In today’s world, telecom operators are facing multiple challenges, with increasing competition and growing demands from consumers and enterprise customers causing concern in the industry.

And despite the high growth seen in both mobile subscriptions and mobile data traffic, overall mobile service revenues are declining as spending on mobile voice and SMS services continues to slow — a trend that is only going to intensify over the coming years.

Mobile voice and SMS revenues in the UAE will decline at a compound annual growth rate (CAGR) of -1.8 per cent and -8 per cent, respectively, over the 2016—2021 period.

As such, telcos must look to reinvent themselves as digital-ready partners capable of supporting both the changing dynamics of the consumer market and the digital transformation of the country’s business community.

Every operator in the region fears becoming just a provider of connectivity for their customers (i.e., a ‘dumb pipe’), and in order to avoid this scenario, they must look ahead and grasp the bigger picture.

Focusing on just one step of the broader value chain may well generate a profit, but operators could achieve much larger growth by embracing every step and becoming fully integrated providers of ICT solutions.

Many operators are already at the detailed planning stages for 5G, with trials even beginning in some Gulf countries. 5G is unlikely to become commercially ready before 2020, the transformation process must start now if the region’s telcos are to fully capitalise on the advantages that 5G offers.

Key attributes

Despite not being standardised yet, we do know enough of what 5G will bring — a platform that can be truly declared as a business layer and a true enabler of next-generation services encompassing the internet of Things (IoT), artificial intelligence, and cognitive computing.

Without dwelling too much on the technical characteristics of 5G, its benefits can broadly be defined by three key attributes — higher data capacity, lower latency, and denser connection support.

By providing higher data capacity, 5G will enable extreme mobile broadband/higher-data-rate communication that could be used extensively for virtual reality and HD video applications.

The consumption of video through the likes of YouTube, OSN Go, Starzplay, and Netflix is fuelling the desire of consumers to not only watch what they want, but also to determine how and when they watch it.

The arrival of 5G will help address this demand, enabling consumers to watch the latest Hollywood blockbusters or their favourite football team’s goals in high definition and jitter free at their pleasure.

The second key benefit is that 5G is virtually instantaneous, with expected latency of just one millisecond. This compares to a latency of 20 milliseconds for 4G/LTE services.

This significant improvement is essential for enabling ultra-reliable machine communication, something that will increasingly be required amid the growth of autonomous vehicles and connected urban transport.

5G also offers the capacity to add, support, and service billions of connected devices, a development that will propel smart city infrastructure and deployments. As we as individuals become more connected, so are our cities, homes, and workplaces, with intelligent building solutions monitoring everything from air quality to lighting to access control.

But smart homes and smart buildings are only part of the picture, as they will sit within wider smart cities offering connected infrastructure, smart parking, and intelligent urban transport, among a potentially endless list of other services. And it is the denser connection support capabilities of 5G that will facilitate the exponential rise in the number of connected devices required to make this vision a reality.

Service enablers

Organisations across all industries are looking at becoming more agile and efficient in their quest to deliver a truly unique and compelling service experience to their customers. And operators can use 5G to address the key digitalisation challenges that these organisations are facing by becoming end-to-end service enablers and, in some instances, even service creators.

This idea of telcos moving beyond the mere provision of connectivity is key. For example, IoT spending can be broken down into software, connectivity, hardware, and services, with the connectivity portion accounting for just 17 per cent of the total. So, the more focused the region’s telcos become on transforming themselves into services players, the more revenue they can look to accrue.

Annual IoT spending is expected to reach $1 billion in the UAE alone by 2020, spurred by investments within core industries such as manufacturing, transport, and retail and wholesale, considerable opportunities will be there for the taking.

That said, the IoT landscape is set to become much more crowded and complex over the coming years, with a diverse band of technology vendors, device manufacturers, and application vendors all vying for a share of the market. So the clock is ticking.

Ultimately, 5G will play an essential role in driving the digital transformation of households, industries, and entire countries as it enables the rise of IoT. And if the region’s telecom operators want to fully capitalise on the opportunity, they must embrace this spirit of transformation themselves by becoming key players within the broader IoT ecosystem.

The columnist is group vice-president and regional managing director for the Middle East, Africa and Turkey at global ICT market intelligence and advisory firm International Data Corporation (IDC) He can be contacted via Twitter @JyotiIDC