Since officially separating from IBM in November last year, Kyndryl has been busy cementing some heavyweight partnerships. The alliances with Microsoft, Google, and VMware demonstrate its intention to build hybrid cloud solutions with whoever it needs to, rather than favouring the Big Blue or Red Hat. The SAP tie-up hints at a future of migrating ERP workloads to the cloud and even an eye on moving up the application stack. Last week Kyndryl announced it is working with Nokia to provide private 5G and LTE networks to enable Industry 4.0 solutions. The first customer reference for the partnership is Dow, deploying both real-world and proof-of-concept applications for worker safety and collaboration and asset tracking.
The Partnership
Kyndryl has a competitive networking services unit, particularly in partnership with Cisco. Its focus has been on SD-WAN, campus networks, and network management as part of broader cloud services deals. This 5G partnership with Nokia is its first serious effort to work with one of the major carrier-grade vendors using cellular technology. It creates an opportunity for Kyndryl to position itself as a provider of services that underpin IoT and edge applications, rather than only cloud, which has until now been its main strength.
Prior to the Kyndryl announcement, Nokia was already developing private 5G solutions under the moniker Digital Automation Cloud (DAC). A key customer is Volkswagen, using the network to connect robots and wireless assembly tools. Over-the-air vehicle updates are also tested over the private network. Volkswagen operates in a dedicated 3.7-3.8 GHz band, which was allocated by the Federal Network Agency in Germany. This illustrates a third option for accessing spectrum, which will become an important consideration in private 5G rollouts.
Private 5G Use Cases
Private 5G has several benefits such as low latency, long-range, support for many users per access point, and provision for devices that are mobile due to handover. It is unlikely that it will completely replace other technologies, like wireless LAN, but it is very compelling for certain use cases.
Private 5G is useful on large sites, like mines, ports, farms, and warehouses where connected machines are moving about or some devices – like perimeter security cameras – are just out of reach. Utilities, like power, gas, and water, with infrastructure that needs to be monitored over long distances, will also start looking at it as a part of their predictive maintenance and resiliency systems. Low latency will become increasingly important as we see more and more customer-facing digital services delivered on-site and autonomous robots in the production environment.
Another major benefit of private 5G compared to operating on public service is that data can remain within the organisation’s own network for as long as possible, providing more security and control.
Private 5G Gaining Popularity
There has been a lot of activity over the last year in this space, with the hyperscalers, telecom providers and network equipment vendors developing private 5G offerings.
Last year, the AWS Private 5G was announced, a managed service that includes core network hardware, small-cell radio units, SIM cards, servers, and software. The service operates over a shared spectrum, like the Citizens Broadband Radio Service (CBRS) in the US, where the initial preview will be available. CBRS is considered a lightly licenced band. This builds on AWS’s private multi-access edge compute (MEC) solution, released in conjunction with Verizon to integrate AWS Outposts with private 5G operating in licenced spectrum. A customer reference highlighted was low latency, high throughput analysis of video feeds from manufacturing robots at Corning.
Similarly, Microsoft launched a private MEC offering last year, a cloud and software stack designed for operators, systems integrators, and ISVs to deploy private 5G solutions. The system is built up of components from Azure and its acquisition of Metaswitch. AT&T is an early partner bringing a solution to the market built on Microsoft’s technology and the operator’s licenced spectrum. Microsoft highlighted use cases such as asset tracking in logistics, factory operations in manufacturing, and experiments with AI-infused video analytics to improve worker safety.
The Future
Organisations are likely to begin testing private 5G this year for Industry 4.0 applications, either at single sites in the case of factories or in select geographic areas for Utilities. Early applications will mostly focus on simple connectivity for mobile machines or remote equipment. In the longer term, however, the benefits of private 5G will become more apparent as AI applications, such as video analysis and autonomous machines become more prevalent. This will require the full ecosystem of players, including telecom providers, network vendors, cloud hyperscalers, systems integrators, and IoT providers.
