Network slicing has been a topic of conversation since the launch of 5G in 2013, but now with the advent of 5G core it is hotter than ever. In our previous post Network slicing: A USD 200 billion opportunity for CSPs we discussed how network slicing, needed by 30 percent of use cases, is the key to monetizing 5G investments. This blog digs deeper to analyze the key question: “What are the top 10 industries, and which use cases will benefit from network slicing?”
In our recently released report, Network slicing: Top 10 use cases to target, Ericsson and Arthur D. Little uncovered the answers to this question. To do so we analyzed more than 70 external market reports about the global digitalization of industries. As part of that work, we also reviewed more than 400 digital use cases from 70 industries and took a deeper look into one or two use cases in each industry.
The report found there are many things for CSPs to consider when they are selecting their target industry segments and corresponding use cases. Firstly, there needs to be a solid enterprise strategy around which industries or verticals to target. To successfully offer your services to industries or enterprises will require both a good understanding of their needs and market realities, as well as the other players operating in their eco system. A natural starting point is the current local market and already established relations in connectivity services.
CSPs also need to understand which industries are more likely to maximize business impact. That's why we have listed uncovered the top 10 profitable industries for CSPs. Below we explore some of them.
Our findings - the top industries for network slicing
Fig 1. Each industry is usually dominated by two to three segments.
Ultimately, our research discovered that six top industries, (see fig 1) account for 90 percent of the addressable revenues, summing up to some USD 200 billion for CSPs. In turn, these can be divided into several industry segments, e.g. transportation could be split up into automotive and railway services. Manufacturing could be split into production and supply chain etc.
Automotive: A USD 23 Billion opportunity for CSPs and one of the largest industry segments. This is an industry where the need for high availability and low latency will pave the way for CSPs to help facilitate use cases, including teleoperated driving, coordinated groups of platooning vehicles, automated lane change and real-time situational awareness.
CSPs’ could essentially take two roles in the value chain - either as a network developer or service creator. As a service creator the CSP would engage in activities like reselling devices, application platform provisioning, data monetization or offering support. Generally, as service creators the market potential grows significantly, but it requires the capability to broaden the scope of the offerings and have a go-to-market approach.
Fig 2. The role as service creator in automotive offers a significantly higher revenue
Healthcare: This is addressable market for CSPs with patient services expected to grow from USD 6 Billion in 2025 to USD 23 Billion in 2030.The patient services industry is composed of hospitals and various healthcare players that provide mobile healthcare services to patients. This is certainly a growing industry. The percentage of the population over 60 continues to grow and is forecasted to rise from 13.5% of the population in 2020 to 21% by 2025. Use cases like remote treatment in emergencies, precision medicine and rehabilitation robotics and many more will evolve.
Manufacturing: The production segment will see strong growth of 36 percent compound annual growth rate (CAGR) from 2025 to 2030. The manufacturing production segment consists of several players that are focused on the preparation, processing and fabrication of goods from raw materials. A key growth driver is the rapid technological adoption and demand for mass customization. Consumers and enterprises want more personalized production of goods, which adds additional value and creates a larger addressable market. Key use cases include augmented reality (AR) devices that will enable improved quality inspection and diagnosis for maintenance workers, technicians and operators throughout a plant, as well as remote controlled robots and3D video-driven interaction between collaborative robots and humans. With a network slice, the CSP can guarantee the level of throughput, reliability and control required through quality of service (QoS), for example collaborative robots.
Broadcasting and streaming: This is a fast-growing industry. Consumer spending on ultra-high definition (UHD), virtual reality and 360-degree video is expected to grow at a 35 percent CAGR through 2023. The ways in which people produce, distribute and consume entertainment content is rapidly changing. There are a number of near-term uses cases in the industry that network slicing can enable, such as, remote broadcast and production. For example, network slicing would enable most of the personnel involved in the live broadcast of an event control cameras, mix and edit content and change views on the fly, even if they are working from a location hundreds or thousands of miles away from the event. This is because the ultra-low latency of a network slice combined with its quality of service, can provide the required reliability and throughput to enable real-time control of cameras. Since CSPs can deploy slices globally at a predictable cost, broadcasters can now produce niche events that were not previously economically viable. 5G will provide better coverage than fixed solutions, and a network slices ability to isolate traffic could be configured to meet the broadcaster's specific security needs.
The energy generation and transmission sector: consists of various players that are managing, producing and supplying energy. This includes the generation of energy from fuel sources and distribution. New regulatory policies and directives are encouraging and stimulating the adoption of clean energy generation and consumption. High reliability is critical to ensure real-time control especially in case of a malfunction. Growing amounts of data will need to be analyzed in real time and over large geographical areas.
For CSPs, typical customers include small and medium-sized energy companies and power plants. By 2030, slicing-enabled revenue is expected to approach USD 46 billion and the addressable revenue will reach USD 20 billion.
The four main energy generation and transmission near term use cases include:
- Virtual power plants
- Connected remote windfarms
- Cellular push-to-video
- Grid voltage monitoring
So, are there any ‘killer use cases?’
Like the previous 3G and 4G discussions regarding ‘killer applications’ for consumers, which ended up being hard to predict, it may not be possible to identify those single use cases for 5G or network slicing. Most enterprise-based studies indicate there will be a huge plethora of use cases once the technical and commercial capabilities are in place. Network slicing with the capability to offer isolation and customization to cater for short time to market, low latency and high security, may very well turn out to be a prime solution for many more use cases than the 30 percent predicted here.
CSPs have a great opportunity to enable new services
5G and network slicing puts CSPs in a great position for the future. Our studies indicate that enterprises are willing to partner with CSPs if they can work with others in the eco system, and when they offer integrated services that meet the specific needs of the industry vertical.
To discover the other top five industry segments and use cases, download our report, Network slicing: Top 10 use cases - An overview of industries and use cases that will drive the majority of the revenue potential
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