Has 3GPP Missed the Enterprise Verticals Boat?

While consumers are eagerly waiting for 5G to be deployed, the 3^rd Generation Partnership Project (3GPP) is already working behind the scenes to frame the 5G environment for enterprise vertical use cases.

With 3GPP Release 15 not yet fully frozen (the full specification of the late drop is projected to be finished by Q3 2019), the standardization committee recently gave an insight on the agenda for releases 16, 17, and beyond (the freeze of release 16 is planned to be June 2020), providing an interesting, yet somewhat inconclusive update regarding where 3GPP wants to move in terms of 5G. At the core of Release 16 is the full specification of enterprise vertical use cases, with support for Time-Sensitive Networking (TSN) being a major component. At the same time, vertical industry-specific associations, like the 5G Alliance for Connected Industries and Automation (5G-ACIA) and the 5G Automotive Association (5GAA), are cooperating with 3GPP to define full network slicing requirements and capabilities, which has proven to be a more complex task than previously anticipated. Moreover, 3GPP is now in discussion to introduce an additional New Radio standard (NR-Light) as mid-tier radio standard (aimed for use cases in, for example, security cameras or wearables), small data transfer optimization, and the support of multi-sim operations in Release 17 (freeze is planned to be Q3 2021).

The key question for Mobile Service Providers (MSPs) is how they will react to these recent developments in order to realize the revenue potential that comes with approaching enterprise verticals beyond the end user market. At the same time, the telecoms industry needs to reflect on the impression it gives to enterprise verticals, especially when enterprise-specific technologies are changing with every 3GPP release.

3GPP’s recent update must be seen in the context of a bigger picture: as of Q2 2019, 3GPP has had 673 company members and thousands of individual contributors with diverging interests and conflicting company priorities. At the heart of this conflict is the dispute about whether to continue focusing on the consumer market (which MSPs know by heart) or embrace enterprise verticals, where additional revenue potential is much bigger.

Looking at the recent update, 3GPP continues to try and reconcile both: The standardization of TSN is of key importance for technology implementers in the enterprise vertical, especially for industrial manufacturing and automotive industries. By contrast, the introduction of NR-Light, which is designed for use cases in devices like security cameras or wearables (smart watches for example) as well as the support of multi-sim mobile phones, is clearly aimed to serve the consumer market. In addition, external political influences (like the blacklisting of Huawei by the US American government) further increase the uncertainties the group is facing.

This inevitably leads to the question, whether 3GPP as a group is currently in the position to provide the much-needed reliability in framing 5G standards for enteprise verticals. For if it does not, vertical-specific associations and industry leaders will start focusing their efforts on developing private networks to adopt the 5G framework to their own needs. If 3GPP is not careful, this could create a highly fragmented 5G environment (especially for industrial implementations). While network infrastructure providers (including Huawei and Nokia) could address connectivity for enterprise verticals directly, revenue potential would be much bigger if MSPs addressed these enterprise verticals. However, penetrating a highly fragmented 5G environment would prove difficult and inefficient, leading MSPs to carefully reconsider their entry options. A disintegration of the market would therefore jeopardize MSPs’ revenue opportunities beyond the consumer market.

To prevent this fragmentation from happening and therefore safeguard mobile service providers’ opportunity to address these enterprise verticals, 3GPP needs change. At the core of this change should be the focus on and streamlining of the standardization process in order to give technology implementers this much need reliability. After all, the narrative has always revolved around the immense benefits 5G will bring to enterprise verticals. Now these enterprise verticals are preparing to implement (be it Siemens with its Digital Factory division, Bosch with its “Factory of the Future” concept, or Mercedes with the Factory 56). However, with the amount of investment and Research and Development (R&D) that has already gone into these projects, these enterprises are looking to implement 5G infrastructure sooner rather than later and will not wait forever. As has become apparent with the different vertical-specific requirements for TSN, addressing each of these verticals will be extremely ambitious for one single organization and might end in dissatisfactory results for both MSPs and technology implementers.

Therefore, as argued in ABI Insight Are 3GPP and the Telecoms Value Chain Relevant for Enterprise Verticals? (IN-5312), what is needed is a much deeper dialogue between these industries and mobile network providers. Even though big implementers like Siemens try to make their voices heard in 3GPP, it has proven to not be the right forum for such a dialogue to take place. After all, the voice of these important technology implementers may get lost in the “noise” of telecoms-centric 3GPP discussions.

Instead, in specifying key requirements for 5G use cases, industry-specific bodies like 5G-ACIA for manufacturing and 5GAA for automotive have proven their ability to act as meaningful forums for bringing together industry leaders and MSPs. In short, they pool the necessary vertical-specific expertise. However, to truly reconcile industry-specific requirements with MSPs’ interest in revenue enhancement, the input of MSPs, which is currently missing from these forums, is required.Therefore, in order to capitalize on new revenue opportunities, MSPs should approach these associations and seek to initiate this much needed dialogue with industry leaders.