In June, the Infocomm Media Development Authority (IMDA) awarded 5G licenses to Singtel and JVCo (formed by Starhub and M1), after they completed the required regulatory processes – including the selection of their preferred frequency spectrums, vendor partners and other technical matters such as performance, coverage, resilience, and cybersecurity. They will be required to provide coverage for at least half of Singapore by end-2022, scaling up to nationwide coverage by end 2025. While Singtel and JVCo were allocated radio frequency spectrum to deploy nationwide 5G networks, other mobile operators, including MVNOs, can access these network services through a wholesale arrangement. The networks will also be supplemented by TPG who has been allocated the remaining mmWave spectrum and will be allowed to roll out localised 5G networks.
Ecosystm Principal Advisor, Shamir Amanullah says, “Singapore, along with Thailand, leads 5G adoption in Southeast Asia and major telecom operators Singtel and StarHub launched trials which gives customers an opportunity to experience 5G speeds and potential new services.”
Singtel’s Journey Forward
Earlier this month Singtel launched its 5G NSA infrastructure on a 3-month trial promising speeds of 1Gbps by use of 3.5GHz frequency coupled with the existing 2100 MHz spectrum. It has made it free for the first 20,000 customers with 5G-compatible smartphones. While the 5G signals initially cover certain central and southern parts of Singapore, the coverage is expected to increase over the trial period. Singtel is also working on the development of other 5G services and integrating its network with technologies such as AI, IoT, Cloud, AR and data technologies, in line with the Government’s vision for 5G.
Last week, Singtel unveiled a 24×7 unmanned 5G powered stall to transform and reshape the retail experience. Labelled as 5G NOW @ UNBOXED, the hyper-connected store is designed to provide a first-hand experience of 5G services and possibilities to retailers and consumers. The store aims to offer seamless service experience to visitors looking for services such as SIM card replacements, and device collection through self-service kiosks. To create a more personalised experience for visitors, a 5G virtual assistant Stella is deployed at the store, integrated with facial recognition and emotion reading capabilities which will work in tandem with UNBOXED’s 5G rover Stanley. The rover is connected with the kiosk’s security system and will manage the contactless experience for visitors through temperature checks and maintaining social distancing measures. The 5G service with wireless connectivity and high speeds makes the store movable in a sort of hybrid online and offline retail model.
Amanullah says, “Singtel has ramped up its digitalisation efforts and increased adoption of digital channels and services to improve their customer experience. The 5G NOW @ UNBOXED phygital experience is cutting edge and brings the physical and digital experience in a seamless fashion for its customers. Singtel will be able to integrate physical and digital marketing efforts which should increase sales opportunity. In a recent report, Singtel announced that more than 70% of customer service transactions are online while only 30% of sales are transacted online. The unmanned 5G powered phygital experience should see online sales rising.”
The 5G powered pop-up store follows the launch of Singtel’s 5G non-standalone (NSA) network in the 3.5 GHz frequency as well as existing 2.1 GHz spectrum integrating technologies such as dual connectivity. The trial based 5G network offers Singtel customers a sense of 5G services such as high-speed internet of more than 1Gbps, video streaming, cloud gaming, AR/VR and other consumer use-cases.
JVCo’s 5G Initiatives
JVCo has also launched its 5G connectivity services using the NSA 5G architecture in the country in partnership with Nokia. StarHub launched its trials in August 2020 which will end on 16 February 2021. The trial runs on an NSA 5G infrastructure on the 2100 MHz spectrum with the SA 5G infrastructure operating on the 3.5 GHz expected to be ready in mid-2021. The StarHub Mobile+ or Biz+ mobile plans, allows customers to automatically experience some early 5G benefits using compatible mobile devices. The 6-month, free trial is a lead up to the full commercial launch of 5G standalone services next year. The telecom operator has a planned investment of USD 146.4 million in 5G infrastructure over a five-year period.
Meanwhile, M1 is working closely with IMDA and is expected to roll out 5G trial services, soon.
Amanullah says, “In the challenging financial times due to the COVID-19 pandemic which has impacted roaming, prepaid segment, equipment sales among others, it is impressive that the leading operators in Singapore are bringing cutting-edge connectivity services which should drive digitalisation of consumers and enterprises.”
Never before has the world experienced a shutdown in both supply and demand which has effectively slammed the brakes on economic activities and forced a complete rethink on how to continue doing business and maintain social interactions. The COVID-19 pandemic has accelerated digitalisation of consumers and enterprises and the telecommunications industry has been the pillar which has kept the world ticking over.
