibocom FG100 • Inseega R1000 8 • Huawei 5G CPE 2.0 (mmWave) • Nokia Fastmile 5G Gateway • Huawei 5G CPE 2.0 (Sub-6Ghz) • Samsung SFG-D0100 • Huawei 5G CPE Win 15 • Huawei 5G CPE Pro Hotspot 3 • HTC 5G Hub (US bands) • HTC 5G hub (Europe & Asia bands) • Netgear Nighthawk M5 Fusion 4 MR5000 Module 4 • Fibocom FG100 • Huawei MH5000 • SIMCom Wireless SIM8200-EA-M2 16 • SIMCom Wireless SIM8200G Dongle 1 • Motorola 5G Moto Mod (only on Verizon) 1 Commercially available To be launched 11
5G Ecosystem | The digital haven of opportunities The Indian telecom industry's major players, including • Innovation in semiconductors used for developing JioPhone, Foxconn, HTC, Huawei, Lava, and Google, have 5G technologies formed The Mobile Association (TMA) that works towards Semiconductor manufacturers are innovating solutions developing the 5G device ecosystem.17 for 5G networks that can be used with 4G technology as well. With the launch of 5G, China, Japan, South Korea, 2. Equipment manufacturers - Key for new business and Taiwan are becoming hotspots for semiconductors, opportunities serving global clients.18 China remains one of the largest consumers in the semiconductor market. Companies • Advancements in network Infrastructure such as Samsung and Huawei are creating their own Telecom equipment manufacturers are focusing on chips through their subsidiaries Samsung Austin cloud solutions such as Cloud RAN (or CRAN) and Semiconductor and HiSilicon, respectively. Virtual-RAN, which involves the virtualisation of Radio Access Network (RAN). • Driving partnership projects The value proposition of 5G lies in fast data connectivity • Scalable 5G – flexible business opportunities and new business opportunities that will be enabled by To achieve economies of scale and smoothly transition it. To realise new business opportunities, collaboration to 5G, equipment manufacturers are coming up with among players across the telecom value chain is solutions related to 5G spectrum sharing and 5G carrier imperative. Examples of collaborators already in play are aggregation. provided: Table 2: Innovation through collaborations19 (Illustrative list) Reason for collaboration Participating entities Examples Development of next-generation hardware Network transformation providers and • Ericsson and Intel management platforms semiconductor manufacturers • Nokia and Intel 5G MoU – to operate 5G in the market Network transformation providers and • Ericsson, along with multiple service telecom service providers providers, such as Bharti Airtel, T-Mobile, and Zain • Huawei, along with China Telecom, and China Mobile Accelerate innovation and digital Multiple telecom equipment • Ericsson and Cisco transformation manufacturers and solution providers Develop 5G business models Telecom service providers and 5G • Orange and Dell technology solution providers Cloud computing enabled 5G for scalable Telecom service providers or equipment • AT&T and Microsoft solutions manufacturers and cloud solution • Nokia and AWS providers • Rise of IoT platforms and IoT device ecosystems The number of connected IoT devices is forecast to increase at a 10% CAGR between 2018 and 2025. By the end of 2021, this number would exceed other device connections (phones, tablets, PCs, etc.). By 2025, the number of IoT connections will reach ~25 billion with smart building and smart home leading the way. 20 12
5G Ecosystem | The digital haven of opportunities Figure 7: Growth of IoT connections by 202521 30 Industrial Consumer 1.5 25.2 25 0.7 0.3 0.2 0.8 1.6 5 20 0.5 0.3 15 0.7 Consumer IoT – 11.5 billion connections 1.3 3.2 Industrial IoT - 13.7 billion connections 10 9.1 5 Consumer IoT – 5.5 billion connections Industrial IoT – 3.6 billion connections 0 2018 2025 es cs es es rs gs es g it y l th s ai er r in om he ni al in iti icl bl et tc th He tu t ro ld ra t il tr eh ot th ar eo ui tu ac ea ar tv ec Sm er ar tb r is uf W Sm ar um el ar Sm an ar rp Sm Sm er ns Sm tm te um Co En ar ns Sm Co 3. Infrastructure providers - expanding the network As emerging technologies, such as 5G, IoT, and smart footprint cities, will drive massive growth in data transactions, a 5G networks will need a network of small cells with 5G robust infrastructure would be required to keep systems antennae placed throughout the city, compared with operational by providing uninterrupted power supply. the huge, geographically dispersed cell towers of the LTE technology. Infrastructure costs for the network Most of this additional infrastructure will likely be built with footprint could be grouped under the following four small cells that use lamp posts, utility phones, or other areas: similar-sized structures that can host smaller, less obtrusive • Upgrades to the traditional network radios required to build a densified network. Tower and Infrastructure Providers Association (TAIPA) is also targeting to • Addition of new macro sites deploy diesel-free sites using efficient solutions, such as Li-ion • Creation of the new 5G layer batteries, advanced VRLA batteries, simple power panels, fuel • Addition of small cells cells, outdoor sites, free cooling units, and solar cooling units.22 13
