UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK - WHITE PAPER OCTOBER 2018 - Huawei
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> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK RESEARCH
WHITE PAPER
UNLOCKING DIGITAL OPPORTUNITIES
WITH 5G: A GCC OUTLOOK
OCTOBER 2018
analysysmason.com
1
Download the full version @ https://e.huawei.com/topic/me-5g-ecosystem/en/index.html
Contents Foreword 5 Executive summary 6 Chapter 1. 5G will have a significant impact on digital transformation worldwide and in the GCC region 10 1.1 Digitalization is transforming economies and societies 11 1.2 5G is not just another wireless technology generation – 5G will be a key enabler of digitalization 12 1.3 5G will have a central role in the digit0al transformation of the GCC region 14 1.4 5G could generate over USD273 billion for the GCC ICT industry over a decade 15 1.5 Operators in GCC countries are well positioned to address a significant share of the 5G revenue opportunity 16 Chapter 2. The GCC region’s drive to sustain technology leadership globally creates fertile land for 5G 18 2.1 Operators hope to gain a first-mover advantage and maintain their technology leadership by preparing for 5G 19 2.2 Both the fixed and mobile segments are well suited to take advantage of 5G high capacity and bandwidth characteristics 20 2.3 To address the opportunities, GCC operators have been investing in digital transformation 21 Chapter 3. 5G readiness index: the GCC region needs more 5G-focused vertical policies 22 3.1 The GCC region hosts some of the most 5G-ready countries globally 24 3.2 Regulatory readiness: the GCC region needs more focus on industry vertical policies for 5G 25 3.3 Operator readiness: GCC operators should consider further investment in intelligent operating models and customer experience 26 3.4 GCC governments can play a significant role in creating the environment for 5G to achieve these goals 28 Chapter 4. Platform thinking will enable large numbers of new services – don’t wait for the ‘killer’ 5G app 30 4.1 Operators with serious plans for digital transformation and 5G have platform- and ecosystem-driven strategies 31 4.2 Operators can pursue a large and growing number of possible 5G use cases 32 4.3 GCC should focus on 5G use cases delivering the highest benefits in the short term and consider smaller-scale initial deployments to generate essential knowledge 33 Chapter 5. An intelligent operating model will enable operators to maximize their roles in many 5G-enhanced value chains 36 5.1 Operators can target brand new roles and expand their value-chain presence in new digital services 37 5.2 A digital, sliceable platform is critical to 5G success 38 5.3 To succeed in 5G, operators need to start building their ecosystems now 41 Chapter 6. The transformed 5G platform will enable business success for operators in the long run 44 6.1 Some international players are leading the way 45 6.2 GCC operators will have to adapt to new business models and investment patterns 46 6.3 The business impact of 5G will be maximized by the new platform 47 Chapter 7 Summary of recommendations 50 7.1 Key recommendations for operators 51 7.2 Key recommendations for regulators 53 7.3 Recommendation for Enterprises/Industries Annex A: References and bibliography 55 Annexes 56 Annex A: References and bibliography 57 Annex B: Abbreviations used in this report 60 Annex C: 5G readiness index methodology 61 Annex D: Methodology for forecasting the addressable 5G market opportunity 63 Annex E: List of use cases 64 About the authors 66
> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
Foreword
Larry Goldman Safder Nazir
Partner and Head of Networks Regional Vice President
and Software Digital Industries Strategy
Analysys Mason Huawei Technologies – Middle East
New advances in cloud computing make it possible for The emergence of 5G technology brings with it huge
businesses and governments to undertake a digital expectations for potential benefits, yet also carries
transformation, enabling them to support vast uncertainty in terms of how and when to move forward.
numbers of new users with greater personal control In which areas should governments, regulators,
than ever. Furthermore, digital transformation will operators and vendors put their focus is a question on
enable a new generation of advances in medicine, the minds of many of us. How do our nations, societies,
transportation, industry, and education which societies economies and companies benefit from such
around the world will benefit from. 5G will underpin potentially revolutionary technology transitions whilst
this digital transformation. taking steps to mitigate the risk of not acting in time or
even doing too much too soon?
Unlike previous generations of networking, 5G requires
a closer interaction of partners who cooperate but also As we see the 5G era as being one of greater
act independently of one another. New applications collaboration across industry, it necessitates curating a
enabled by 5G will need not only connectivity but also broader ecosystem, with us all contributing to the
other capabilities (e.g. security, device management) adoption of 5G in order to realize the benefits for our
that can be controlled in the network. Delivery of these markets. To this end, Huawei is pleased to sponsor
new 5G services will require large investments by such research into the 5G domain across industries
telcos and other technology firms, but will not be made and society in the GCC. The thought leadership of key
unless companies have the assurance of stable and industry research and consulting experts should
supporting regulatory regimes. In some cases, provide us all with food for thought and guidance we
governments will need to provide the necessary can leverage for our own situations.
support so that all elements of society benefit from
With the collective efforts of the industry, it is our
these advances.
ambition that we can all make better informed
With sponsorship from Huawei, Analysys Mason has decisions, solidify our plans and ask for the necessary
developed the following white paper to explain the support so that we can reach our goals with a better-
potential for societal advances from digital connected world. We invite you to explore with us the
transformation and 5G networks. The white paper “Unlocking digital opportunities with 5G: A GCC outlook”,
includes recommendations for network operators, a paper developed by Analysys Mason, which assesses
governments and enterprises to fulfil this potential. the trends and benefits of 5G for the GCC region.
The analysis and the recommendations presented in
the paper were developed independently by Analysys
Mason’s key 5G and regional experts.
