Back when 3G and 4G dominated the market, the focus for communications service provider (CSP) monetization was firmly centered on capturing the consumer market. Enterprise customers meanwhile, were largely segmented according to organizational size, with clients in different verticals − from manufacturing to banking to agriculture − being treated more or less the same. Needless to say, the results were mixed.
5G offered an opportunity to hit “reset”. But despite newfound capabilities that were promised – particular in terms of latency, speed, coverage, capacity, density, slicing and data management – many CSPs struggled to evolve to meet the wide-ranging enterprise requirements at scale. For some consumers as well as businesses, 5G in its early phase – 5G “non-standalone” (NSA) – simply meant “faster 4G”.
While the evolution towards standalone (SA) 5G encountered delays, the delays also revealed wider change requirements that demanded increased attention, including:
- Cloud migration and associated organizational changes: According to analysts, by 2026, 5G core (NGC) will generate around 80% of service provider revenues, predominantly leveraging cloud-based cores. This trend is prompting CSPs to actively pursue the transition from partial cloudification to more comprehensive cloud flexibility, accompanied by upskilling initiatives.
- Phased movement from 4G to non-standalone (NSA) 5G: While 4G was engineered for longevity, over 240 CSPs have already launched some form of 5G service. By the end of 2023, an estimated 52 operators are expected to introduce services based on standalone 5G infrastructure, illustrating steady progression in adoption.
- Digitization: The relentless drive towards digitization, possibly catalyzed by the pandemic, has reshaped consumer expectations. Many customers now anticipate digital-only relationships or seamless digital enhancements. This shift has compelled CSPs to evaluate their networks and extend digitization efforts to meet escalating customer demands.
- Early impact of generative AI: While still in its initial stages, generative AI is already delivering tangible results for CSPs. Indeed, this transformative technology holds significant disruptive potential and is poised to shape the industry's future.
Amidst these multifaceted changes, which compete for finite resources, CSPs continue to navigate evolving competitive and legal environments, while grappling with the involvement of hyperscalers and the persistent waves of global events. Addressing these challenges requires a strategic approach that encompasses the diverse needs of enterprises at scale.
For some, this presents an almost overly complex set of changes to consider before fully committing to 5G. But despite the strain of often conflicting requirements and increasing pressures for returns on investment, many CSPs continue to make progress. Despite also the diverse challenges and quality requirements of enterprise customers, according to the GSMA, enterprise revenue as a percentage of CSP revenues has consistently increased – by about 1% per year over the past several years to over 31%. For some CSPs such as BT, Singtel and Softbank, this figure is closer to if not more than 50% of overall revenue. Alas, for many operators however, 5G’s contribution from B2B is not so high and seems to remain more promise than reality.
When seeking standardized benchmarks to drive widespread enterprise adoption, Omdia's recent paper on enterprise 5G provides valuable insights and guidance. However, considering the complexity of the previously discussed scenarios, it's understandable that CSPs would prefer to retain certain areas of particular expertise and specialization in-house for the foreseeable future.
For example, Canadian operator Rogers Communications is actively developing specific IoT expertise across domains such as automotive, natural resources, fleet management, smart cities and asset management. Yet simultaneously, their strategy involves building a solution-neutral enterprise service delivery organization that caters to multi-cloud requirements and open APIs.
And while challenges persist, such as this one of striking the right balance between focus on enterprise sub-segments and a broader multi-segment approach, considerable progress is being made to address the enterprise market as CSPs transition to standalone 5G. However, it is those CSPs who proactively embrace specialization, cultivate domain expertise, deploy the right building blocks for flexibility and seize rapidly evolving opportunities in the enterprise sector who will not only reap the rewards but also lead the industry into a future defined by innovation, growth and success.
To gain a deeper understanding of how CSPs can successfully address the enterprise market with 5G, read the full white paper .