Analyzing the potential of smart city verticals as drivers of 5G technology deployment.
Smart Cities: The Professional 5G Customers
Deploying new generation communications networks is always a challenge due to the high CAPEX. Network operators and investors usually tend to utilize the existing technologies to make the most out of the current assets and wait for the return on investment (ROI), while, digital service providers, over-the-top (OTT) players and people are usually eager to access new mobile generations and much higher data rates.
However, the emergence of the digital transformation and the tremendous growth of smart city verticals have shifted the above equilibrium into deploying new techs and grasping the promised impacts. For the very case of 5G, it is projected that the technology will enable $13.2 trillion of global economic output [1].
Here in this article, we are going to analyze the potential of smart city verticals as drivers for 5G technology deployment. In this regard, we categorize the verticals by their 5G technical requirements and market levels. Afterward, we’ll have a glance at the private 5G deployment market and finally, look at the subject from the technical perspective.
The matter of ‘infrastructure development’
The smart city value chain (see Figure 1) has an undeniable reliance on the connectivity layer, where the number of players is not so high as the other layers and in many cases, the value generation is not sufficient for new investments to deploy new infrastructure (i.e., FTTx or 5G roll-out) on high-scale.
In many cases, smart governance tools like, financing stimulus, tax cuts and other kinds of pro-investment regulations come to help operators invest in new technologies. It is not much different for 5G networks roll-out, and the two major categories mentioned above, are still among the main effective approaches.
The anchor role of data in smart city verticals – say data generation, data transfer, or data analytics – with their various technical needs in terms of high or low bandwidth, low or high delay-tolerance, and need for more reliable coverage, turns smart city verticals into the most promising 5G technology drivers.
Smart city verticals with their various use-cases have certain connectivity requirements. As the technologies evolve and new features arise, these requirements become more and more precise.
In Figure 2, the possible 5G markets are characterized according to their contribution to the digital economy and technical requirements. Next, we’ll dive deeper into these smart city verticals, based on the market and technical dimensions.
Smart Manufacturing
Transforming industrial processes is one of the key tools for making smart cities a reality and improving citizens’ quality of life. Increasing agility in operations by investing in digital initiatives across production and the supply network would be an operational response to the disruptions caused by COVID-19 increasing resiliency.
In a survey made to Deloitte’s manufacturing executives 76% said they intend to do so and plan to pilot and implement more Industry 4.0 technologies [2].
In addition, the market studies show a glorious path for 5G service providers. For example, remote-controlled machines such as drones, robot arms will grow to more than 15$ billion by 2027 and the wireless video surveillance market will reach 55$ billion by 2023 [3].
Increasing the number and quality of cameras, using drones that support 4K mobile video surveillance, the ability to guarantee low latency as more machine remote control applications are used within a given campus, and haptic/tactile feedback-enhanced applications, are among possible use-cases.
Technically speaking, smart manufacturing and Industry 4.0 technologies require all of the promised advantages of 5G networks. Implementing a massive number of IoT sensors, utilizing time-sensitive industrial robots with extremely low latency constraints, and deploying security cameras and operational displays with high data rate requirements are among the readily identified needs of the smart industries.
So, long-term contracts with giant industrial players with tangible terms in SLA pave the way for the development of 5G in professional markets.
Mobility
Mobility is a multi-billion-dollar smart city market with many segments like shared mobility, green mobility, logistics and delivery, traffic management, parking management, mobility management. For example, only the shared mobility market now exceeds $60 billion in value across the three largest markets of China, Europe, and the United States and its annual growth rate is to exceed 20 percent through 2030 [4].
About $660 billion in the mobility and transportation market will be enabled by 5G by 2035 [1]. Adding the auto-making industry to this market, the potential value is even higher. For example, ‘Market And Market’ predicted a $212 billion market potential for connected vehicles by 2025 [5].
With its footprints in so many market segments, it is not a surprise the mobility market needs every single advantage delivered by 5G. Supporting Vehicle-to-Vehicle (V2V) connections, AI-based cameras, asset tracking solutions, connected road sensors, high-end in-vehicle experiences, and mission-critical services (MCS) in autonomous vehicles are among the numerous possible areas for 5G deployment.
Richer mobile experiences
Fancy AR/VR applications, online gaming, and social media are the territory where Gen Z and millennials are its sovereigns!
Delivering better customer venue experiences in sports events and cultural events by provisioning fixed wireless access (FWA) and enabling the host to guarantee reliable and consistent mobile coverage, AR/VR live services, enhance video sharing, smart ticketing, and real-time parking services to end-users, in addition to some back-end services like ultra HD camera surveillance compose good service portfolios to provide.