5
> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
Executive summary
The fifth generation of wireless technologies, known as intelligence, analytics, virtual reality, industrial Internet
5G, is expected to have a profound impact on peoples’ of Things (IoT), and drones are expected to produce
lifestyles, societies and economies globally, stretching long-term gains in efficiency and productivity. For the
far beyond the telecoms industry and its users. In this wider society, digitalization, enabled by 5G is expected
white paperi we analyze 5G and its value in the context to generate environmental benefits, enhance safety
of the Gulf Cooperation Council (GCC) region and and create additional jobs.
provide recommendations to the region’s telcos,
The internationally agreed vision for 5G technology is
governments and regulatory bodies on how to
that it will lie at the heart of the future digital economy
maximize the value the technology is expected to
and society. 5G’s technical capabilities – i.e. very high
generate for them.
(>1Gbit/s) data speeds, high and reliable network
availability and low latency communications in the
5G is not just another wireless technology densest environments – will not only enhance the
generation – 5G will be a key enabler delivery of existing mobile broadband services, but are
of digital transformation in the GCC and also expected to support a wide and diverse mix of
worldwide completely new solutions and services.
Most GCC governments have not yet formally included
Digitalization is transforming economies and societies, analysis of the value of 5G in their policy documents.
and 5G will be one of its key enablers. For consumers, However, with one of the highest rates of mobile and
digitalization provides the promise of a more fiber adoption in the world, the GCC region is well
ubiquitous, convenient and personalized access to positioned to benefit significantly from 5G. In the GCC
these services, while fostering innovation and the region, 5G could generate an estimated cumulative
development of new products (for example, new revenue opportunity over ten years totaling
entertainment based on augmented reality (AR) and USD273 billion (see Figure on next page), a large share
virtual reality (VR), consumer drones and robots). For of which will be addressable by telcos. Key 5
enterprises, new digital services based on artificial
High
Domotics
Business attractiveness
*
AR for Industrial
Smart Operations
Smart CCTV 10
Parking
Remote Control of Smart 16
Factory Robots Grids 1
Vehicle-to-Vehicle
Communication
21
eHealth
Low
Low
Agriculture
1 5G-based V
2 Facial-reco
Utility
3 VR for live
Water Management 4 VR for on-d
Quality 5 VR for tele
Smart Traffic 6 eMBB
Wearables Priority VR for
Video Streaming Next Generation 7 Hobby / ph
Drone Capabilities
8 Immersive
Overview of 5G-enabled digitalization
i
The analysis presented here is based on extensive desk research in the region and globally, interviews with a number of operators in the region,
and detailed modelling of 5G country readiness, 5G market value and 5G business cases for the key use cases in the GCC region. See Annex A for 6
more information on the analyses frameworks as well as the sources of information used in the preparation of this white paper.
> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
60
273
19
50
73
40
USD billion
+59% 31
30
40
20 28
16
10 32
31
0 3
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Agriculture Transportation Utilities
Banking / Finance Healthcare Cross-industry
Media / Entertainment Smart & safe cities Retail
Potential 5G revenue opportunity from new digital services in GCC by vertical, 2020–2030
5G use cases for the GCC region Operator addressable 5G revenue opportunity in the GCC region
However, to address this opportunity, and truly reap the Network slicing, the key enabler of 5G use
30 29
benefits of 5G’s potential in the next decade, the GCC cases, will revolutionise business models
region needs to become more ‘5G ready’ now. The
results of Analysys Mason’s 5G country readiness
25 and service pricing 24
21
benchmark analysis suggest that, on average, 20
the GCC
2 4
USD billion
6
region is behind the leading benchmark countries To really benefit from 17 5G capabilities, operators need to
5
(USA, Japan, South Korea and China) in terms
15 of both tie their 5G vision
14 and roadmap closely to their digital
15 8 7
20 regulatory readiness and operator readiness criteria. transformation
12 strategies. Traditional business models
19 14 However,
9 the range of scores for regulatory
10 and and ‘ways
9 of doing things’ will not be sufficient to
1
13 3
operator
12 readiness achieved by individual GCC 6enable operators to make the most of 5G opportunities.
18 11 5
countries
17
is very wide, with the UAE being the most 2 Operators will need to introduce network slicing to
1
5G-ready country22 in the region. On the regulatory 0 front, expect revolutionizing business models and service
0
70 the region needs more High focus on industry vertical 2020 2021 2022 2023 pricing.
2024 Network
2025 2026 slices
2027 will
2028 be created
2029 2030 on demand and
policies
Technical requirements ** for 5G. On the operator front, more focus on will be independently controlled and managed with the
network virtualization, automation, and digital degree of customization that could previously only be
-industry achieved withSmartdedicated
& safe cities physical
Retail networks. The use of
Transportation experience
Utilities will/ be
Banking neededHealthcare
Finance in the nearCross
term. Media / Entertainment
Key 5G-enabled solutions network slicing means partners can be integrated into
V2X services 9 Drones for inspection
a network platform in similar ways as on a dedicated
17 Remote control of factory robots
ognition smart CCTV The GCC region should
10 Wearables become
for crowd management more ‘5G 18 Wireless smartnetwork,
private grid but with far less integration effort. It
video streaming ready.’ More focus on industry vertical
11 5G-V2X for public transport 19 AR for real-time text translation
will also enable operators to expand their role from
demand streaming 12 Remote diagnosis 20 AR for tourist / travel information
policies for13 5G is needed. connectivity to other areas of the value chain – such as
emedicine Remote surgery 21 Precision farming
14 AR for operations support
cloud and edge services, orchestration, and
22 Sky-taxi drones
hotography drones 15 Advanced fleet management
applications. In these areas, operators will meet new
e VR for gaming 16 Remote patient care competitors too and they will have to fight hard for
* Simple implementation, short time-scale, high revenue potential
their new value-chain roles.
