Manufacturing companies want to buy 5G services, but can telcos deliver quickly enough?

An interesting new report from Capgemini Research Institute finds a disconnect between how quickly manufacturing companies want to adopt 5G and how quickly telcos can deliver the new technology, but telcos should view this as an opportunity, not an insurmountable challenge.

For its report 5G in industrial operations: How telcos and industrial companies stand to benefit, Capgemini surveyed more than 800 executives from asset-intensive companies in 12 countries and 150 executives from 80 telecom companies operating in those countries. The team also conducted more than 20 one-on-one interviews with industry and telecom executives. The goal of the research was twofold:

• help industrial companies identify the best use cases for 5G and develop strategies for implementing them


• help communications service providers (CSPs) understand the expectations of manufacturing and asset-intensive companies and how to meet their needs

The report finds that that a large majority of manufacturing companies believe 5G will be a key enabler of digital information.

“Seventy-five percent of manufacturing executives we talked to consider 5G to be a key enabler for the next five years. In fact, in our research 5G ranked second only to cloud computing in terms of digital transformation enablement,” the report’s author Pierre Fortier, Principal Consultant, Capgemini Invent, said during a podcast discussing the results (you can listen to the full podcast below). “Connectivity is becoming business and mission critical, and 5G with its versatility and flexibility holds potential to address existing connectivity pain points and unleash new opportunities.”

QoS is critical, and enterprises may turn to private 5G to get it

Other important findings in the report are that two thirds of manufacturing executives expect to implement 5G within the first two years of availability, and roughly the same number believe quality of service guarantees will be critical to their businesses (see graphic below). But telco respondents said they expect it to take more than 5 years for “large-scale” adoption (Capgemini classifies this as 50% or more telcos rolling it out at scale).

“This is spurring interest in private or dedicated networks,” Fortier says. “One third of manufacturers are considering applying for a 5G local license as they expect it could offer greater economy and security and could be the faster route to implementation, compared to waiting for telecom operators.”

But this doesn’t mean telcos will be completely disintermediated. The report notes that telcos hold key assets that manufacturing companies need:

• a wide range of spectrum bands


• knowledge about how to design, build and operate networks


• global connectivity

“Here's a very promising finding for telcos: The study found that manufacturers are willing to pay a premium charge for enhanced 5G connectivity,” says Fortier. “For example, 71% of industry companies will pay more for ten or a hundred times faster wireless connectivity. But when you ask the telco operators, only 55% of them think that there is appetite for this. This is an example of an opportunity for telcos to consider how to build a highly profitable 5G business model.”

To build these business models, enterprises and telcos must work together. Telcos “need to collaborate closely with industrial companies to create a win-win business model by understanding connectivity pain points in industrial operations and adjusting the priorities of 5G network' and services' rollout,” the report advises.

Download the Capgemini report

Find out how can TM Forum help

TM Forum’s Ecosystem Business Architecture project is helping CSPs and enterprises develop cooperative and mutually beneficial business models for 5G. To find out how you can get involved, please contact Joann O’Brien via jobrien@tmforum.org.