The mobile gaming market with around $100 billion global value [6] is the other 5G development opportunity for the operators in this context.
Higher bandwidth and lower latency are all the brand-new applications need! The combination guarantees the quality of experience for the end-users, enjoying cutting-edge games and sharing high-quality videos on social media.
Digital Retail Services
The digital retail market can be considered as the intersection of smart city markets, and its core value proposition targets the provider parties and citizens to transact with each other. Further enhancements of retail technology will rely on 5G smartphones and beacons in physical stores that communicate with each other in a low-power fashion and enable brands and retailers to build a revolutionized customer experience.
In addition, M2M transactions, massive employment of RFIDs and sensors on products, asset tracking, and monitoring the condition of perishables with high reliability and a reasonable connectivity price, are among the further use-cases of 5G in the digital retail market.
The provision of real-time communication with high reliability for transactions in addition to supporting massive sensor connections under unified connection packages would create a considerable value for network operators.
Oil and Gas, Construction and Mining
The conventional economic value generation areas like ‘oil and gas’, and ‘construction and mining’ have the opportunity to redefine their boundaries through digitalization. More than 3 decades have been passed since the first adoptions of digital technologies to understand a reservoir’s resource and production potential, improve the health and safety of employees, and boost marginal operational efficiencies at the aforementioned fields around the world.
However, the industries haven’t exploited the benefits of digital technologies in a meaningful way. Terabytes of data can be generated from any equipment, say a single drilling rig at an oilfield every day, but only a small fraction of it is used for decision-making right now.
As other capital-intensive industries (such as automotive) have revolutionized their business and operating models through a holistic application of digital technologies, the opportunity for the industries like oil and gas, and construction and mining industries to leverage the transformational impact of digitalization has become more evident.
According to the world economic forum, oil and gas firms have the potential for creating $1 trillion of value till 2025 [7], and the contribution construction and mining industry would be around the same value till 2035 [1]. Areas like asset tracking and life cycle management, predictive maintenance, real-time land surveying, smart ultra-HD surveillance, and heavy guided vehicles are the potential use-cases for 5G deployment.
High availability and reliability of communications for mission-critical use-cases, and the ability to support a massive number of sensors in the operational areas are the most important technical requirements of the sector from mobile network operators. However, by maturing some emerging technologies like digital twins, the bandwidth requirements of the sector will surge in the future.
Health and medical industry
The health industry is one of the growing smart city markets with new demands both from the service provider and patient sides, which has gained momentum during the spread of COVID-19. The market that was anticipated to contribute a share of more than 1$ trillion in the global digital economy by 2035 [1], now it faces the growing importance of decreasing the physical on-site presence of patients, surgeons, and even nurses.
This has led to the growth of remote patient care and remote robotic-controlled surgery services, where the latter requires high bandwidth and extremely low latency features, together. Additionally, by using health wearables and developing insight provision applications based on artificial intelligence, the need for massive connections is increasing in the industry. In addition to that, drugs track and trace, patient location tracking, and other improved remote patient monitoring services like AR/VR and IoT in connected ambulances to enable emergency room doctors to diagnose patients before they reach the hospital are the other 5G services provisions opportunities.
Precision Agriculture
Fueling precision agriculture to improve the production efficiency is the other 5G development area where a projected value of around 390$ billion resides for the digital economy by 2035 [1]. Autonomous harvesters, real-time dry chain tracking, sensor-based pest detection, and other applications like incorporating moisture sensors and supply chain analytics compose the future development areas of the market.
In addition, the agriculture market has untapped areas like vertical farms, where based on massive use of sensors and AI together with ‘as a service’ business concept, delivering a high volume of fresh vegetables and fruits would be possible.
Energy Sector Digitalization
The digitalization market in the energy sector has a long track record. Smart utility meters, powered by IoT are among the practical use-cases with around a decade of history and ~20$ billion of value [8].
Pursuing on zero carbon in recent years – even during the COVID-19 pandemic – green and renewable energies are becoming a commodity rather than luxury pilots, due to their lower costs of infrastructure development compared to the past 10 years. There are a handful of technologies and services around these market mainstreams like the detection of energy surge during peak hours, smart dispatching and load balancing, sending the surplus energy back to the grid, that can be expanded by means of 5G connections.
In addition, predictive and remote maintenance of the assets, smart grid fault detection, and future (better to say ‘early future!’) use-cases like smart electric vehicle (EV) charging and new battery business models compose the other role-playing opportunities of 5G in energy sector digitalization market.
Digitized Education
The sector is triggered by the pandemic and seems to grow at an increasing pace throughout the upcoming years, where it is anticipated that the market will be quadrupled in around 5 years from now [9].