It is unthinkable just how the human race would have coped with such massive disruption, two decades ago in the absence of broadband internet. The technology and telecom sector has seen a rise in their visible importance in recent months. Various findings show that peak level traffic was about 20-30% higher than the levels before the pandemic. The rise in traffic coupled with the fervent growth of the digital economy augurs well for the technology and telecom sector in Southeast Asia.
Revenues Hit Despite Rise in Traffic
Unfortunately, the rise in network traffic has not translated to an increase in revenue for many operators in the region. The winners, that enjoyed YoY growth in Q1 2020 despite challenging circumstances were: Maxis (4.9%) and DiGi (3.4%) in Malaysia; dtac (3.3%) and True (5.7%) in Thailand; PDLT (7.5%) and Globe (1.4%) in the Philippines; and Indosat Ooredoo (7.9%) and XL Axiata (8.8%) in Indonesia. The telecom operators that struggled include: Celcom (-6.1%) and TM (-8.0%) in Malaysia; Singapore’s trio of Singtel (-6.5%), StarHub (-15.2%) and M1 (-10.3%); and AIS (-1.0%) in Thailand.
Key market trends include a dip in prepaid subscribers due to fall in tourist numbers, roaming income losses due to travel restrictions, and a general decline in average revenue per user (ARPU) due to weaker customer spend. The postpaid customer segment was resilient while the fixed broadband revenue stream was stable due to the increase in work from home (WFH) practices. With fixed tariffs, there are no incremental gains with an increase in usage. Voice revenue has been hit with the increase in collaboration-based communication applications such as Zoom and Microsoft Teams.
Equipment sales fell as global supply chains were severely disrupted and impacted new sign-ups of the more premium customers. Most markets in Southeast Asia depend on retail outlets as a key channel to the market, which has been hampered.
With the job losses across the world, bad debts and weakened customer spend is inevitable and it is imperative that the operators provide for reflective pricing strategies, listen to new customer requirements to ensure customer retention and strengthening of their market position. In May, Verizon’s CEO Hans Vestberg said nearly 800,000 of their subscribers were unable to pay their monthly bills. Discussions with operators in Southeast Asia also highlighted this as a current concern.
Enterprise Segment Target for New Growth
Ecosystm research shows that enterprises in Southeast Asia are increasingly considering telecom operators as go-to-market partners (Figure 1). Enterprises are demanding more than just devices and connectivity and with the fervent digital transformation (DX) efforts underway, services such as managed services, business application services, cybersecurity and network services are in demand. Technology vendors have an opportunity to partner with the right telecom operator in each market to enhance their IT market offerings, ahead of the 5G rollouts.
The broad 5G ecosystem inculcates cross-sector innovation and greater collaboration leading to new business models and exciting new opportunities. Singtel is the leading operator in the region and has the enterprise segment contributing approximately 65% to its revenue in its domestic market. In the World Communications Award 2019, Singtel won both “Best Enterprise Service” and “The Broadband Pioneer” awards. This places Singtel in a fine position to capitalise on the 5G enterprise services.
5G Needed Now More Than Ever
The pandemic has seen a rise in network traffic, onboarding of the digital customer and rapid DX of businesses which has whetted the appetite for faster broadband speeds and new services. Southeast Asia countries stand to profit from the trade war between the US and China and 5G features of low latency and higher security can boost adoption of IoT, Smart Manufacturing and broader Industry 4.0 goals to drive the economy.
Fixed Wireless in Southeast Asia is expected to be very popular considering the low penetration of fibre to the home (with the exception of Singapore) and will provide enterprises with a viable secondary connection to the internet. Popular applications – including video streaming and gaming – which are speed, latency and volume hungry will also be a target market for operators. Mobile operators that do not have a fixed broadband offering can enter this space and provide a serious “wireless fibre” alternative to homes and businesses.
Governments and telecom regulators ought to make spectrum available to the major telecom operators as soon as possible in order to ensure that the cutting edge 5G communications services are made available to consumers and businesses. Many experts believe 5G can raise the competitiveness of a nation.
Recent research from World Economic Forum (WEF) has found that significant economic and social value can be gained from the widespread deployment of 5G networks, with 5G facilitating industrial advances, productivity and improving the bottom line while enabling sustainable cities and communities. GSMA notes that mobile technologies and services in the wider Asia Pacific region generated USD 1.6 trillion of economic value while the mobile ecosystem supported 18 million jobs as well as contributing USD 180 billion of funding to the public sector through taxation.