** High throughput, high density, high coverage, low latency
i
This forecast has been developed based on a top-down and bottom-up approach. More detail on methodology are provided in Annex D
7
> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
COMMUNICATIONS DIGITAL SERVICE DIGITAL
SERVICE PROVIDERS ENABLERS SERVICE PROVIDERS
MOST SOME NONE
Provides voice, SMS Platform play Offers digital services
3G 4G and data services Owns and operates a Offers services that
platform that enables proved successful on the
services of third parties operator’s platform
Provides enhanced Diverse investment Engages with customers
5G connectivity through strategy in a digital way
network slicing e.g. has venture funds, Offers advanced
start-up incubators etc self-service apps
Ecosystem play Owns a digital network
A risky strategy that will not allow Has a large number of Near zero-touch network
operators to recover investment in partners and can support automation, fully
network transformations flexible business models virtualised network with
micro-service based
architecture
Improved business case for 5G Attractive business case for 5G
Weak business case for 5G
with new revenue opportunities with new revenue opportunities
based mostly on cost savings
and limited additional costs from high-value services
Operators’ digital transformation path and the link to 5G opportunities
Operators, and the telecoms industry as a whole, Annex E. The rest of the paper provides a more-
should not be looking for a single ‘killer’ 5G use case. detailed analysis of the most immediate 5G
Instead, operators will need the agility that digital opportunities. In particular, we believe that VR for
transformation will bring about to enable and benefit on-demand video streaming and VR for 4K/8K live video
from many possible 5G digital services, through new streaming use cases should be considered by most
partnerships and new business models. GCC operators operators in the region.
should focus on 5G use cases that will deliver the
greatest benefits in the short run and consider Platform thinking will enable large numbers
smaller-scale deployments at first to generate
of new services – don’t wait for the ‘killer’
essential knowledge. The Figure on the following page
summarises key 5G use cases that we believe will be 5G app
attractive for the GCC region over the next ten years,
and an expanded list of over 50 use cases is provided in
8> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
Location analytics Remote patient Facial recognition
eMBB FWA services care smart CCTV
5G in-vehicle VR for live video VR for on-demand Wireless
2019 - 2022 entertainment streaming video streaming smart grid
Wearables for crowd
management 5G-based V2X services Drones for inspection
Ultra-high frequency
VR for telemedicine Immersive VR for gaming mobile trading
2023 - 2025
Blockchain-based banking AR for operations support Precision farming
AR for financial data VR for enterprise live
Remote surgery
visualisation training
2026 - 2030
V2X services for self-driving cars Remote control of factory robots
Connectivity Smart and safe cities Cross-industry Utilities Media/entertainment
Healthcare Transportation Retail Banking/finance Agriculture
Variety of 5G use cases that will become available to GCC operators in the next ten years
The rest of the paper is structured as follows: • Section 5 discusses the critical success factors for
GCC telcos, considering this potentially game-
• Section 1 discusses the value that 5G is expected to
changing technology
generate for societies, economies and telcos in the
GCC region • Section 6 provides an analysis of the expected
business impact of 5G for operators
• Section 2 provides an overview of the GCC context
to 5G We anticipate that this white paper will provide a
starting point for further discussion specific to each
• Section 3 analyses the GCC region’s readiness to
market.
embrace 5G from a regulatory and operator
perspective
• Section 4 explains why operators need to closely tie
their 5G plans with their digital transformation
efforts, as well as am overview of the most attractive
5G use cases
9> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
Chapter 1. 5G will have a
significant impact on digital
transformation worldwide
and in the GCC region
10> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
1. 5G will have a significant impact on digital transformation
worldwide and in the GCC region
To a far greater extent than previous generations of Figure 1.1 summarizes the key benefits that
telecom network technology, 5G promises to have a digitalization offers for consumers and enterprises. In
profound impact not just on peoples’ lifestyles, but addition, a study conducted by the World Economic
across whole societies and economies, stretching way Forum estimated that the potential value at stake
beyond the telecoms industry and its users. 5G will associated with the digitalization of society and
have a global impact, and eventually it is expected to industry could exceed USD100 trillion worldwide in
help narrow the “digital gap” between developing and 2025 (of which USD28 trillion accrued by ten key
developed countries. However, some regions, such as industries – see Figure 1.2), with the majority of this
the GCC, are expected to lead the way and provide early value benefiting societies and individuals.
evidence of the power of 5G.
For consumers, digitalization of the economy has
1.1 Digitalization is transforming economies and already significantly transformed the way people
societies access and consume products and entertainment
services (e.g. online gaming, music and video
Technological breakthroughs in areas such as artificial
streaming), while providing increased access to choice
intelligence, virtual reality, IoT, 3D printing, drones,
and information (e.g. for e-commerce, tourism,
connected (and, in the future, autonomous) vehicles
transportation) and significant time savings (e.g. the
have the potential to connect billions of people and
use of e-government platforms, applications for smart
devices and bring significant socio-economic benefits
parking). In future, further digitalization offers the
to society.
Consumer
Automotive
Logistics
More leisure
time Electricity
Telecoms
Improved Increased
well-being Societal productivity
Aviation
benefits of
digitilisation Oil & gas
Media
Lower
Time and cost market-entry Mining
savings barriers
Chemistry
Consumer
New products 0 2 4 6 8 10 12
and services Enterprise USD trillion
Society Industry
Figure 1.1: Societal benefits from digitalization Figure 1.2: Cumulative benefits of digitalization
for society and industry, 2016–2025 [1]
Sources corresponding to references made in the text are listed in
Annex A
11> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
promise of a more ubiquitous, convenient and 1.2 5G is not just another wireless technology
personalized access to these services, while fostering generation – 5G will be a key enabler of digitalization
innovation and the development of new products (e.g.
The internationally agreed vision for 5G technology is
AR-/VR-based entertainment, consumer drones and
that it will lie at the heart of the future digital economy
robots).
and society. 5G technical capabilities – enabling very
For enterprises, technological innovations such as high (>1Gbps) data speeds, offering very high network
cloud and IoT are already creating new revenue availability and low-latency communications in the
opportunities by enabling the creation of new products densest environments – will not only enhance access
(e.g. smart home) and by improving businesses’ access to and delivery of existing mobile broadband services,
to new markets. Digital services such as artificial but are also expected to underpin a wide and diverse
intelligence, analytics, virtual reality, industrial IoT mix of completely new solutions and services
(‘Industry 4.0’), and drones are expected to produce supporting the ongoing digitalization of society.
long-term gains in efficiency and productivity.
