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CSP share of enterprise 5G deals falls 5% in 2021

Study shows that while the number of enterprise 5G projects doubled over the past year, competition from alternative service providers has significantly impacted CSPs’ share of the market

More and more enterprises are taking up 5G services, but communications service providers (CSPs) are increasingly missing out on the opportunities on offer, according to research.

In its annual enterprise 5G report, CSPs’ readiness to reap the benefits of 5G – a year on, Beyond by BearingPoint, in collaboration with Omdia, found that telcos understand the importance of multi-technology solutions and partner ecosystem orchestration, but are still too slow to react to enterprise demands.

The study revealed that while the number of enterprise 5G projects doubled over the past year, and despite telcos recognising the need for a multi-technology, omni-partner, solution-oriented approach for enterprise 5G, competition from alternative service providers has significantly impacted CSPs’ share of the market. It warned CSPs that they must fully commit and put dedicated resources in place more quickly if they are to capture opportunities as they emerge.

In 2020, the first report, Industries and enterprises are ready to reap the benefits of 5G, found that 72.3% of CSPs already believed that most 5G revenues would be derived from B2B, B2B2C, or government/smart city opportunities. But it also found that CSPs were being cut out of the enterprises 5G engagement and the solution building by enterprises and other players in the market.

Only 21% of enterprise 5G deals were led by CSPs and in 40% of the deals, CSPs were the secondary supplier – 32% were led by enterprises and 7% by alternative service providers.

But the study also showed that CSP thinking has evolved. CSPs were found to have realised that solution-oriented production models also require mastering multiple technologies such as cloud, edge, artificial intelligence and Wi-Fi 6, and partnership options to complement 5G networks. According to this year’s report, more CSPs understood this opportunity and started to provide private networks and 5G solutions to the enterprise. But they are still too slow to react to enterprise demands.

The research showed that in the past 12 months, the number of enterprise 5G projects doubled, while the share of CSP deals dropped from 21% in 2020 to 16% this year. Alternative service providers such as private networks specialists ramped up their efforts and operations and outpaced CSPs, increasing their share of enterprise 5G deals from 7% last year to 27% this year. 

Looking at the role of CSPs in the ecosystem through the eyes of potential partners such as systems integrators, global suppliers and vendor specialists, the survey showed that all ecosystem players expected CSPs to take the lead on orchestrating different services, technologies and capabilities, and thought there is more to be done by CSPs to capture this role.

“CSPs are no longer trapped in their thinking and understand that enterprise 5G is an ecosystem play, which is good news,” said Angus Ward, CEO at Beyond by BearingPoint. “However, despite developing and launching new strategies and forming partnerships, CSPs failed to move at the speed of enterprise demand.

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“It is clear that enterprises are eager to adopt 5G solutions and reap the benefits the technology can bring to their businesses, but these findings can only lead us to one conclusion: CSPs understand the opportunity, but their determination and speed are lacking

“CSPs need to stop hesitating and continue to be more collaborative, even when they may not be in full control of the product or solution. They must start living up to the expectations that enterprises and partners have of them, experimenting with business models, accelerating testing and monetising new offerings that are co-created with ecosystems of partners.”

The report emphasises the need for CSPs to assimilate lessons such as agility, speed and focus from alternative service providers – they must accelerate into the enterprise market and not wait for network slicing, complete 5G coverage, or other 5G capabilities. It also noted that 5G network design is only one component of enterprise digitisation and that CSPs need to offer additional value to become preferred partners, demonstrating more flexibility within their commercial and business models.

“It is clear the enterprise 5G market is not just about connectivity,” said Evan Kirchheimer, research vice-president, service provider and communications at Omdia. “CSPs need to prove their prowess in security, network architecture and design and demonstrate commercial creativity to win the trust of enterprises to do more.

“CSPs have technological assets and expertise. To bring these to life and monetise them in the 5G world, they will need to form relationships with new partners and think creatively about what type of partner organisation will help them address the enterprise opportunity.”

Ward added: “Despite the headline figures, we remain optimistic about the ability of CSPs to turn the situation around. The 5G enterprise game is far from over. Many global and regional CSPs have now launched 5G enterprise services, and still more now understand the need for a multi-technology, omni-partner, solution-oriented and verticalised approach for enterprise 5G.

“This is really encouraging, but as an industry, CSPs need to move faster, orchestrate ecosystems and fully commit to enterprise 5G in order to capitalise on the opportunity.”

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