The Rising Importance of 5G-ACIA and How MSPs Should React

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By Leo Gergs | 3Q 2019 | IN-5599

As the commercial rollout of 5G continues to take shape, the deployment of 5G for enterprise verticals is expected to start in 2020 after the publication of 3rd Generation Partnership Project (3GPP) Release 16. Along with this, new vertical-specific organizations are entering the landscape in order to make sure their industry-specific requirements are considered when framing 5G standards in the3GPP, one of the most prominent of which being the 5G Alliance for Connected Industries and Automation(5G-ACIA), which focuses on requirements for the Industrial Manufacturing arena and is the most active organization in defining enterprise requirements for 5G networks today.

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The Changing Landscape of 5G-Centered Organizations

NEWS


As the commercial rollout of 5G continues to take shape, the deployment of 5G for enterprise verticals is expected to start in 2020 after the publication of 3rd Generation Partnership Project (3GPP) Release 16. Along with this, new vertical-specific organizations are entering the landscape in order to make sure their industry-specific requirements are considered when framing 5G standards in the 3GPP, one of the most prominent of which being the 5G Alliance for Connected Industries and Automation (5G-ACIA), which focuses on requirements for the industrial manufacturing arena and is the most active organization in defining enterprise requirements for 5G networks today.

Already, 60% of work items in 3GPP’s SA1 come from enterprise verticals, and it is reasonable to expect this proportion will rise with the freeze of releases 16, 17, and beyond. This focus on enterprise verticals forces Mobile Service Providers (MSPs) and network infrastructure vendors to leave their comfort zone (the consumer market) and advance into new, largely unknown territory. Furthermore, vertical-specific organizations will become an additional stake holder on the map of 5G focused associations. The question to ask, therefore, is what role will vertical-specific bodies like 5G-ACIA take in framing 5G standards for enterprise verticals, and how should MSPs and the telco environment react to these developments in order to maintain their position in the 5G value chain and secure access to technology implementers in enterprise verticals?

5G ACIA: A Closer Look

IMPACT


At present, 5G-ACIA (founded in 2018 at the 5G Forum of Hannover Messe Industry and hosted by the German Electrical and Electronic Manufacturers' Association, or ZVEI) comprises 45 member companies, ranging from industrial manufacturing heavyweights like Siemens and Robert Bosch to network infrastructure vendors like Huawei and Qualcomm. In just the first half of 2019 the body reported 19 new memberships, hinting at the rising importance of the association. Furthermore, workshops in Chicago, London, Paris, and Singapore and presentations at fairs in Barcelona, Hannover, Nuremberg, and Riga underline the association’s ambitions to strengthen its international presence. But what position will 5G-ACIA, and comparable vertical-specific associations, take in framing 5G standards?

In light of the challenging situation the 3rd Generation Partnership Project (3GPP) currently finds itself in—as has been elaborated upon in the ABI Insight Has 3GPP Missed the Enterprise Vertical Boat? (IN-5563)—and the increasing demand for reliability in framing 5G standards for industrial manufacturing use cases, it would not be completely unreasonable to assume that 5G-ACIA could, in theory, move on to define its own industry-specific 5G standards. If you listen to senior representatives of the association, however, this is not bound to happen, as there is no ambition to become a parallel body to the 3GPP and develop one’s own sets of standards.

Now you could take the opposite extreme position and argue that 5G-ACIA as an organization is completely irrelevant for MSPs to address. However, this would be far too easy to conclude and would neglect a key aspect. Until now, cellular network technologies 2G, 3G, and even 4G have been largely consumer-oriented, meaning that MSPs could remain inside their comfort zone (i.e., the consumer market, where they know the landscape and market dynamics by heart). As ABI Research argued in 5G Will Fail without Enterprise Applications (IN-5591), this will change with 5G: while 5G will certainly bring benefits to the consumer market, as our analysis has shown, these benefits will not be enough to justify the investment needed to roll out 5G. Instead, the large revenue potential for 5G lies in applications in enterprise. Hence, in order to maintain their position in the 5G value chain, MSPs have to approach these verticals (like industrial manufacturing) and advance on largely unknown territory, in need of guidance regarding stake holders, technology requirements, and market dynamics in order realize Return on Investment (ROI).

What Does This Mean for MSPs?

RECOMMENDATIONS


MSPs and 3GPP need to embrace enterprise verticals and they need to do it now. Manufacturers like ABB, Bosch, and Siemens are eagerly waiting for 5G deployment and are well prepared to implement. However, they all have their contingency plans in place should 3GPP not advance in framing 5G standards for industrial manufacturing use cases quickly enough. This in turn means that addressing enterprise verticals becomes time critical. In other words: MSPs cannot wait until they have built up profound knowledge of the vertical-specific market characteristics on their own, but need to start approaching the various verticals now. In order to succeed in doing this, a well-founded understanding of the stake holders, technology requirements, and market dynamics in the different verticals is pivotal (as this is largely unknown territory for them), and can be provided by organizations like 5G-ACIA; as the approved Market Representation Partner (MRP), the association acts as the central forum to align the stake holders’ technological requirements, which MSPs would then need to address. Furthermore, since 5G-ACIA is hosted by the ZVEI and has all key international players of the industrial manufacturing arena as members, the association also pools in-depth knowledge of the vertical, key stake holders, and market dynamics.

Taking all of this into account, MSPs should adopt a two-pronged strategy in order to be successful in addressing new enterprise verticals. On the one hand, they should bear in mind the central role that 3GPP plays (and will continue to play) in consolidating various technology requirements of the different verticals. On the other hand, however, they need to accept the rising importance of vertical-specific organizations like 5G-ACIA and initiate a dialogue with the various verticals to get a profound understanding of the industry, key stake holders, and market dynamics, as well as the specific requirements for 5G standards and their anticipated use cases.

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