The role of 5G as a key enabler of the digitalization of
For the wider society, digitalization is expected to society is emphasized in the following statement from
generate environmental benefits (e.g. reduced CO2 Ronan Dunne, Vice President and Group President of
emissions and energy consumption through smart-grid Verizon Wireless: [2]
initiatives, connected cars) and safety impacts (e.g.
reduction in deaths on the road from the fitment of
vehicle-to-everything (V2X) systems on new vehicles), “5G has the potential to join a very exclusive
as well as creating additional jobs. club-the handful of technologies throughout
history that transform industries across
every sector of the economy ... redefining
work, elevating living standards, and having a
profound and sustained impact on our global
economic growth”
Domotics
AR for Industrial
Smart Operations
Smart CCTV
Parking
Remote Control of Smart
Factory Robots Grids
Vehicle-to-Vehicle
Communication
eHealth
Utility
Water Management
Quality
Smart Traffic
Wearables Priority VR for
Video Streaming Next Generation
Drone Capabilities
Figure 1.3: Overview of 5G-enabled digitalization
12> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
5G will enable new digital solutions and services • face significant commercial challenges, driving the
need for investment in further digitalization
5G is expected to enable a diverse mix of nascent
digital solutions across a wide range of vertical • have high requirement for 5G capabilities (high-speed
sectors, from cloud-based robotics for healthcare and connectivity, low latency, high mobility, very high
manufacturing, through AI-enabled video surveillance numbers of IoT connections envisaged)
for the public sector, to V2X-enabled autonomous
• are already advanced in their digital transformation
vehicles in the transportation vertical, and a smart
efforts, or involve processes that are ripe for
supply chain in the retail industry, etc. Vertical sectors
digitalization.
will be able to harness 5G as a key enabler of their
digitalization efforts. Broadly, the vertical sectors in Figure 1.4 below illustrates some of the key challenges
which the greatest impact will be felt are those which: faced by selected vertical sectors and possible
5G-enabled digital solutions to address these.
Challenges Potential 5G-Enabled Solutions
Manufacturing High level of competition; very Smart supply chain and smart factory
susceptible to business cycles greatly increase quality and efficiency
Healthcare Ageing population; rising Combining low-latency connectivity
consumer interest in wellbeing with AI for remote diagnosis,
consultation and treatment
Media and User-generated content; Differentiate and add value to content
entertainment complex value chain with with immersive experiences such as
declining ARPU growth VR; provide interactive platforms for
user-generated content
Energy and Shift of industry from oil to Smart grid to improve distribution
utilities alternatives; more pressure on and usage efficiency, critical
margins and efficiency infrastructure monitoring
Public safety Rising cyber and physical Enhanced surveillance with real-time
threats from crime and AI-based analytics to detect and
terrorism predict incidents
Transportation Rising need for transport Intelligent transport management,
causes congestion, pollution including autonomous private and
and accidents; reduced public vehicles and high-quality V2X
productivity
Figure 1.4: Key challenges and possible new 5G-enabled solutions, in selected vertical sectors
13> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
The role of 5G across a variety of vertical sectors has “My vision for 5G […] is not only about more
been well captured by Günther H. Oettinger, European speed and more bandwidth for mobile but
Commissioner for Budget & Human Resources: [3]
about building the communication platform
5G will also enhance existing services that will power the digital revolution. This
As well as enabling new digital solutions, 5G will also means that public services, utilities,
improve the performance of existing applications that manufacturing, healthcare, and farming will
currently work on 3G and 4G networks, including:
all be using 5G networks to deliver new,
• Fixed wireless access (FWA). Fixed wireless, smart products and services based on next
including LTE, is already used as a fiber alternative in
generation connectivity”
some underserved areas, but it represents a
significant performance compromise compared to
fiber to the premises (FTTP). With 5G, people in areas 1.3 5G will have a central role in the digital
which are uneconomical to reach with fiber, or even transformation of the GCC region
copper, will be able to access the same quality
GCC countries have enjoyed a spectacular economic
services as customers with wireline links, with the
boom since 2003, driven by high oil prices. However, in
added advantage of using the same subscription for
the light of recent oil price shocks, governments across
mobile services when they move beyond the home or
the GCC have recognized the importance of diversifying
office
their economies, to reduce their reliance on oil & gas.
• Mobile video streaming services. These include
This has encouraged GCC governments to reshape
in-car video entertainment, remote teleconsultations
their multi-annual economic development programs
between doctors and patients, online schooling and
and set ambitious goals to accelerate economic
interactive lectures, videoconferencing between
diversification, encourage growth, promote
business sites, or simply access to mobile video
sustainability, improve public services (e.g. health,
entertainment
education, smart cities, e-government) and the overall
• IoT applications. Existing IoT solutions provided via wellbeing of citizens. Some GCC countries have
2G/3G/4G networks will benefit from improvements expressed the objective of encouraging a more
when delivered over 5G. In the healthcare sector, for entrepreneurial culture in order to diversify their
example, the ultra reliability and low latency of 5G will economies. Others have committed to increasing
improve the accuracy and reliability of products and access to healthcare and providing a first-class
services (e.g. real-time patient diagnosis and education system. Finally, some will endeavor to create
monitoring). In the logistics industry, track-and-trace an environment that attracts and retain the necessary
applications will benefit from the expected lower skills and capabilities from abroad.