5G Ecosystem | The digital haven of opportunities 4. Mobile network operators - supporting the 5G ecosystem New technologies being adopted by telcos for radio, core, and transport network To facilitate smooth roll out of 5G, operators need to identify the deployment approach effectively using existing investments and best supporting their own business strategies. Telcos/TSPs are making investments in several new technologies to achieve a 5G-ready status: Figure 8: Enhancements across networks to meet 5G requirements (Illustrative list)23, 24, 25, 26, 27 Radio Market highlights Cloud RAN 5G The global cloud radio access network (C-RAN) market is expected to RAN solutions in the cloud provide high scalability to Technologies reach ~ US$ 14 billion by address varying demand 2022, at ~21% of CAGR for capacity using powerful over 2019−2022. Expected new capabilities, such as AI growth drivers: reduced (for real-time optimisation) costs, improved energy and edge cloud (to improve efficiency, spectrum subscriber experience. Transport utilisation among others. Core Market Highlights Software Defined Network Function The deployment of 5G or Small cell Networking (SDN) Virutalisation (NFV) The network function multimode small cells is virtualisation market While serving a much SDN architecture, along with The concept of NFV expected to cross the one is expected to see 42% smaller geographical area Path Computation Engine decouples software from million mark in 2020 and growth to reach US$ 70 than a macro cell, small Protocol (PCEP) capability, hardware. Using this further increase steeply billion by 2024. cells increase network can be used in 5G networks technology, it is expected to reach 5.2 million in coverage, capacity, and to facilitate ways to automate that network administrators Expected growth 2025. The total installed quality of service to deliver optimised paths and do not need to invest in high- drivers: Significant capex base count of 5G small dense coverage and high- network redundancy from priced, proprietary hardware and opex reduction cell in 2025 is predicted capacity network required a centralised control plane to set up a service chain of opportunity, increasing to be 13.1 million. by 5G. and circumnavigating major network-connected devices. data centres and cloud Expected growth drivers: outages by determining Instead, they create virtual services, adoption of IoT increasing data uptake, optimal data flows in real network functions that can rising high bandwidth time. be installed in a few days or a required applications, and week instead of months. increasing urbanisation Massive MIMO Network slicing Mobile Edge Computing The global edge Valued at US$ 1.05 (MEC) computing market billion in 2017, the global MIMO uses a combination Networking slicing is a fundamental building is expected to reach massive MIMO market of advanced antennas with MEC is a network architecture block of 5G core networks, US$ 6.96 billion over is expected to expand a large number of steerable that supports computing and enabling operators to 2018−2024, growing at a at a CAGR of more than ports to significantly storage at the edge of the rapidly create custom CAGR of 34%. 39% from 2018 to 2026 increase the number network, i.e., closer to users, services by segregating thereby lowering low latency to reach US$ 20.85 of transmission points. traffic and delivering specific billion. Expected growth This increases spectral essential for delivering sets of KPIs for each of drivers: 4.5G technology, efficiency and network mission critical and massive them. These independent improved SNR (signal to capacity, and delivers IoT device ecosystem. Edge network instances enable noise ratio), link reliability, faster data throughput. service-specific service technology can be invaluable expected launch of 5G level agreement (SLA) for the process of machine needs for connectivity, learning, automation, and big mobility, capacity, security, data applications. redundancy, and QoS/QoE. 5G network deployments are primarily service-based architectures (SBA) providing a modular framework where all functions are deployed through open software on generic hardware rather than proprietary hardware-software combination. This is both a significant advantage over legacy wireless networks and a source of vulnerability, as software is more easily subject to malicious attacks exploiting weaknesses. Due to these vulnerabilities, along with the transition to edge clouds, end-to-end security from the mobile core to the edge is a pre-requisite. 14