US-China Trade War Threatens to Change Equipment Supplier Landscape
Despite severe pressures caused by the US-China trade war, Huawei posted an impressive 13.1% YoY growth in 1H 2020 registering revenue of USD 64.88 billion. Both Huawei and ZTE generate approximately 60% of their business from their domestic markets which is critical with the current unfavourable global sentiments. Huawei has diversified its business and built its consumer devices business which should withstand the disruptions caused by the political challenges.
Ericsson and Nokia stand to benefit from Huawei’s current global position and this was evident with the wins for the 5G contracts by Singtel and JVCo (Singtel and M1). The JVCo announced it selected Nokia to build the Radio Access Network (RAN) for the 5G standalone (SA) mmWave network infrastructure in the 3.5GHz radio frequency band. Singtel selected Ericsson to provide for the RAN on the same mmWave network.
However, while there is an opportunity for NEC and Samsung to join the party, Huawei is expected to do well in most other countries in Southeast Asia.
The Rise of the Digital Economy in Southeast Asia
A recent Google report valued the internet economy in Southeast Asia at USD 100 billion in 2019, more than tripling since 2015, and the sector is expected to hit USD 300 billion in 2025. With a population of approximately 570 million people, the region has some of the fastest-growing internet economies in the world.
The Indonesia market is the largest in the region and is expected to hit USD 133 billion from USD 40 billion in 2025. Indonesia’s lack of a world-class telecom infrastructure coupled with their slowness in 5G adoption has not impeded the country’s attractiveness for global technology investors who see the 270 million population as an immense opportunity. US tech giants, Facebook, Google, and PayPal have invested in Indonesia to reap the benefits from the growing digital economy powered by unicorns such as Gojek, Bukalapak, Tokopedia. In June 2020, Google Cloud launched in Jakarta, only the second in the region after Singapore with the four big unicorns being anchor customers.
In 2025, Google predicts Thailand to be the second-largest internet economy worth USD 50 billion. The internet economy for Singapore, Malaysia and the Philippines are estimated to be over USD 27 billion each. Shopee and Lazada are the top eCommerce apps in the region and have seen an increase in sales due to the disruption in the Retail industry. In-store shopping contributes to more than 50% of Retail in Singapore and Malaysia – this provides a tremendous opportunity for eCommerce players.
While movement restrictions are gradually being lifted, some things may never return where they were before COVID-19. Public debts have risen with numerous aids and handouts impacting economic growth forecast and rising unemployment is impacting customer spending power. On the plus side, DX of businesses and sharp onboarding of customers have redefined interactions, and sectors such as Education, are going online which will boost the digital economy. While the challenges are evident, exciting times are ahead for the technology and telecom sector in Southeast Asia.
April saw the disruption of normal business operations due to the COVID-19 crisis. However, telecommunications companies continued initiatives to identify the best ways to serve customers and enterprises. The month saw a lot of activity in the 5G space across the globe, including partnerships, innovation in productisation and identifying 5G use cases.
Telecom providers building their 5G capabilities
Ecosystm Principal Advisor, Shamir Amanullah noted in his blog that in the new normal telecom providers have fast evolved as the backbone of business and social interactions. Telecom operators are fervently working towards 5G network and services deployment in order to be an early mover in the market. In China, China Mobile has been one of the leaders in rolling out country-wide 5G. The tender to build around 250,000 fifth-generation wireless network base stations across 28 provincial regions was put out in March and in early April, Huawei emerged as the key winner with the contract to build nearly 60% of the base stations. ZTE also won nearly a third of the contract. Global network equipment providers will find entering the China market as challenge for a number of reasons, including the strength of their local players.
Huawei continues to be under scrutiny in the global market, however British telecom provider chose Ericsson to build the core of its 5G network. BT hopes to create and define a future roadmap of new services such as mobile edge computing, network slicing, enhanced mobile broadband and various enterprise services. The US market is another arena where the battle for 5G will be fought out. The T-Mobile – Sprint merger was finalised in early April. The New T-Mobile is committed to building the world’s best nationwide 5G network, which will bring lightning-fast speeds to urban areas and underserved rural communities alike. Other vendors are also vying for a larger share of the US market. Nex-Tech Wireless, a smaller rural telecom provider based in Kansas, is planning to transition from 4G to 5G by using Ericsson’s Dynamic Spectrum Sharing (DSS) to deploy 5G on existing bands. This will help Next-Tech wireless to leverage existing assets instead of building 5G capabilities from the ground-up – enabling them to seamlessly transfer from 4G to 5G.