power consumption of 5G networks. In the public
Digital transformation, in which 5G plays an important
sector, 5G connectivity will support more-reliable and
part, underpins most of these ambitions. For example,
lower-latency emergency services communications,
it can help to improve the manufacturing capability of
as well as enabling larger amounts of data to be
small and medium businesses through industrial IoT
transmitted in real time
solutions, simplify administrative processes via
• Enterprise connectivity requirements. With 5G and e-government initiatives, improve energy efficiency by
network slicing, industries will be able to access creating a smart grid, reduce the number of road
connectivity which supports all their requirements, not accidents by encouraging the adoption of connected
just voice and high-speed data. For example, very low vehicles, or improve the access to healthcare through
latency or very high security might be critical for one remote patient monitoring or telemedicine solutions.
vertical industry, while another may be more
GCC region, driven by the availability and penetration of
interested in very high data rates. Industries that can
high-speed broadband, the adoption of connected
obtain exactly the connectivity characteristics they
devices (e.g. smartphones, tablets, IoT) and the already
require will be able to transform their business
prevalent use of digital economy services (e.g. e
processes far more radically than before.
commerce, media, mobile payments), it has significant
Key 5
High
ess attractiveness
*
14 10
16
1> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
potential for further growth. To this end, GCC countries of the highest rates of mobile adoption in the world (see
have developed digital ICT strategies which aim to define Section 3), the GCC region appears well positioned to
the role played by technologies to achieve these goals. benefit significantly from 5G. According to the GSMA, in
While most GCC governments have not yet formally the Middle East and North Africa (MENA) region, mobile
included the role played by 5G in their policy documents, technologies and services generated around 4.2% of
it is expected that 5G will be a key enabler of digital GDP in 2016, equating to USD165 billion of economic
solutions. For example, 5G capabilities will support value. In the period to 2020 the GSMA expects this to
advances in robotics services, which could form an increase to almost USD200 billion (4.3% of GDP). [5]
essential part of the future industrial processes, as well
The diverse and increasingly urgent vertical sectors’
as key public services such as healthcare. These
requirements for digitalization will translate into new
services will require ultra-low latency and reliable
potential revenue opportunities for the ICT industry, with
wireless connectivity to deliver real-time
operators responsible for the bulk of the build-out of 5G
responsiveness. In addition, 5G will play a major part in
networks and platforms, while other ICT players will
the smart infrastructure that is expected to have a
provide enterprise services that leverage the operators’
significant role in many aspects of day-to-day life, from
5G networks (e.g. cloud services, applications,
autonomous vehicles to smart buildings, energy
integration or computing). ICT players may, in some
networks and cities. As recently stated by Mats Granryd,
sectors, share some of the investment in 5G networks
Director General at the GSMA: [4]
themselves – for instance, by building a localized
1.4 5G could generate over USD273 billion for the GCC network of small cells to support a particular venue or
ICT industry over a decade enterprise location. In the GCC region, Analysys Mason
estimates that 5G will provide a cumulative new revenue
The likely contribution of 5G to an economy has been the
opportunity over ten years totaling USD273 billioni (see
subject of many studies. Most agree that, to derive the
Figure 2.5), with about 50% of this addressable by mobile
maximum benefits, a country or a region will need to
operators (MNOs) and the rest by other ICT players.
have a high existing level of mobile penetration, and a
clear roadmap for deploying digital platforms. With one
60
273
19
50
73
40
USD billion
+59% 31
30
40
20 28
16
10 32
31
0 3
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Agriculture Transportation Utilities
Banking / Finance Healthcare Cross-industry
Media / Entertainment Smart & safe cities Retail
Figure 1.5: Potential 5G revenue opportunity from new digital services in the GCC region by vertical, 2020–2030ii
5G use cases for the GCC region Operator addressable 5G revenue opportunity in the GCC region
30 29
25 24
i
Calculated as the aggregate cumulative revenue opportunity across all countries in GCC e.g. UAE, Saudi Arabia, Kuwait, Qatar and Bahrain.
This forecast has been developed based on a top-down and bottom-up approach. More detail on methodology are 21 provided in Annex D
2 4 20 15
USD billion
17
5 6
15 14
15 87
20 12> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
“5G is more than just a generational step; it enhanced 5G-based FWA services. As in other regions,
represents a fundamental transformation of these are likely to be the first priority
of GCC operators when initially leveraging 5G
the role that mobile technology plays in
society. […] It is an opportunity for industry, • Using 5G to provide new services to consumers, such
as upselling an interactive smart-home service to
society and individuals to advance their digital
mobile broadband users, offering an AR/VR gaming or
ambitions, with 5G a catalyst for innovation” shopping service, or launching an immersive
VR-based video-on-demand or video live streaming
service to over-the-top (OTT) subscribers
1.5 Operators in GCC countries are well positioned to
address a significant share of the 5G revenue • Using 5G to provide new services to vertical sectors,
opportunity especially for the vertical sectors identified in Section
1.3, such as industrial IoT or AI-enabled analytics, in
Although GCC operators have enjoyed healthy revenue
addition to premium connectivity. However, this means
growth over the past few years, driven by strong demand
that operators will need to enhance their role in the
for data connectivity and digital services, overall mobile
value chain, which will require investment to develop a
service revenue is expected to increase by a modest
digital platform of capabilities (see Sections 5 and 6
0.6% annually between 2018 and 2025 as a result of
for more detail on this). This platform will allow
market saturation and increasing competition.
operators to move into new areas of the value chain
Operators are therefore keen to explore ways to
such as security or analytics, and provide flexible
generate new revenue streams, slow down ARPU
support for a wide range of services in future – even
erosion and protect revenue margins, while delivering
those which are not currently envisaged.