5G Ecosystem | The digital haven of opportunities Figure 9: Security challenges and mitigations28 5G security concerns 5G security resolutions Resilience DDoS to potential threats System vulnerabilities Identity Phishing management Privacy and assurance malware Recurring security Data loss & & threat inadequate data evaluation back-up Negligence & Communication insider threat security Deloitte is assisting government and private sector players build telecom infrastructure. It is offering assistance in the following areas: network capex prioritisation, network planning, detailed project report, investment estimations, design and bill of quantities development, and project management to meet connectivity requirements. Deloitte has also been involved in data centre design and implementation, security operation centre (SOC) development, etc., in the telecom infrastructure space. Deloitte’s engagements also span across robotics process automation, big data analytics, AI and ML design, and implementation for telecom and cross-sector players. 5G spectrum bands To provide diversified 5G use cases, operators will need spectrum across three frequency ranges − below 1 GHz, 1 - 6 GHz, and above 6 GHz. The 3.5GHz band has been identified as the primary band in many countries as it is expected to be harmonised. Operators would need to use multiple combinations of bands to provide a wide variety of uses cases as there is a trade-off among coverage, capacity, and latency for each band. Figure 10: Key characteristics across spectrum bands (illustrative)29 Low band Mid band High band < 1 GHz 1–6 GHz 24–40 GHz • Ubiquitous coverage (outside-in • High capacity • Ultra high broadband speed Characteristics and deep indoor) • Low latency • Extremely low latency • Wide coverage Suitable area of application • Rural areas • Urban and sub-urban areas • Dense urban areas • mMTC • eMBB • eMBB Use case category • eMBB • URLLC • mMTC • TV broadcasting • Environmental monitoring • Industrial IOT • Multimedia services • Smart cities • Fixed wireless access Use case • Voice services • Mission critical services – • High-definition cloud gaming security and safety • Real-time augmented reality • Critical IoT applications service • New Zealand • Japan • China • Ireland • China • India • UK • South Korea • UK • South Korea Countries supporting • Canada • Spain • India • Spain • India different bands • Mexico • South Africa • Brazil • China • Brazil • Albania • Australia • France • Italy • Hong kong 15
5G Ecosystem | The digital haven of opportunities In India, the regulator has harmonised 700 MHz band and will have to increase infrastructure spending to cope with identified 3.5 GHz band for IMT service. 30,31 Telecom service increasing traffic. providers plan for 4G and 5G deployments in line with the spectrum roll out and the regulator’s harmonisation plans. In the Indian context, both the strategies are being seen to be deployed by telcos. While Reliance Jio focuses on a lean-in Investment requirements for 5G deployment strategy, other telcos seem to be having a more conservative Cost and investments related to traditional 2G, 3G, and 4G outlook. With debt-laden financials, telecom service providers networks, unlike those for 5G, are likely to differ over time (TSPs) are in dilemma to meet the capital needs of network and would depend on local conditions. Operators have expansion. Private telcos are now attempting to monetise on at least two options. The first involves a lean-in strategy the fibre opportunity through fiberco and towerco separations, in which they prioritise 5G investments in anticipation of thereby trying to deleverage a big chunk of their (overall) debt accelerating commercial prospects. The second involves and making themselves asset-light. Fund raising is also for the a more conservative method in which they delay 5G need to expand 4G networks and make them 5G ready. Hence, investments as long as possible while existing networks the network expansion is already underway to expand 4G are upgraded. Even if operators delay 5G investments, they networks and lay the foundation for 5G in the near future. Figure 11: Network infrastructure transformation of telco-fiberco separation (illustrative list) 32, 33, 34, 35 Net debt: ~US$ 15.65 billion Net debt: ~US$ 16.44 billion Net debt: ~ US$ 22.06 billion Towers: Bharti Infratel Towers: Bharti Infratel Towers: 220,000 and Indus merger (163,000 and Indus merger (163,000 Fibre: 300,000 route KMs towers) towers) Fibre: 246,000 route KMs Fibre: 156,000 route KMs Bharti Airtel Vodafone Idea Limited Reliance Jio Bharti Airtel is in the last stages The segregation of fibre assets The transfer of control of of transferring its optical fibre sets the stage for VIL to engage assets has been done to cable network to its wholly in active discussions with two InvITs – Digital Fibre owned subsidiary, Telesonic potential buyers, which could Infrastructure Trust and Tower Networks Ltd, by way of a culminate in a fast-track hive- Infrastructure Trust, which is Network slump sale. off of the fibre business. set up by a wholly owned unit infrastructure VIL’s fibre network asset has of Reliance Industries (RIL). transformation The objective of this been estimated to be US$ of telcos transaction is to have a truly 0.43−0.45 billion. Incremental capex related to - fiberco independent fiberco with ability network infrastructure will also separation to monetise the fibre assets be made by InvITs, which will and also avoid duplication of reduce Jio’s capex intensity and capex. strengthen its balance sheet. Bharti Airtel and Vodafone Idea Limited are likely to announce their optic fibre combined entity, which will be an Infrastructure Investment Trust (InvIT). Deloitte has been assisting telcos in the innovative structuring of hived off businesses such as Investment Infrastructure Trust as part of tower and fibre assets separation. This helps drive investments in infrastructure. The company is also helping telcos in separating business plan development for valuation, asset valuation, potential operating model, plan for monetisation, and separation advisory. 16
