Why 5G’s commercial potential remains untapped in Southeast Asia

Though there has been a lot of hype around 5G technology and how it will drastically change our world, its real business use cases and commercial and industrial applications have been underwhelming.

This is true despite the commonly held belief that the spread of the COVID-19 pandemic in 2020 has accelerated commercial adoption of digital services as consumers have become more home-bound and technology-dependent.

Rosy 5G forecasts, but little real ROI and few actual use cases

The forecast for 5G has been quite rosy all along. According to an AT Kearney report in 2019, 5G represents great potential for operators in Southeast Asia. “5G could add 6 to 9% to consumer revenues and 18% to 22% to enterprise revenues by 2025,” the report says. “Indonesia is expected to capture the biggest share, followed closely by Malaysia, Singapore, and Thailand. To deliver this value, operators will likely pour about US$10 billion into the region’s 5G infrastructure by 2025”.

Whilst Indonesia and Malaysia have fallen behind the curve and countries like Thailand, Singapore and Philippines have zoomed ahead in 5G initiatives, a recent report by analyst firm Frost & Sullivan puts the expected growth of revenue potential for 5G enterprises in Asia-Pacific at 46.4% annually from 2019 to 2024, to reach US$13.9 billion by 2024.

In terms of user base and scale, IDC projects that Asia-Pacific excluding Japan will grow from just over 7.2 million subscribers in 2019 to nearly 613 million 5G subscribers by 2023. China will be the largest market, followed by South Korea, and Australia by 2023. “IDC expects most 5G service launches in [Asia-Pacific excluding Japan] initially to be based on the non-standalone version of the 5G standard, though standalone launches will begin from 2021 in markets like Singapore and China,” says Nikhil Batra, associate research director for telecom at IDC.

All this sounds very exciting—but without adequate commercial applications, 5G’s true potential remains untapped in the region.

“IDC predicts that by 2023, 90% of enterprises will still be struggling to find the ‘killer’ 5G application and meaningful ROI on the upfront investment because of continued limited integration with tangential technologies,” Batra says. “Despite the promise of 5G-enabled services, by 2023, [Asia-Pacific excluding Japan] enterprises will be struggling to make the best of 5G into their day-to-day operations. While many businesses are interested in 5G, beyond base connectivity, many of the innovative, futuristic, and, most importantly, ROI-generating use cases will still be in their infancy and lack significant scalability.”

He cites several reasons for this lackluster commercial adoption of 5G. “ Many of 5G’s most promising features—ultrareliable low-latency communications, massive machine-type communications, and network slicing—that are foundational elements of the real-time decision-making and autonomous operation enabled by 5G will just be at the cusp of their commercialization journey in 2023 and will still be maturing through 2024 and beyond,” he says.

This dim prospect of 5G’s commercialisation in the Asia-Pacific region is also reflected by a 2020 Frost & Sullivan survey on the state of 5G in Asia-Pacific. “Although 5G has the capabilities to transform various industries, only 67% of the companies understand the full impact of 5G on their industry,” the survey states.

The enterprises faced various challenges when incorporating 5G into their business. For example, “55% of companies in Singapore cited that inability to come up with innovative solutions is the key challenge to implement 5G, 36% of companies in the Philippines need a common third party in the industry to help them build end-to-end 5G solutions, and 35% of companies in Malaysia thought that there is a lack of suitable best practices strategies from other parts of the world.”

The evolving reality of 5G commercialisation in Southeast Asia

Despite this lacklustre reality, the governments in the region have been active in facilitating the wider adoption of 5G technology for the benefits it may bring to transform their respective societies.

One of the 5G leaders in the region, Singapore has already started 5G deployment and by 2022 expects to have at least 50% standalone outdoor coverage for 5G. Moreover, the country aims to have nationwide 5G standalone coverage by 2026.

Janil Puthucheary, Singapore’s senior minister of State, Ministry of Communications and Information, wants “world-class, secure, and resilient 5G networks” for the in-development smart nation. “5G standalone networks unlock the full suite of capabilities including network slicing and ultrareliable low-latency communications necessary for applications such as cloud gaming and smart factories.”

While Singapore has been pushing ahead with its drive to commercialise 5G technology applications across the island state with two grant programmes totalling S$70 million, other countries in the region have been active, too. “Thailand has been quite active in 5G since 2020 due to the COVID-19 pandemic, and Philippines has had 5G fixed wireless access since 2018=19 and has had full commercial launch since 2020,” says Mei Lee Quah, associate director for telecoms and payments strategy for Asia-Pacific at Frost & Sullivan.

Because of these initiatives, some green shoots are already visible. For example, 5G application trials are underway in Singapore’s port, Pasir Panjang Terminal, involving automated guided vehicles (AGVs) and rubber-tyred gantry cranes. Trials in cloud gaming, smart manufacturing, and last-mile delivery of food and goods are also underway in the island state.

In Thailand, AIS, the country’s largest telecom operator, is “helping hospitals launch telemedicine services and robots that help prevent direct contact between doctors and patients” through its 5G networks in 158 hospitals in Bangkok and other major Thai cities.

Other use cases already in operation in the region are in agriculture and public safety. For example, “large plantations in Indonesia are using 5G drones to collect information on soil conditions and moisture levels,” CIO ASEAN has previously reported, and “traffic monitoring and crowd control” use cases have already been trialled.

“In ASEAN region, IDC expects 5G to cater to both consumer and enterprise use cases,” Batra says. “On the consumer side, IDC expects to see a focus on ultra-high-definition TV streaming, augmented/virtual reality, and gaming, as well as fixed-wireless use cases. For the enterprise, 5G use cases will come from massive machine-to-machine communications and applications that will rely on ultrareliable low-latency communications that the 5G standard will support, whereas applications leveraging 4K video will drive the largest amount of traffic over the 5G network.”

Frost & Sullivan’s Quah sees major applications of 5G in the manufacturing sector in the region. “Manufacturing use cases hold strong promise in the Asia-Pacific region,” she says. For example, in process automation, robotics may replace repetitive, labour-intensive work that requires high levels of accuracy. 5G’s role: “Collaborative robotics make manufacturing faster and more accurate without the limitations of cables and wires,” she says.

Gartner predicts that by 2024, mobile telemedicine kits, diagnostic, and screening devices will go from niche usage to become more than 80% of all healthcare 5G use cases globally, and that 5G use cases will be activated in retail, banking, public sector and manufacturing.

But it remains to be seen how much of this will be in action in Southeast Asia. As Frost & Sullivan analysts note in a report, “there is still work to understand end-user needs, partner fit, and the go-to-market plan for an effective implementation of 5G within enterprises” in the region.

They suggest a recipe to push commercialisation of 5G: Move from showcasing 5G technology to educating about the full impact of 5G on business ecosystems, bring in regulations and public sector projects to help drive 5G implementation, and form intercompany and public-private partnerships to develop beneficial use cases.

It’s up to the Southeast Asian countries to follow these three steps to unleash the potential of 5G.