increasingly complex and traffic-hungry services. At a
high level, 5G offers several opportunities for operators By embracing these opportunities operators can expect
to improve their business model, including: to drive further revenue growth:
• Using 5G to enhance existing mobile broadband • For example, the GSMA expects that, globally, 5G can
services, for instance by offering enhanced help operators increase mobile revenue growth over
connectivity tailored to the specific needs of vertical 2016–2025 from a CAGR of 2.5% to 5%. [6]
sectors through network slicing, or by providing
Operators'
addressability
Smart & safe cities 55%
Cross Industry 51%
Utilities 39%
Media / Entertainment 55%
Transportation 51%
Healthcare 40%
Retail 54%
Banking / Finance 43%
Agriculture 49%
0 20 40 60 80
USD billion
Addressable by operators Not addressable by operators
Figure 1.6: Cumulative revenue from 5G-enabled solutions, by vertical and operators’ addressability,
2020–2030, GCCi
16
i
This forecast has been developed based on a top-down and bottom-up approach. More detail on methodology are provided in Annex D.> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
• In the GCC region, Analysys Mason expects the In years 4 to 6 of a commercial deployment, operators
provision of new services to vertical sectors to support expect to prioritize a somewhat different mixture of
their 5G-enabled digitalization efforts to offer a services in terms of network and marketing
cumulative revenue opportunity to operators of investment. Although continued enhancement of eMBB
USD137 billion over a ten-year period, i.e. over half of services remains a top-four priority for over 40%, the
the revenue potential of USD273 billion for the ICT largest percentage of MNOs expect to be targeting
industry discussed in Section 1.4. Figure 1.6 services which rely on future releases of 5G standards,
illustrates the cumulative addressable 5G revenue such as robotics and drones, or VR services (for
opportunity for operators and other ICT players in the business or consumers) and AI-enhanced services.
GCC region over a ten-year period, by key vertical sector.i
To summarize this discussion of the impact of 5G on
In a survey of mobile operators in the GCC region, digital transformation, we expect 5G to be one of the
Analysys Mason found a significant shift in the pattern key enablers of digital transformation and digital
of vertical sectors which MNOs expected to target in solutions worldwide and in GCC countries. Both digital
the first three years of a 5G deployment, as opposed to transformation and 5G will have a profound impact on
those in years 4 to 6. MNOs were asked to name all individuals, societies, industry segments and telcos in
their 5G commercial use cases. Among those use the region, generating a new revenue opportunity of
cases which were cited most frequently, MNOs were over USD273 billion for the GCC ICT industry over a
asked to select their top four in terms of network decade. Telcos will be well positioned to address a
investment and marketing effort. As Figure 1.7 shows, large share of this opportunity.
for years 1 to 3, the biggest priorities are mainly
In the next two sections we discuss the current GCC
extensions of existing services – enhanced mobile
communications market context (Section 2) and then
broadband (eMBB) speeds and quality of service for
compare the region’s 5G readiness with that observed
consumers and business people; and added-value
in leading countries globally (Section 3).
applications which run over those eMBB connections
and largely target the same users – connected
personal health, connected cars and citizen services
within a smart city.
90%
% of operators interviewed (N = 9)
80%
70%
60%
50%
40%
30%
20%
10%
0%
Robotics and drones
Transport and logistics
Industrial IoT
V2X
Smart cities
eMBB
VR/AR
Connected cars
AI-enhanced services
Healthcare
Agriculture
FWA
Years 1-3 Years 4-6
Figure 1.7: Percentage of GCC mobile operators placing each use-case category among their top four commercial
priorities for 5G, in years 1–3 and 4–6 of deployment
i
Please note that the estimate presents an optimistic scenario and depends significantly on whether the operators will realise the capabilities 17
explained in detail in Sections 6 and 7.> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
Chapter 2. The GCC region’s
drive to sustain technology
leadership globally creates
fertile land for 5G
18> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
2. The GCC region’s drive to sustain technology leadership globally
creates fertile land for 5G
The GCC region hosts some of the most advanced The GCC region was one of the first regions to launch
telecoms markets in the world, in terms of access to 4G (LTE) services, in 2011. Adoption of LTE has
high-speed data services, the sophistication of network accelerated in the last three years thanks to extended
% of operators interviewed (N = 9)
90%
infrastructure, and the consumer appetite for social coverage, the availability of more-affordable
80% and media streaming services. Regional telcos
media smartphones, and the introduction of new technology
are keen to maintain their technology leadership, slow
70% iterations (such as LTE-A and LTE-A Pro) which
down
60% ARPU erosion and protect revenue margins while support higher data speeds.
delivering increasingly complex and traffic-hungry
50% For 5G, most operators in the region will start by
services. To do that, operators have been investing in
40% transformation and future network technologies,
deploying the first set of specifications, 5G New Radio
digital
Non-standalone (NR NSA) which do not require a 5G
such
30%as 5G and network virtualization. core. The next stage will be to deploy 5G NR
20%
2.1 Operators hope to gain a first-mover advantage and Standalone, and introduce a 5G core. From 2020,
maintain
10% their technology leadership by preparing for 5G Release 16 (and then subsequent releases) will
introduce more-advanced 5G capabilities such as lower
0% maturity, enforced SIM registration policies, a
Market
Agriculture
Industrial IoT
levels of latency, very high availability, and support for
Robotics and drones
Smart cities
Connected cars
Healthcare
FWA
eMBB
VR/AR
V2X
Transport and logistics
AI-enhanced services
reduction in the number of expatriates and economic
unlicensed spectrum bands. With each iteration, there
slowdown due to low oil prices, led to a contraction of the
will be new demands on the transmission network and
subscriber base in some GCC countries in 2017.
the quality of fiber required. These will mainly consist
However, the adoption of data services across the region
of increased capacity to backhaul 5G base stations and
remains very strong, driven by growing smartphone
support higher speeds; very low latency fiber
penetration and the roll-out of LTE networks. The large
connections for fronthaul links in a cloud radio access
young, technology-savvy, consumer base in the region
network; and more-extensive fiber to the curb to
has also helped to drive the demand for new digital
Years 1-3 support
Years 4-6
dense city networks.
services. Figure 2.1 sets out mobile retail revenue by
service type, and mobile ARPU for the region.