5G Ecosystem | The digital haven of opportunities Partnerships and alliances for monetisation LTE-A and 5G being underlying technologies for end-to- end connectivity. 5G monetisation can be tricky and many service providers are struggling with how to monetise 5G use cases. Effective 2) Rise of content partnership among telcos and CDN/ monetisation of 5G use cases among other things, demands OTT players agile, low-latency high-performance networks and supporting To boost revenues, there has been a significant upswing in systems based on modern software methodologies. partnerships between telcos and CDN/OTT players in India and globally to provide exclusive video content, games, New business models are seen to be evolving with cross-sector music, etc., to former’s subscriber. Moreover, content partnerships to provide IoT services to retail and enterprise providers are promoting their platforms aggressively customers. To meet the demand for high quality-of-service through a two-pronged strategy. and high-definition content, telecom service providers are a. Allow initial free usage to enable customer to partnering with content data network (CDN) and over-the-top experience platforms and content consumption. (OTT) players. b. Incremental premium fees at a later stage after 1) Offering end-to-end IoT solution to enterprise and consumer behaviour is in favour. retail consumers Telcos are partnering with IoT device OEMs to offer end- to-end solutions to enterprise and retail consumers, with Figure 12: Business models evolving through cross-sector alliances and partnerships (illustrative list) 36, 37 Content Partnership between End-to-end IoT solution to TELCOs and CDN/OTT players Enterprise and Retail consumers Global 5G-enabled smart office solution • AT&T acquired Time Warner and HBO to bring premium SK Telecoms partnered with Samsung and Cisco to provide a content direct to consumer distribution (D2C) using high- 5G-based smart office solution offering customised mobile speed networks to provide differentiated, high-quality, enterprise phones, collaboration solutions, mobile-oriented mobile-first entertainment experience to customers. business environments, and 5G network services per client • Verizon acquired AOL and Yahoo, and combined Yahoo’s requirements. internet assets with AOL’s business to create Oath, an integrated AOL-Yahoo operation, to enhance their capabilities in content provision and drive data business growth PoS (point-of-sale) machines (unorganised sectors) • British Telecom (BT) signed a deal with Amazon to have Amazon Reliance Jio bundled Jio Mobile PoS device with Reliance Jio Prime Video app available via the UK telco TV set-top boxes. mobile 4G network services to connect the unorganised retail • Telefonica and Netflix formed a global partnership to integrate industry to its 4G network. Reliance’s subscribers can use the Netflix’s service into Telefonica’s TV and video platforms service to order supplies. across Europe and Latin America. • France based Orange, established its own original content services to create content, which it makes available on a wholesale basis and not just to its own customers. Connected cars India MG Motor partnered with Cisco, Microsoft, and Unlimit to come • Vodafone Idea partnered with digital content provider SonyLIV up with their first internet car with the advanced connectivity to provide access to SonyLIV exclusive digital content across system, which is a complete integrated solution that combines all genres to Vodafone Idea subscribers. Vodafone Idea also hardware, software, connectivity services, and applications with collaborated with OTT player ZEE5 to offer a content portfolio the first of its kind machine-to-machine sim. of ZEE5 to Vodafone Idea subscribers. • Airtel and Netflix formed a strategic partnership wherein select Airtel postpaid and broadband subscribers received free subscription of Netflix for three months and Airtel postpaid subscribers can pay for Netflix in their Airtel bills. Surveillance in commercial and residential buildings • Reliance Jio picked up a significant stake in home-grown Telcos in India are partnering with CCTV OEMs like CP Plus and content providers, such as Eros International and AltBalaji, in Kent CamEye to provide surveillance services which are now content sharing deals. an important compliance for every residential and commercial • DTH operator Tata Sky partnered with Amazon to launch a buildings from security point-of-view. platform ‘Tata Sky Binge’, which aggregates digital contents from multiple apps. 17
