Industrial companies are embracing 5G connectivity as a primary enabler of digital transformation and plan to implement the technology within two years. This is spurring interest in private licenses, which nearly half of large industrial companies (47%) intend to apply for. This is according to the latest findings from the Capgemini Research Institute.
5G is the fifth generation of mobile networks. The “5G in Industrial Operations: How Telcos and Industrial companies stand to benefit” study found that 5G is regarded as a catalyst of digital transformation. Manufacturers expect it to deliver more secure and efficient operations.
Key findings of the study, which surveyed over 800 industrial companies’ executives and 150 telecoms executives across 12 countries, include:
5G is critical to digital transformation
Industrial companies’ executives were asked which technologies will be the most integral to their digital transformation over the next five years. Seventy-five percent mentioned 5G as a key enabler, ranking second to cloud computing (84%). This was ahead of technology innovations such as advanced automation and AI/machine learning. Industrial companies believe that 5G’s versatility, flexibility, and reliability will help address connectivity challenges. (A limiting factor to digital transformation for 44% of those polled) and fuel future use cases.
Moving quickly to implement 5G
There is widespread confidence in 5G’s potential. Almost two-thirds of industrial companies (65%) planning to implement it within the first two years of availability. In the US, 68% plan to start using 5G within the first two years. Meanwhile, over a quarter in Italy (35%), France (30%) and Canada (27%) intend to use 5G within the first year. The largest manufacturers are most likely to implement 5G first compared to the broader industry. 74% with annual revenue above $10bn expect to do so within the first two years. This is compared to 57% with revenue between $500m and $1bn.
One-third (33%) of industrial companies are planning to apply for their own 5G license. Large organisations will take the lead with 47% expressing interest. This is fuelled by a desire for greater autonomy and security combined with concerns about telecom operators being too slow in rolling-out 5G public networks. However, there will be regulatory barriers which differ across countries.
Gunther May, Head of Technology and Innovation, Business Unit Automation and Electrification at Bosch Rexroth AG says, “As a solution provider and a manufacturer, we are monitoring the 5G landscape closely. We believe there are multiple benefits to holding our own license. It would allow us to be in full control of our 5G strategy by giving us the freedom to either deploy the network alone or with a telecom operator.”
Security and operational advantages
When asked about the business reason for investing in 5G, more than half cited more secure operations (54%). Efficiency of operations/cost savings (52%), with the expectation that 5G will help enable services such as real-time edge analytics. Video surveillance, remote control of distributed production, AI-enabled or remote-controlled motions, remote operations through AR/VR, were also listed.
Paying more for premium services
Despite uncertainties around the speed of deployment, manufacturers are willing to pay a premium charge for enhanced 5G connectivity. Seventy-two percent of industrial companies will pay more for enhanced mobile broadband speed and increased capacity. However, only 54% of telecom operators think there is appetite for this. This presents an opportunity for telecom operators to consider how they build a highly profitable 5G business model.
Pierre Fortier, Principal Consultant in Telecom, Media and Technology at Capgemini Invent comments, “ 5G is an emerging technology. There will be many challenges to overcome before it is ready to be deployed at scale. Co-innovation between industrial companies and the telco ecosystem, in the form of pilots and open experimentation platforms, will be essential. This will create win-win business, service and operating models that will foster 5G adoption.”
The Capgemini Research Institute conducted a primary survey of over 800 executives from industrial companies. Respondents were based in 12 countries: Belgium, Canada, France, Germany, Italy, Netherlands, Norway, South Korea, Spain, Sweden, United Kingdom and US. The survey explored a dozen sub-sectors:
- aerospace & defence,
- airport and railway operators,
- consumer product,
- energy & utilities,
- industrial machinery,
- medical devices,
- pharma & life sciences,
- hi-tech manufacturing.
The Institute also conducted a survey of 150 telecom executives from these 12 countries. They also finished more than 20 one-on-one interviews with industry and telecom executives.
Enterprise Times: What this means for business?
5G is the latest iteration of mobile networking. The network operates on higher frequencies and more of them. Investment in 5G network trials are taking place around the world with carriers in South Korea, China and the US among the most active in testing 5G technology. 5G has the potential to bring faster, more reliable outdoor coverage to mobile networks and make IoT a reality. The Capgemini research is extensive. Clearly industrial companies are confident about the benefits of 5G before it has even come to market. Experts say that 5G will be fundamental to the rise of autonomous cars. These cars will need a constant low latency connection to the internet – and to one another.
5G is also essential for emerging technologies such as remote surgery, with doctors controlling medical robots from across the world. The ability to monitor and control robots, drones, and even whole factories remotely and in real time. All of this will prove transformative in the world of industry, and hence industrial companies interests in acquiring 5G licences.