60 12
Historicals Forecast
50 10
40 8
USD per month
USD billion
30 6
20 4
10 2
0 0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Mobile voice Mobile messaging Mobile handset data
Mobile broadband IoT connectivity Mobile ARPU
Figure 2.1: Mobile retail revenue by service typei, and mobile ARPU, Middle East and North Africa, 2013–2023 [7]
50 This drop in 2016 is due to stringent SIM 12%
registration legislation in Saudi Arabia
45
i
Mobile voice: service revenue from operator-billed voice services from mobile handset SIMs ; mobile messaging: service revenue from
operator-billed mobile P2P (SMS and MMS) services from mobile handset SIMs ; mobile handset data: operator service revenue from 10% data
40 through mobile handset SIMs (does not include data revenue from mobile broadband or IoT services) ; mobile broadband:
connections
services accessed
19
operator service revenue from mobile broadband connections, including all mobile broadband PC, laptop, netbook, or tablet connections via a
million)
USB modem, 35datacard or connected tablet device ; IoT connectivity: operator service revenue from mobile IoT (cellular, LPWA) connections.
8%
30> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
Operators in GCC countries hope to gain a first-mover Operators are investing in expanding their
advantage and maintain their technology leadership by capabilities to better support the business
preparing for 5G. It is anticipated that 5G technology will
support the data connectivity and digitalization
segment
aspirations of consumers and enterprises and expand
FWA (i.e. the use of wireless technologies to offer fixed
on the current 4G capabilities in terms of latency, speed
broadband services) has also proved popular across the
and network capacity to support a wide range of services
wider MENA region, mainly based on LTE and in
and use cases.
underserved areas. But 5G will make FWA more
2.2 Both the fixed and mobile segments are well suited commercially attractive in developed GCC markets too
to take advantage of 5G high capacity and bandwidth (for example, 5G-based FWA could help governments
characteristics achieve national broadband targets more economically).
The number of FWA connections across the GCC region is
In some GCC markets there has been steady and strong
set to increase from 119 000 in 2017, to 386 000 in 2023.
demand for mobile-connected tablets, dongles and
personal MiFi devices as alternatives to fixed broadband The modest rate of growth in revenue from the
services (or a complement to it). The market for mobile consumer segment in the GCC region has prompted
broadband services is expected to expand by 2.7 million many operators to strengthen their ICT service
between 2018 and 2023 across the whole GCC region propositions towards enterprises, in search of new
(see Figure 2.2). revenue opportunities. Operators in the region have
traditionally been well positioned in providing co-
The growing adoption of data-hungry, high-quality, video
location and hosting services to medium and large
and audio streaming services, accessible from a variety
enterprises (by leveraging their existing data-center
of smart devices (including tablets, laptops and TVs) will
infrastructure), as well as security services (as an
contribute to the rapid growth of data traffic. While
extension of their connectivity business). More recently,
network capacity enhancements introduced in 4G and
however, they have increased their focus on pursuing
4.5G will be sufficient for most users in the short term,
emerging ICT opportunities, such as providing dedicated
migration to 5G will help operators keep up with growing
connections to large enterprises, cloud services (e.g.
demand for data in the medium to long term.
private cloud, hybrid cloud for medium and large
enterprises), advanced security services (e.g. security
consulting) and IoT.
50 This drop in 2016 is due to stringent SIM 12%
registration legislation in Saudi Arabia
45
10%
40
5G share of total MBB connections
Connections (million)
35
8%
30
25 6%
43 44 45
20 41 40 42
36 38
36
33 4%
15
10 22
2%
5
0 0%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Total mobile broadband 5G share of mobile broadband
Figure 2.2: Mobile broadband connections forecast and 5G share of mobile broadband [7]
20> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
On the IoT front in particular, demand is expected to ‘digital’ basis – many operators see digitalizing their
continue to emerge from the automotive industry (e.g. customer services as the first step in increasing their
connected vehicles) and from government-led initiatives involvement in, and developing, new consumer services
(such as smart-city projects) which can act as a catalyst akin to those provided by OTT players. A number of GCC
for the adoption of IoT. IoT connectivity services will operators have made good progress in digitalizing
continue to be dominated by telcos given the high customer experience, such as by launching mobile
barriers to entry to the wide-area connectivity market self-help applications and websites. This entails using
and data rates will benefit from the enhancements digital channels to deliver services and support, and
introduced in 4G and 5G. Participation in parts of the offering a seamless experience across the different
value chain beyond connectivity carries more risk, but interfaces.
also generates higher revenue and, typically, higher
As part of this digital transformation, telcos are also
margins.
adopting software-defined network (SDN) and network
2.3 To address the opportunities, GCC operators have function virtualization (NFV), also known as telco cloud.
been investing in digital transformation It is expected that preparations for 5G launch will
continue to accelerate the demand for telco cloud
The increased pressure from OTT players, the need to
solutions in 2019. Major operators are leading the way in
increase their agility and level of automation to quickly
the GCC region and driving spending on these solutions.
design and launch new digital services, and the
The telco cloud market is expected to be worth more
necessity to reduce operating costs and improve
than USD555 million in 2021, up from USD214 million in
efficiency have been pushing GCC operators to evolve
2018 (see Figure 2.3).
into digital service providers.
Customer support functions are often one of the first The GCC operators have embraced
areas to be ‘digitalized’ by operators. Digitalization of
customer journeys helps with customer retention and
digitalization to remain relevant and
costs (e.g. by reducing calls to call centers). There is competitive
also the perceived need to conduct business on a more
600
500
154
400 120
USD million
300 92
200 401
68 339
264
100 37
146
26 77
36
0
2016 2017 2018 2019 2020 2021
NFV SDN
Figure 2.3: Mobile broadband connections forecast and 5G share of mobile broadband [7]
21> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
Chapter 3. 5G readiness
index: the GCC region needs
more 5G-focused vertical
policies
22> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
3. 5G readiness index: the GCC region needs more 5G-focused
vertical policies
To provide a view on the relative positioning of GCC We have grouped these criteria into two broad
countries in terms of promoting 5G development and categories: regulatory readiness and operator readiness,
commercial deployment, and identify potential gaps and as outlined in Figure 3.1 and Figure 3.2 below.
best practice for regulators and operators, we have
To identify additional best practices for GCC countries,
assessed their ‘5G readiness’. Our assessment is based
we have also compared their 5G readiness against those
on a set of criteria that our research indicates are
of leading 5G-ready markets, including China, Japan,
relevant to the overall success of 5G in a given country.