5G Ecosystem | The digital haven of opportunities Innovative products and services (cloud-based on generic hardware that allows greater flexibility. This infrastructure enabling micro-services) is expected to significantly reduce time-to-market and deployment cost as systems are configured on generic For the effective monetisation of business models revolving hardware using a high degree of automation. This helps around 5G network, telcos would need to act as an further reduce costs and ensure faster resolution of intermediary to enable 5G network connectivity, agile network issues. infrastructure, and different types of bundled service offerings. Telcos are also seen realising the importance of picking the • Telcos are expected to evaluate benefits of transitioning right partner and systems for such network transformation. their existing network for 5G deployment vis-a-vis greenfield deployment of 5G network to keep up with • Telcos will have to transit to a micro-service model market competition. (instead of a traditional monolithic model), which is expected to have multiple benefits, such as rapid • Telcos are looking forward to introduce innovative products deployment, autonomy of application offering lower and services through cross-sector collaboration with OEMs, capex and opex, agility, dynamic extendibility, and service software vendors, and cross-sector partners. In the 5G era, scalability through the deployment of cloud-based the B2B2C business model is likely to be more prevalent infrastructure. with telcos providing connectivity, platform, analytics, and AI, IoT, and AR-VR solutions across sectors. • Telcos will have to upgrade or migrate their networks to modern day systems, which are more software-driven, 18
5G Ecosystem | The digital haven of opportunities 19
20 Figure 13: Innovative products and services in the 5G era (illustrative list) 38 Sector Use cases Market Network feature Services Examples opportunity requirements Entertainment Infotainment The global • Enhanced • Consumer – 180 • In the US, Verizon demonstrated a multi-user VR experience using a services connected mobile degree and 360 360 degree camera that transmitted over a 5G system. on public automotive broadband degree videos, VR • In the US, AT&T enables its customers to capture their 3D AR transport infotainment • Ultra-low game streaming, and holograms and view them in real time. immersive system market is latency AR non-time sensitive • In Finland, Telia uses 5G to provide 3G VR transmissions of a football event forecast to reach performance advertising overlay match in Telia 5G Arena. experience US$ 53.28 billion by • Industry – Real-time • In Japan, NTT DOCOMO introduced first 360-degree 8K 3D VR for public 2026. AR content overlay, system for live video streaming for upcoming sporting events, such spaces (rise and holographic as Rugby World Cup, Tokyo Summer Olympics, and nationwide of AR and VR 5G Ecosystem | The digital haven of opportunities solutions cultural events, such as Shogatsu, Setsubun, and celebrating content) emperor’s birthday. Immersive The video game • Increased cell • AR/VR applications • In Australia, Optus provides 5G wireless services to customers (using experience segment is expected capacity • Video and music fixed wireless access). for homes to spearhead the • Deep indoor streaming • France Televisions provides 5G ultra-HD broadcast to its customers. Online entire AR and VR coverage • Over-the-top gaming • Orange Romania conducted trials with CISCO and Samsung using interactive market, reaching • Low latency for • Cloud-based mmWave technology for 5G to offer 5G experience to consumers. gaming a valuation of US$ delay sensitive environments for small • In South Korea, LG U Plus Corp is set to release cloud-based virtual 217.26 billion by the applications, offices reality (VR) gaming service in 2019, taking advantage of its low- end of 2025. such as VR latency 5G network. • Ultra-HD broadcast Automotive Connected The global • Ultra-low • Locations services • O2 UK will provide spectrum to a government-funded project for vehicle connected car latency • GPS testing 5G-enabled connected and autonomous vehicle (CAV) market was valued • High reliability technologies using 2.3GHz and 3.4GHz airwaves. • Infotainment at US$ 63.02 • American automotive giant Ford is building its own LTE/5G network • Mission critical • Truck platooning/ billion in 2017. It is to test connected cars in a private environment in Dearborn services management as a projected to reach (Michigan, US), operating across 3.5GHz CBRS band and using • Security service US$ 225.15 billion equipment from Ericsson, Juniper, and Dell. by 2025, registering • Samsung has signed an MoU with Korea Transportation Safety a CAGR of 17.1% Authority (KOTSA) to collaborate on autonomous driving innovation. from 2018 to 2025. • Airtel has identified the auto sector as a focus area and is building platforms through partnerships for connected cars. The telco has started talks with several automakers for potential partnerships. It is also exploring alliances with global telecom operators to provider IoT solutions to their auto customers in India. • India’s telecom operator Vodafone Idea has signed an exclusive partnership agreement with Hyundai AutoEver India, a subsidiary of Hyundai Motor Group, for the roll out of connected car services with Hyundai Blue Link technology. The tie-up will enable Hyundai cars (starting with its recently launched SUV Hyundai VENUE) to offer ‘advanced connected car functionality’. The partnership will see Hyundai deploy a connected solution in the Indian market with the integration of eSIMS with voice, 3G/4G data, SMS, etc.
