Industrial companies are eagerly anticipating 5G's opportunities

01 July 2019 Consultancy.eu

The majority of European industrial companies have plans to invest in 5G in the coming two years. Manufacturers and industrialised companies in the UK and Italy have forged the most progressive ambitions, while German players seem to be the slowest to get off their mark.

The roll-out of 5G technology is seen as a major opportunity for industrial companies of all sizes. 5G is the next generation of mobile internet connectivity, offering faster speeds and more reliable connections. According to tech experts, with 5G in place, average speeds of around 20 GBps for download and 10 GBps for upload could become the norm. In comparison, today’s current 4G technology across Europe’s borders on average achieves speeds of 1 Gbps for download and and 500 Mbps for upload. 

This much faster internet connection will enable connectivity to power a massive huge rise in Internet of Things (IoT) technology, providing the infrastructure needed to carry huge amounts of data, allowing for a more connected world. Not surprising therefore is that, as per new research by Capgemini, executives in the industrial sector are eagerly anticipating the realisation of 5G. Alongside other rapidly emerging digital trends such as cloud computing and advanced automation, telecom’s 5G technology is seen as one of the largest drivers of digital transformation in the years to come.

5G ranks higher than most other enablers for digital transformation

The researchers surveyed around 800 executives in 12 countries, active across 10 segments of the industrial sector*, finding that 43% of the manufacturers are willing to implement 5G for operations within two years of availability, and 22% within one year. More secured operations, the ability to chase cost savings in operations, and the added speed it gives to new product launches are the top three business arguments to invest in 5G. As an example: 5G will enable better video surveillance of remote production lines, which in turn will improve the security of operations and safety of employees. 

By powering speed and effectiveness in innovation and research & development processes, industrial companies can more easily upgrade their products and shorten the time to market. To this end, 5G can support all kinds of sub-processes, such as process design and prototyping of minimum viable products, to scaling-up from pilot to actual use cases. 5G can also make co-innovation easier in partnerships and ecosystems, as it provides the means to achieve faster connections in shared processes and improved monitoring of these activities.

Another area where 5G can largely benefit manufacturers is in the efficiency of the operations. By adopting aspects such as remote control in production, remote-controlled motion through virtual reality or artificial intelligence, industrial companies can streamline operations and perform activities more efficiently. Examples of such benefits are plentiful. Airline carriers can use predictive maintenance to upfront better plan how they maintain their aircraft, bringing down the risk of non-performing parts causing delays for travellers. Rail operators can use augmented reality to better train their rail drivers through real-life simulations, and remote-controlled robotics can help chemicals companies better manage how they produce and transport hazardous products.

Willingness to implement 5G

Not so fast….

However, there still is a long way to go for 5G to become mainstream reality. Even if the political bottlenecks are set aside (many Western economies are excluding Chinese companies such as Huawei to support infrastructure work, slowing down the progress of 5G roll-out) there remain a number of challenges that need to be cracked. One of those is that telecom providers don’t seem to be able to keep pace with 5G’s technological progress. To support 5G, they will need to invest heavily, including in beefing up network capacity and in acquiring the needed licenses. With business models and retrun on investment still shrouded in secrecy, many telcos are slow with unfolding their 5G investments. 

This is inciting in particular large industrial companies with a big wallet to take matters into their own hands. Around one third of industrial companies are according to Capgemini’s research eyeing the opportunity to apply for a 5G license, with companies in the aerospace and defense, chemicals and oil & gas sectors the most advanced in their ambition. For them, being able to operate autonomously and with security are the key reasons for taking on this option. 

Pierre Fortier, a Principal Consultant at Capgemini Invent, the management consulting arm of Capgemini, said that industrial companies will have to start working together with telecom operators to pave the way for a successful collaboration. “Co-innovation between industrial companies and the telco ecosystem, in the form of pilots and open experimentation platforms, will be essential to create win-win business, service and operating models that will foster 5G adoption.” 

Industrial companies that are keen on applying for licenses, by geography

5G under scrutiny

Capgemini’s study comes at a time when 5G technology is under a magnifying glass. First, the question of who should be responsible for setting up the infrastructure for 5G connectivity. China’s Huawei is a front-runner in the field, however, for political reasons that fall back on national security reasons (Huawei is suspected of espionage through the firm’s mast equipment), the Chinese company is in some countries being excluded from infrastructure delivery projects, as is the case in the UK. If this line of reasoning expands to other countries in Europe, the continent will have to absorb a hefty price tag. According to a just released analysis by GSMA, not using Huawei products and solutions could cost Europe up to €55 billion. 

Second, 5G faces a growing public debate around its impact on health. Various doctors and health authorities across Europe have shared major concerns about the impact of 5G radiation on human beings. In a study commissioned by the Dutch government for example, researchers found clear evidence that 5G technology can, once exposure limits are passed, cause overheating and damage to tissues and organs.

* The following sub-sectors were included: aerospace and defence, airport and rail operators, automotive, chemical, consumer, energy and utilities, industrial machinery, logistics, medical devices, pharmaceutical and life sciences, and semiconductor and high-tech manufacturing.