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Coronavirus: Standardisation delays threaten long-term enterprise 5G

Covid-19 outbreak could see delays in essential technology roll-out, leading to the 5G industry missing out on up to 10% of total revenues, says research firm

The Covid-19 pandemic has forced a delay in crucial standardisation work that would make 5G available for enterprise use cases, an ABI Research study has warned.

The analyst noted that the 5G standardisation body, 3GPP, has formally announced a deferral of this standardisation until at least June 2020, which it said will delay the commercial roll-out of industrial 5G until at least 2022.

Given that most industrial enterprises are looking to upgrade their communication technology in 2021, ABI believes this delay will result in 5G missing out on at least 25% of the revenue opportunities within industrial enterprises, which, given the importance of industrial use cases for overall 5G revenues, translates into 5G losing up to 10% of total 5G revenues.

In the long run, this could result in a shortfall of several billion US dollars in contributions to the global economy, said Leo Gergs, principal analyst at ABI. “This is a blow to the standards bodies and the timeline of 5G,” he said. “The cancellation of leading industry events, such as Mobile World Congress in Barcelona, caused more complicated workflows for 3GPP.

“As a result, the freeze of Release 16, which is of key importance for 5G applications in industrial and logistics environments, has been delayed until June. This would, in turn, push the roll-out of 5G into warehouses, shipping ports and factory floors until at least 2022.”

Even though, in the short term, the coronavirus pandemic is putting the timely enterprise roll-out of 5G at risk because of the delay in standardisation framework, ABI noted that in the long term, enterprise verticals will consider 5G for automating workflows in factories and other industrial environments in order to minimise supply chain disruptions.

“However, we will also see 5G applications for life-critical verticals, such as agriculture/food production, to pick up pace, while a growing number of countries will consider enhancing their healthcare sector with 5G-enabled capabilities,” said Gergs.

Looking at the bigger picture going forward, ABI observed that situations like this underline the importance of a technologically up-to-date healthcare system, as well as more automation in factories and production outlets. However, it cautioned that the current situation with Covid-19 will probably induce a shift in the verticals that investigate 5G deployment.

“While it puts 5G applications in industrial surroundings in a difficult position, current experiences will ignite considerations for 5G applications in healthcare and agriculture/food production,” said Gergs. “The telco ecosystem must prepare for this shift.”

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The latest research follows another ABI study that aimed to identify the short- and long-term impacts the coronavirus pandemic will have on 5G devices, smartphones and wearables. ABI warned in the report that the emergency is likely to lead to a huge reduction in the production of smartphones, potentially falling by as much as 30% in the first half of 2020.

It expected the outbreak to gradually come under control by the end of the second quarter of 2020, but after that, it will take some time for consumer confidence to return and for the device sector to recover.

The analyst said the ripples from China will be felt globally as the epicentre of the Covid-19 outbreak has resulted in mass disruption to production lines and a stalling of related supply chains caused by labour shortages and inactive logistics. Also, China is one of mobile’s largest markets, so that sector has been hit hardest by delayed shipments and weaker development of next-generation products.

ABI stressed that it was not clear what the full extent or lasting effect Covid-19 will have on the mobile device ecosystem, but in the short to medium term, it will heavily affect the smartphone market. ABI also noted that, in the short term, there will be a marked adverse effect on 5G devices.

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