Sector Use cases Market Network feature Services Examples opportunity requirements Healthcare Tele- The global • Ultra-low • Wireless tele-surgery • A successful surgery was carried out at a hospital in China using medicine telemedicine market latency • 5G-enabled medical equipment through images, which were transmitted using Location- will expand from • High reliability ambulances 5G technologies in collaboration with Huawei, China Mobile, and based its current US$ 38.3 Chinese PLA General Hospital. • Security • Wireless service services billion valuation to • The Spanish government worked with Vodafone, Juniper Networks, robots US$ 130.5 billion emergency equipment provider Corpuls, satellite provider Hispasat, by 2025. The research and innovation centre i2cat, and IT company Informatica teleconsultation El Corte Ingles to bring out 5G-enabled ambulance to serve medical service market is emergency systems to respond to health emergencies. expected to grow at a CAGR of 18.9%. Manufacturing Automation The size of the • Ultra-low • Tracking of critical • Engineering company Worcester Bosch, UK, is testing 5G for global factory latency equipment and improved factory output. It is expected to examine how it can automation market • High reliability monitoring output of provide help across preventative maintenance using IoT sensors is expected to reach manufacturing lines and data analytics to predict failure, re configuration, and real- • Security US$ 368.37 billion • Remote maintenance time analysis, to steering a machine's movements from a remote in 2025, from US$ of equipment location. Tech companies involved includes Huawei, O2, and BT. 190.88 billion in • AT&T and Samsung, US, plan to partner on a 5G "Innovation Zone" 2017, growing at a to test how 5G will affect manufacturing. CAGR of 8.8% from 2018 to 2025. Smart Grid Automation In India, the energy • Ultra-low • Real-time fault • Nokia, ABB, and Kalmar have conducted industrial trials for and metering market latency management 5G technology to support time-critical applications, along with management is about US$ 0.34 • High reliability • Power control enhancing protection and efficiency across smart electricity grid. billion. It is expected • Security • Load forecasting to grow at a CAGR • Smart metering of 8−10 percent over the next 4−5 years. Defense Drones The drone market • Ultra-low • Surveillance services • In South Korea, SK Telecom signed agreements with drone is expected to grow latency • Public protection and manufacturer DJI in June 2018 to cooperate for the R&D of at a CAGR of 20.5% • High reliability disaster relief 5G-connected drones. from US$ 14.1 • Security • Remote imaging billion in 2018 to US$ 43.1 billion in 2024. Retail Robots and Global retail sales • Ultra-low • Inventory • AT&T Foundry is testing 5G connectivity using Badger Technologies’ augmented were projected to latency management robots, which identify out-of-stock, mispriced, or misplaced reality reach about US$ • High reliability • Large interactive inventory, and store hazards, enabling retailers to improve 28 trillion by 2020, touchscreens operational efficiencies. up from ~US$ 22 displaying products trillion in 2016. • Virtual dressing rooms 21 5G Ecosystem | The digital haven of opportunities
5G Ecosystem | The digital haven of opportunities 5. Rise of application/software providers entry barriers for new players. This will lead to a shift in paradigm, where the main value propositions will be in 5G is seen catalysing significant changes in the software solutions and the business model will be OPEX- telecommunications infrastructure by increasing the oriented. adoption of open source software, non-proprietary hardware, and encouraging multi-vendor collaboration Downstream application scenarios with a mature to build programmable software-defined infrastructure technology and a high economic value are likely to be capable of delivering critical services. given priority in the implementation of 5G network. More technical barriers are expected to be broken down over These services could be delivered over 5G infrastructure time. As a result, 5G-based downstream applications will with minimal hardware and software to be owned. cater to new emerging use case scenarios, creating higher Future networks, increasingly relying on software, are economic value. expected to accelerate the pace of innovation and lower Figure 14: Application implementation timeline (estimated) 39 Intelligent power distribution Life scenarios system Remote Smart traffic maintenance and Economic value of application scenario control system inspection robots Remote equipment Agricultural High speed railways operating system drones communication and Sophisticated tele- entertainment AR/VR Commercial vehicle surgery immersive platooning Connected entertainment Production homes Assisted tele- scenarios surgery L2 intelligent Outdoor logistics driving Logistics robots drones L3 intelligent L4 intelligent L5 intelligent Mobile HD driving driving driving AR/VR based monitoring education and shopping 4K/8K HD Short term Mid term Long term High videos (Present–2022) (2022–2026) (2026–2030) Technical difficulty of application scenario Smart Smart Smart Easy life production city 22