With video-conferencing and smartphones as the new education tools for students, having higher bandwidth is of high interest for the market. In addition, in the post-COVID era, not only the digital legacy will remain operational in education systems, new concepts and digital experiences will be created. Digitized classrooms and libraries, immersive XR learning and experience, and personalized training are the near future realities in the digitized education market.
Riding the Waves of Private 5G Networks
Around 155 private 5G networks have been launched across Europe between 2018 to 2020. As it is shown in Figure 3, smart city verticals with their precise service level requirements are the professional customers that can be considered as the main drivers of 5G network development.
Figure 3. private 5G networks across Europe between 2018 to 2020 by smart city verticals
As it is seen, richer mobile experience, mobility, and smart manufacturing have around 70% of private 5G networks in Europe. Although the matter would be different in other geographic areas, for example in the oil and gas sector has great potential for mission-critical 5G development in middle-east, Figure 3 shows the overall profile of private 5G network development markets.
Network slicing - a technical opportunity for operators
Network slicing is a technical feature that is highly correlated with the customer segmentation in business literature, and the whole point is that the network operators can make most of it, if they correctly identify the professional markets, their precise technical requirements in terms of data rate, tolerable latency and massive number of connections in sending and receiving packets, and providing them what they need with professional service level agreements.
Although there are many separate private networks that are serving the enterprises, many enterprise customers are not interested in investing and launching their own network, and it is not important for them to be served by network-level isolated infrastructure. Actually, the service level assurance is much more important for them. This paves the way for the operators to deal with them and provide Network-as-a-Service (NaaS) options by incorporating the ‘network slicing’ feature, which enables the operator to ensure enterprise customers have a certain quality-of-service by employing the operational level isolation.
Right now, there are some MNOs that employ ‘network slicing’ over the LTE networks. This functionality contains access to network slices in the RAN that enables the operator to connect the slices to respond to any particular application. The feature has been evolved through 5G and it will be easier for MNOs to split the resources and provide different classes of rate, coverage, encryption, and other technical parameters to business-critical and mission-critical use-cases.
Bibliography
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[2] P. Wellener, "2021 manufacturing industry outlook," Deloitte Research Center for Energy & Industrials, 2021.
[3] "Unleash the value of 5G, Use cases to expand your business," NOKIA, 2020.
[4] "McKinsey Center for Future Mobility," McKinsey and Company, [Online]. Available: https://www.mckinsey.com/features/mckinsey-center-for-future-mobility/overview/shared-mobility.
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[6] "Global Mobile Gaming Market Report 202," businesswire, 25 June 2021. [Online]. Available: https://www.businesswire.com/news/home/20210625005180/en/Global-Mobile-Gaming-Market-Report-202-Worth-98-Billion-in-2020-the-Mobile-Gaming-Market-is-Forecast-to-Grow-to-272-Billion-by-2030---ResearchAndMarkets.com.
[7] "Digital Transformation Initiative Oil and Gas Industry (White Paper)," World Economic Forum in collaboration with Accenture, 2017.
[8] Avinash Savekar, and Vineet Kumar, "Smart Meter Market By Product (Smart Electricity Meter, Smart Gas Meter, and Smart Water Meter), and End Use (Residential, Commercial, and Industrial): Global Opportunity Analysis and Industry Forecast, 2020–2027," Allied Market Research, October 2020. [Online]. Available: https://www.alliedmarketresearch.com/smart-meters-market.
[9] "Digital Education Market by End User (Individual Learners and Academic Institutions, Enterprise and Government Organizations), Learning Type (Self-paced and Instructor-led Online Education), Course Type, and Region - Global Forecast to 2025," MARKETSANDMARKETS, [Online]. Available: https://www.marketsandmarkets.com/Market-Reports/digital-education-market-7751828.html.
Authors
Sayed Ali Khodam Hoseini
Ph.D. is a Digital Transformation Consultant in Smart Tehran Center (STC). He earned his PhD in communications from Shahed University, Tehran, Iran. With a background of consultancy in policymaking and regulation telecom ecosystem, he joined STC in 2018 and is currently responsible for developing smart city policies, regulations and initiatives targeting the use of digital services and uptake of disruptive business models and technologies.
Mohammad Peiravi
Head of Smart Tehran Program Steering and Monitoring in Smart Tehran Center (STC). With a background of consultancy in policymaking and regulation telecom ecosystem, he joined STC in 2020 and he was Smart City Projects Supervision, the project about Smart City Indicators, Living Lab, Testbed, Smart Environment Monitoring System, Noise & Air Quality Sensors Network, Urban Smart Elements & Smart Zone. He has MSc degree in wireless communications.
