Digital Transformation, 5G and COVID-19 have triggered further growth in indoor traffic

Digital transformation is underway regionally and globally. A recent survey by IDG found that 68% of respondents in Australia and Singapore were either undergoing or have completed their digital transformation journey with the majority of these respondents having plans for artificial intelligence (AI) and robotic process automation (RPA) deployments within 12 months of completion. Indeed, we live in interesting times where emerging technology is driving economies and change.

Funding change is getting more and more challenging. Investors look for ideas that can strategically meet their needs, are scalable and are flexible enough to cut across multiple vertical industries. The launch of 5G in the region in April 2019 brought about interesting new concepts that sparked the interest of investors. COVID-19 has played a key part in putting some of these new concepts in place to meet critical needs. It has not only disrupted our lives but has triggered the urgent need to enhance and upgrade digital infrastructure and expedite the deployment of 5G networks, especially indoors.

While most of Asia-Pacific was under lockdown and indoors in 1H 2020, concepts were tested to ensure that life as we knew it went on. Staying indoors and needing remote support has triggered the further growth of network traffic originating from indoors. Traffic was already over 80% before COVID-19, with an estimated 60% of customers dissatisfied with indoor coverage. This growth of indoor concepts to meet needs and corresponding indoor traffic are triggering innovation in and transformation of next-generation indoor solutions, including digital indoor systems (DIS).

DIS technology is evolving rapidly, but not all markets have developed at the same rate

China and South Korea both have a high domestic demand for 5G, along with an early government push and market-driven initiatives. In these countries, the governments have facilitated 5G, with China aiming to become the leading digital country, while South Korea aims to build a creative economy. With the encouraging numbers for 5G adoption, governments are putting in a final push to further drive the momentum for 5G.

For South Korea, in addition to funding public sector projects and fostering greater private-public cooperation, the government is actively removing potential barriers to commercialization of 5G by providing tax incentives of 1%-3% for mobile operators to reduce the CAPEX burden; offering financial support, e.g., loans and funds for innovative 5G start-ups and developers; and amending the laws and regulations where necessary.

In China, a government mandate issued in February 2020 for China Telecom, China Unicom and China Broadcasting Network to share spectrum at 3.3-3.4 GHz for indoor coverage is leading to co-development and co-sharing of indoor solutions that will result in lower costs and better solution efficiencies.

At the other end, Myanmar wants to achieve a fully connected digital society within the settings of an emerging market. The government has addressed 5G network infrastructure, facilities and site policies and has announced its intention to focus on improving the indoor user experience, even though it is not yet clear when 5G deployments will commence in the country. By fully understanding the local context, the government is creating a favorable environment for innovation and investment when 5G arrives. By that time, investors will see the potential of indoor solutions and invest through mobile operators or as neutral hosts.

Healthcare, being the first vertical to be tested by COVID-19, has shown that there is some basic understanding of needs. Case studies in China and Thailand show how DIS can help to address those needs.

In China, the release of the 5G hospital network standard in 2H 2019 through industry collaboration helped hospitals cope with COVID-19 in 1H 2020. As a result, 300+ 5G hospitals were able to connect to the National Telemedicine and Connected Health Centre, which has expedited the commercialization of 18 telehealth applications for remote assistance, diagnosis and monitoring.

In Thailand, its e-Health Strategy (2017-2026) supports the use of ICT technologies to increase access to healthcare and reduce geographical/relative gaps between patients and their caregivers. Since obtaining spectrum in February 2020, AIS has deployed 5G and telemedicine robots at 20 hospitals treating COVID-19 patients. A further 110 hospitals in Bangkok and eight more in major provinces will soon benefit from 5G technology. With DIS as an enabler, transformation of healthcare in Thailand is now underway.

Scalability and flexibility across verticals are promising developments for DIS investment

To scale, there needs to be co-creation of solutions that can be used across verticals. These solutions can leverage emerging technologies such as edge and artificial intelligence and partner with system integrators (SI) or cloud providers. To be successful, viable business models for partnerships are necessary.

In South Korea, KT has diversified its business models for indoors by enabling high value-add services, e.g., smart office/building applications with security and asset management systems.

In Switzerland, Sunrise has employed the “Anything as a Service” or XaaS concept to network infrastructure, calling it the “5G Indoor Coverage as a Service” business model.

XaaS concepts are not new in Asia-Pacific and with private 5G networks on the horizon, beginning with Japan, Network as a Service could bring an interesting new spin to the region.

With elements favourable for investors, the incentive is high for companies to invest in DIS

From a financing perspective, the conversion of private 5G network solution costs from CAPEX to OPEX is a key development. OPEX-based business models open up a potential market, not just for mobile operators, but also for neutral hosts and financiers.

From a perspective of managing fixed costs, reductions in labor and associated insurance costs are a necessity. For example, China Unicom was able to support Shanxi HuoZhou Coal Group in China with a fully automated underground station. The cost-savings would come from remote control of mining equipment and sensor-based environmental monitoring with 5G technology.

Innovation by vendors is further helping to justify the business

Innovations by vendors include offering the necessary key attributes, i.e., speed, location, capacity and reliability capabilities, as required based on scenarios since they vary by vertical industry. For example, in healthcare, critical processing tasks to produce real-time analytics are needed to predict and respond to health emergencies; in manufacturing, reliable real-time filtering of meaningful data is necessary to reduce the amount of data sent to a central server.

As scenarios vary, the future will see DIS solutions eventually settling at the right cost structures for performance requirements or, more explicitly, what people will pay to address the differing needs of vertical industries while improving mobile operator return on investment (ROI).

In closing, with the new normal brought about by COVID-19, new perspectives on what people need and want will emerge. It is clear that with the global launch of 5G, investments in indoor solutions will shift to DIS solutions for new sites. Developments in policy, business models and innovation enablers are helping to tip the scales.

However, the bigger question now is, when will the massive number of existing sites with DAS solutions migrate to DIS and how much will developments with millimeter wave and massive MIMO affect the timing of the transition?

It is known from past industry analysis that if there is a need, the investments necessary will come through. Governments laying the groundwork early will only crystalize the future of indoors sooner. In an industry where need has never been well understood, innovation and transformation in this area could become a catalyst for future growth.

The future of indoors is with DIS

For businesses and mobile operators, indoors is where your future revenue streams will come from; for consumers, this is where your new normal begins.

About Quah Mei Lee

Quah Mei Lee is a Director with Frost & Sullivan’s ICT practice. Working on Mobile & Wireless Research for Asia-Pacific, her area of expertise lies in telecoms strategy with a specific interest in 5G.

Quah Mei Lee

Quah Mei Lee is a Director with Frost & Sullivan’s ICT practice. Working on Mobile & Wireless Research for Asia-Pacific, her area of expertise lies in telecoms strategy with a specific interest in 5G.

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