The 5G developments are by no means limited mostly to the US and China. Korea’s telecom provider, KT and Far EasTone Taiwan (FET) signed an MOU to collaborate and jointly develop 5G services and digital content. With this deal, KT plans to boost its 5G powered content and services presence through FET.
Tech Vendors evolving their 5G offerings
Network and communications equipment providers have much to gain and more to lose as organisations look to leverage 5G for their IoT use cases. If 5G uptake does not take off, the bigger losers will be the network and communications equipment providers – the real investors in the technology. Also, as telecom providers look to monetise 5G they will find themselves dealing with a completely different customer base – they will take help from tech vendors that have more experience in the enterprise space, as well as industry expertise. Both network equipment vendors and other tech vendors are actively evolving their product offerings. There were numerous examples of this in April.
Microsoft’s decision to acquire Affirmed Networks is an example of how the major cloud providers are trying to be better embedded with 5G capabilities. This month also saw Microsoft announce Azure Edge Zones aimed at reducing latency for both public and private networks. AT&T is a good example of how public carriers will use the Azure Edge Zones. As part of the ongoing partnership with Microsoft, AT&T has already launched a Dallas Edge Zone, with another one planned for Los Angeles, later in the year. Microsoft also intends to offer the Azure Edge Zones, independent of carriers in denser areas. They also launched Azure Private Edge Zones for private enterprise networks suitable for delivering ultra-low latency performance for IoT devices.
The examples go beyond the cloud platform providers. Samsung and Xilinx, have joined forces to enable 5G deployments, with Samsung aiming to use the Xilinx Versal adaptive compute acceleration platform (ACAP) for worldwide 5G commercial deployments. Versal ACAP offers the compute density at low power consumption to perform the real-time, low-latency signal processing needed by 5G. Following the successful pilot of 450 MHz proof of concept 5G network, Nokia has partnered with PGE Systemy, a large energy sector company in Poland to deploy industrial grade 5G solutions and to support energy distribution for its next gen power grid. It is the band of choice for machine-to-machine communications in the energy sector, including smart meters. Nokia also released an AI-as-a-service offering – Nokia AVA 5G cognitive operations – to help telecom providers transform their services with AI-based solutions to support, network, business and operations.
Use cases for 5G adoption firming up
5G promises to revolutionise various industry solutions based on required data rates, low latency, reliability, and machine-type communications. Telecom providers and tech vendors alike are working on developing industry use cases to drive up adoption.
Vodafone Qatar and Dreama Orphan Care Centre and Protection Social Rehabilitation Centre (AMAN) have collaborated to support remote learning and education using 5G technology. This is aimed to enhance virtual education through e-learning, online schools, and connecting teachers and students through high-speed learning environment. In the post-COVID 19 era remote learning is expected to become a key sector and there is immense potential for uptake.
The Manufacturing industry remains a top focus area for 5G providers, with their early adoption of sensors and sensor data analytics. The Smart Internet Lab at the University of Bristol, UK has been awarded a 2 years project by UK’s Department for Digital, Culture, Media and Sport (DCMS) to enable 5G connectivity for the manufacturing sector. The project will primarily work on improving productivity and manufacturing, easy asset tracking and management with involvement of AR/VR technologies and industrial system management.
Gaming is another sector with huge potential for 5G adoption. With cloud gaming, gamers can access a library of popular high-quality games minus the need for expensive hardware which has been the case in the past. China Mobile Hong Kong and Ubitus teamed up to launch a 5G cloud gaming service – UGAME. The application is available for download from the Google Play store. While still at a beta phase, the telecom provider promises a revolutionary gaming experience, where the need for computers or consoles will be lessened by augmented smartphone capabilities.
In the midst of the uncertainties, telecom, network equipment providers and cloud platform providers appear to be gearing up for 5G in enabling a contactless and remote economy.