Telco-Led Sports Event Partnerships: Co-Innovation "Hotbeds" or Enterprise "Go-to-Market" Strategy?

As telcos are innovating and carriers continue to transition from connectivity suppliers to digital service providers, they are increasingly seeing favorable opportunities to “co-innovate” with sports events partners. The value of 5G and edge deployments is based on the use cases and services enabled, and these events provide an opportunity to showcase these capabilities.

Orange Business Services has been particularly active in this area over the last few years and was one of the first to deploy 5G at a public stadium to support experiences and deliver next-generation applications to fans in the “Olympique de Marseille Stadium.” Supported by Amazon Web Services (AWS) edge and cloud, this solution has been aimed at showcasing how Orange Business Services’ network and compute capabilities can drive a more immersive fan experience.

Deutsche Telekom has followed a similar strategy to showcase its integrated solutions through its sponsorship of “Telekom Baskets Bonn.” In conjunction with hubraum (Deutsche Telekom’s technology incubator), it implemented ARISE to improve the stadium fan experience by using 5G and the edge to support Augmented Reality (AR) use cases.

More recently, NTT DATA has pursued similar initiatives during the Tour de France and the 2022 Open Championship. In both of these sporting partnerships, NTT DATA deployed hybrid cloud infrastructure, including edge servers to support digital twins and integrated data delivery, in order to improve customer engagement.

Players in Asia-Pacific have been particularly active in this area. China Mobile leveraged its network infrastructure to support 5G users and implement Virtual Reality (VR) broadcasting throughout the Beijing 2022 Winter Olympics. Huawei, with a variety of partners, has leveraged its 5G Mobile-Access Edge Computing (MEC) infrastructure to launch its Smart Stadium Solution for a number of sporting events.

These are just some of the examples of telco-led sports event partnerships, with companies like Vodafone and Verizon following similar sports event-led partner strategies. But what is the true goal and value of these partnerships for telcos? Are they a source of “co-innovation” or are they just “go-to-market” strategies (aimed at accelerating enterprise service awareness and deployment)?

Beyond improved customer experience, there are several reasons that could explain why telcos are “partnering” with large sports events to deploy 5G MEC to support Industry 4.0 use cases (AR & VR, Artificial Intelligence (AI), digital twins, or cloud):

Co-Innovation

• Continue to Innovate and Develop New Applications/Services that Meet the Requirements of Verticals: Often cited as the primary reason for these partnerships, telcos can use these events to co-innovate and develop new use cases/applications that meet real-world resiliency and latency requirements without substantial risk.

Improve Market Exposure

• Potential Vertical Service Opportunity in the Sports Industry: Sports events offer a significant opportunity for digital transformation through 5G MEC due to the huge (and still growing) demand for improving fan experience and a sector-wide willingness to spend cash to differentiate their experience. Demonstrating the experience value of these use cases may offer telcos a go-to-market foundation to gain a foothold in an emerging vertical.
• Demonstrate Application/Service Capabilities and a Partnership-Led Approach to Other (Traditional) Verticals: Choosing sports event partners offers two opportunities: 1) significant footfall and the chance to show network and edge capabilities to a significant range of people both online and in-person; and 2) demonstrate complex, purpose-built deployments in challenging environments with substantial data creation. These factors allow telcos to showcase their complex and resilient use cases to a wide range of potential customers.
• Drive Regional Dominance through Name Recognition: In each area, the operator likely to grow most effectively will be the one with better brand recognition. Orange Business Services is the “go to” in France, while KPN dominates the Dutch market. Supporting sporting events may be effective at driving this level of brand awareness, which could help regional positioning and eventually filter through to enterprise revenue growth.

ABI Research believes that these partnerships are primarily a go-to-market tool used to demonstrate their networking and compute service capabilities from consultation and problem solving to deployment and use case enablement. This is a low-risk, but low-cost strategy that has the potential to indirectly drive cross-vertical enterprise digital transformation growth by demonstrating the real-world effectiveness of 5G MEC-enabled use cases in a complex/challenging environment.

However, this is where it ends. Looking at the key verticals expected to drive growth in this market, one should be fairly skeptical about the true monetization potential of these partnerships. Key verticals that can leverage the use case potential of 5G MEC are focused on solving mission-critical use cases, such as intelligent traffic operations or connected healthcare monitoring. Subsequently, it seems farcical to claim that because telcos demonstrate that their 5G and edge can track a golf shot with digital twins, a city will be convinced to deploy traffic or autonomous factory management systems, which, if they fail, have the potential to cause injury or death. At most, these partnerships can be seen as a strategy for telcos to sidestep their “commodity provider” label in favor of recognition as a more lucrative end-to-end digital service provider.

These partnerships can create some business value for telcos, but other strategic priorities are likely to provide a better alternative to help telcos accelerate their enterprise digital transformation engagement:

• Launch 5G MEC incubators to lower risk and accelerate enterprise time to deployment through mass testing. Incubators provide rapid enterprise trial facilities to fast-track Research and Development (R&D) through mass 5G MEC testing. Singtel and Intel have recently partnered to deploy an incubator for 5G MEC.
• Deploy metro 5G MEC test and observation centers for enterprise customers. Vodafone and AWS have looked to deploy beta test sites in the United Kingdom to showcase the potential enterprise use cases and benefits across industry verticals without drawn-out individual enterprise R&D periods.
• Focus go-to-market activity in one enterprise vertical to build critical mass prior to shifting vertical focus. Unlike connectivity, leading enterprise digital transformation through 5G MEC requires sector-specific skills.
• Focus enterprise engagement on improved customer outcomes. Enterprise value is no longer in technology or connectivity, but in services that solve problems. Investment in consultative practices and personnel will be crucial to accelerate enterprise 5G MEC deployments.
• Understand enterprise vertical expectations to develop/deploy applications that create value and align closely with demand. To best achieve enterprise traction, telcos and partners should focus activity on verticals in which they have core competencies.