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Capgemini: Synergy needed for 5G rollout

Industrial companies could apply for private licences if telcom operators are slow at rolling out 5G, reveals a new report from Capgemini

Janet Brice
|Oct 26|magazine11 min read

A clearly defined road map and synergy is needed for industrial companies and telcos to pave the way and benefit from a 5G rollout, according to a new report from think tank, Capgemini.

Although industrial companies are keen to adopt the latest standard of cellular networks within two years to boost their connectivity the report highlights a disparity with the timeframe given by the telco players who will need much longer to rollout out their 5G features.

“Telecom operators believe that it will take at least five years for large-scale adoption of features such as guaranteed quality of service or network slicing,” reports Capgemini.

“These are the areas that hold rich potential for enterprise applications. This slow progress, as well as an appetite for greater autonomy and security, are creating a situation where industrial companies are considering applying for their own private licenses.

Call for more collaboration

The report calls on industrial companies and telcos to collaborate to exploit the potential of digital transformation in the future. Experts believe 5G has the potential to solve many of the connectivity issues faced in a range of industries. A total of 75% of Industrial companies polled considered 5G to be the key enabler of their digital transformation.

“They need to identify the areas where 5G can add value, both in the immediate and longer term, and design the right implementation road map. By working closely, the two sides can avail the full potential of this transformative technology,” highlights the report titled: 5G in industrial operations.  

Consultants Capgemini surveyed 806 executives from industrial companies with revenue greater than $500 million in FY 2017 for their research paper.

According to their findings one third of industrial companies are planning to apply for 5G licences. A total of 47% of these organisations revealed they are planning to have a dedicated network and would consider applying for a private license. 

The report shows larger organisations believe private networks will offer more autonomy, security and speed. However, Capgemini points out that not all countries will offer a regulatory environment in which this is possible and telcos will still have a role in building and operating dedicated 5G networks.

“We need our own 5G frequencies so that we can determine the security and availability of the networks,” said BASF’s Matthias Fankhänel. “We want to set the rules of the game and be able to control the 5G network ourselves.” 

BASF has placed a bid for a private 5G licence for its 10-kilometer square plant in Ludwigshafen, Germany. It aims to leverage the speed and reliability of ultra-fast 5G to increase the number of automated guided vehicles in use and make those vehicles faster.

Transformative potential of 5G

“Our research shows that industrial companies believe in the transformative potential of this technology and are willing to quickly adopt it once it becomes available,” say Capgemini.

The 5G technology will offer a wide variety of use cases for organisations ranging from shop floor to supply chain to product and service management. “It will support the reliable, secure, real-time, high-speed transmission of data, transforming the potential of a multitude of applications.”

The aim of this research was to help industrial companies identify the potential use cases for 5G and the optimum path to deliver. 

The research report looks at four key areas:

  • Industrial companies’ appetite for speedy 5G adoption 
  • Why potential delays in 5G deployment are leading companies to consider applying for 5G licenses and how this might affect telecom players
  • Potential manufacturing use cases that 5G offers 
  • Key recommendations for industrial companies as well as telecom players

According to Capgemini, companies should think carefully before proceeding down a path and need to consider the following factors: 

  • Strategic fit: Flexibility to develop customised solutions, control over the network and security. For a public network, the value lies in the flexibility to scale up the capacity and minimal capital expenditure. 
  • Capabilities: To run a private network, you will need to be able to operate and maintain networks – either by outsourcing or in house. 
  • Total cost: Organisations need to carefully evaluate the total cost of both implementation models. Initial capital expenditure is required to set up private networks. However, the accumulated, multi-year cost of industrial solutions over public networks might be even higher than establishing a small-scale private network.

One key conclusion from the research reveals that although there are still uncertainties around 5G, companies are willing to pay a premium for the benefit of this technology. 

“This is something that telcos underestimate. For example, 72% of industrial companies say they would be willing to pay a premium for Enhanced mobile broadband speed and increased capacity but only 54% of telcos think there is an appetite for paying a premium,” outlines the report.

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