5G Ecosystem | The digital haven of opportunities The planned rollout of 5G wireless technology by telcos globally a) Need more lab trials to resolve interoperability issues offers at least US$ 10 billion business over the next six years among different ecosystems to India’s information technology (IT) services companies. b) SLA delivery of 99.999% service uptime may not be This new technology spend by telecom firms on software and guaranteed considering limited maturity services could bring more than US$ 1.1 billion in incremental revenue over the next three years for the country’s five largest c) Security and privacy concerns considering dependency on companies − Tata Consultancy Services Ltd, Infosys Ltd, HCL another company Technologies Ltd, Wipro Ltd, and Tech Mahindra Ltd.40 d) Government and regulatory organisation’s stand on XaaS is still unknown The XaaS model has some detriments that mobility and e) Workforce has to be reskilled with new technologies enterprise service providers have to consider: Figure 15: XaaS models (illustrative) 41, 42 Unified Content-as-a- Network-as-a- Data Protection-as- Data Lake-as-a- Communication-as-a- Service (CaaS) Service (NaaS) a-Service (DPaaS) Service (DLaaS) Service (UCaaS) This model offers Content-as-a-Service Virtual network DPaaS enables A data lake is different types of is one of the fastest- infrastructure through organisations to secure a centralised communication growing services network slicing their data for long-term repository that allows solutions to enterprise in XaaS categories. feature can be used retention requirements organisations to customers. These CaaS would help by incumbent service and helps with quick store structured and solutions are hosted organisations manage provider to deliver recovery to avoid unstructured data at on service provider’s data repositories and a virtual wide area business interruption. any scale, enabling or vendor’s cloud optimise application network for new different types of infrastructure. agility. enterprise or service analytics (such as • VoIP (voice-over- provider companies. big data processing, internet protocol) real-time analytics, and machine learning • IM (instant for effective decision- messaging) making). • Chat box and video conferencing services Use cases (Illustrative) Microsoft, Cisco, and Worldwide content Communication service Solution providers, Various technology Avaya offer unified services software providers (CSPs) have such as Hitachi giants, such as communication revenue totalled been deploying a range Vantara, provide Amazon and Google, service on cloud ~US$ 10.7 billion in of new software-based data protection- offer data lake as to serve end-to- 2018, an increase of virtual networking as-a-service, which a service. Google end enterprise 11.7% from 2017. At services. Operators includes recovery Cloud Platform communications. present, top vendors such as AT&T offers copy, long-term include BigQuery, a The market spend in content services SD-WAN services retention, and serverless, managed across Global Unified are Microsoft, based on VMware disaster recovery. data warehouse Communication will OpenText, and IBM (formerly VeloCloud), The market for security offering; allows increase at a 2.6% with a combined with POP-based software increased customers to address CAGR to reach US$ 46.4 share of 40.7% in gateways to improve annually to about 9.7% a wide range of billion by 2023. 2018, whereas Hyland, performance and in 2018, touching US$ use cases (from Google, and Alfresco scalability, along with 36.3 billion in revenue the traditional data Software had the simplifying migration. (attributing to an warehouse to data highest growth with increase in demand science use cases) 43.8%, 26.8%, and for data security-as-a- by integrating ML 23.3%, respectively. service offerings). capabilities in BigQuery ML, and integrating them in Cloud Dataflow. 23
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