South Korea and the US.
Amount of 5G • Total amount of spectrum being released for 5G
spectrum and • Amount of spectrum being made available in different bands (low, mid, high)
timeline for
Amount of 5G • Timetable for•spectrum
Total amount
beingofmade
spectrum being
available toreleased forfor
operators 5Gcommercial use
release
spectrum and • Amount of spectrum being made available in different bands (low, mid, high)
timeline for
release • Timetable for spectrum being made available to operators for commercial use
Publication of 5G • Publication of a detailed 5G roadmap with indication of bands to bemade available
roadmap for 5G use and/or under study
Publication of 5G •
• Plans for equipment
Publication testing,
of a detailed schemeswith
5G roadmap to facilitate
indicationearly commercial
of bands trials,
to bemade available
roadmap detailedfor
schedule for spectrum
5G use and/or release, etc.
under study
• Plans for equipment testing, schemes to facilitate early commercial trials,
detailed schedule for spectrum release, etc.
Government backing • Extent of proactiveness of national governments for 5G deployment
and infrastructure • Government policies aimed at streamlining planning and easing early 5G
policy infrastructure
Government backing • Extent of proactiveness of nationaldeployment
governments for 5G deployment
and infrastructure • Government policies aimed at streamlining planning and easing early 5G
policy infrastructure deployment
Vertical policies • Publication of multi-annual national plans for the development of key sectors in the
country (e.g. utilities, healthcare, smart cities, transport)
Vertical policies • Importance
• of multi-annual
Publication of the role played by ICT in
national achieving
plans for theroadmap objectives,
development of key and the extent
sectors in the
to which technology-ena bled initiatives
country (e.g. utilities, are being
healthcare, implemented
smart today or ongoing
cities, transport)
• Importance of the role played by ICT in achieving roadmap objectives, and the extent
Figure 3.1: Regulatory readiness criteria.i bled initiatives are being implemented today or ongoing
to which technology-ena
Operator trials and • Extent of 5G network and equipment trials conducted by operators and industry
roadmap to launch stakeholders to demonstrate 5G technology
Operator trials and • Extent of• 5G
Progress made
network and by operatorstrials
equipment towards commercial
conducted 5G launch
by operators and industry
roadmap to launch stakeholders to demonstrate 5G technology
• Progress made by operators towards commercial 5G launch
Pre-existence of
required • Extent to which operators already have an extensive 4G mobile network footprint
infrastructure • Extent of high-speed fixed broadband networks
Pre-existence of
required • Extent to which operators already have an extensive 4G mobile network footprint
infrastructure • Extent of high-speed fixed broadband networks
Focus on customer • Progress being made by operators to offer a modern digital experience for customers
happiness • Includes the provision of self-service applications, social media/omni-channel
Focus on customer • Progress being madesupport and delivery
by operators to offerofapersonalised offers
modern digital experience for customers
happiness • Includes the provision of self-service applications, social media/omni-channel
support and delivery of personalised offers
Network operation • Extent to which operators have implemented zero-touch automation in their
automation network, including progress on network virtualisation, implementing orchestration,
deploying a mature Self-Organizing Network (SON) and automated Network
Network operation • Extent to which operators have implemented zero-touch automation in their
Operation Center (NOC), implementing closed-loop automation
automation network, including progress on network virtualisation, implementing orchestration,
deploying a mature Self-Organizing Network (SON) and automated Network
Operation Center (NOC), implementing closed-loop automation
Vertical readiness • Operator engagements across other verticals to trial and deploy new
technologies or services
Vertical readiness • Includes partnering
• Operator on or leading
engagements projects
across in verticals
other other verticals
to trial(e.g.
and smart
deploycities,
new retail)
technologies or services
• Includes partnering on or leading projects in other verticals (e.g. smart cities, retail)
Figure 3.2: Operator readiness criteria.i
i
Regulatory and operator readiness criteria developed by Analysys Mason. More detail on 5G readiness index methodology are provided in Annex C.
23> UNLOCKING DIGITAL OPPORTUNITIES WITH 5G: A GCC OUTLOOK
3.1 The GCC region hosts some of the most 5G-ready The most advanced GCC countries in terms of 5G
countries globally regulatory readiness have spectrum available in the
low, mid and high bands for the operators to trial and
The result of our 5G readiness index suggests that, on
launch 5G services. In terms of operator readiness, the
average, the GCC region is less advanced than the
best positioned countries have already launched a 5G
benchmark countries on both regulatory readiness and
network (irrespective of its scale) and have a clear 5G
operator readiness criteria. However, the ranges of
deployment roadmap.
scores achieved by each of the GCC countries against
these criteria is very wide; on average, the UAE is the
most 5G-ready country in the region. Figure 3.3 shows
the overall results from the index.
20
The range of regulatory
readiness scores achieved US, 370 South Korea, 32
16 by individual GCC countries
Operator readiness (max = 20)
GCC region average
33 Japan, 99 China, 193
12
8
The range of regulatory
4 readiness scores achieved
by individual GCC countries
0
0 2 4 6 8 10 12 14 16
Regulatory readiness (max = 16)
Figure 3.3: Summary of results from 5G readiness indexi
i
Size of the bubble indicates the country total fixed and mobile service revenue as of 2018. More detail on 5G readiness index methodology are
provided in Annex C..
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