2019 was a critical year for the telecom industry. As 5G commercial rollout ramped up in both speed and scale, we saw a rapid growth in end users. 5G will be integrated into different vertical industries, enabling numerous innovative applications and practices.
Over the past year, I have reached out and talked to a variety of industries. One thing is obvious from our engagement: Emerging technologies like 5G and AI are transforming and redefining every industry, and they’re playing a key role in driving economic transformation and development. But how will 5G and AI drive the digital transformation of vertical industries? How will they enable the telecom industry as a whole? How will business models evolve in the 5G era? I'd like to share how we at Huawei look at those three questions.
How will 5G and AI drive the digital transformation of vertical industries?
5G and AI can only truly enable industries and create new value when they’re combined with industry-specific know-how. People expect much more from 5G than previous generations of wireless communications technologies. As 5G supports low latency, high bandwidth, mass connectivity, and high reliability, it's better able to support application scenarios that require real-time control like industrial Internet and Internet of Things (IoT).
But 5G is not magic. Just because an advanced technology has matured, it doesn’t mean that it will succeed in the market. This is also true for 5G. To succeed in the market, 5G needs to be integrated into vertical industry applications and play an active role in driving industry digitalization.
A perfect example of this is the Ningbo-Zhoushan Port, which has recently gone viral online, where it has been dubbed the "magic port". At the port, it's hard to spot a single human worker. The only sight is automated machinery quickly loading, unloading, and carrying containers back and forth. Port operators in a central control room monitor the safety of gantry cranes, collect real-time data, and perform scheduling remotely using wireless high-definition video backhauled by 5G. In the past, optical cables were used to backhaul data from the gantry cranes. But these cables were costly (around US$285 per meter) and short-lived (about a 2-year service life). In contrast, 5G wireless backhaul can ensure high-quality image transmission, while avoiding the substantial costs incurred by optical cables.
Gantry cranes are but one of many application scenarios in ports. As smart yards, autonomous driving, and other related applications become widely adopted, magic ports like the Ningbo-Zhoushan Port will eventually become commonplace.
This 5G-enabled port is the result of the efforts of China Mobile Zhejiang, Huawei, Ningbo Zhoushan Port Group, and Zhenhua Port Machinery Company (ZPMC). ZPMC served as the integrator that combined 5G technology with port machinery, which has significantly changed port machinery and how the port operates. This has created real value.
To customize solutions that enable a specific industry to go digital, all parties involved need to work together. Specifically, industry partners need to provide industry-specific know-how, while Huawei and carriers need to adapt 5G capabilities to meet industry-specific needs. Carriers deliver ubiquitous connectivity, ensure highly reliable O&M of massive numbers of devices, and boast a large user base (hundreds of millions of users). These advantages and capabilities can be fully utilized through digital operations. Carriers need to continue consolidating industry-specific know-how on cloud-based digital platforms and use a mix of digital technologies to ensure more efficient and agile operations. But to drive the digital transformation of various vertical industries, they also need to work with industry partners.
How will 5G and AI enable the telecom industry as a whole?
Telecom networks enabled by 5G and AI can help make service operations more efficient, cut costs, and deliver real-time, on-demand, and reliable experiences to users. To make this possible, carriers, Huawei and its industry partners work together to gradually consolidate the O&M expertise of the telecom industry and the know-how of vertical industries on open digital platforms. The combination of 5G, AI, and industry-specific know-how will lay a solid foundation for reliable and high-quality user experiences. Today, carrier networks are a much more integral part of our lives. In the 2G and 3G eras, we only used carrier networks to make calls and send text messages. But now we use them in a wide variety of everyday scenarios, including ride sharing, payments, shopping, and entertainment.
Networks have become virtually ubiquitous and used in almost every scenario. This is down to the huge efforts of carriers, but they’re also under great pressure. Over the past year, China's big three carriers quickly resolved hundreds of thousands of complex problems and ensured smooth network operations throughout hundreds of thousands of major network changes. Huawei played an active role during this process. We have digitalized the knowledge we’ve accumulated from implementing solutions, identifying risks, and troubleshooting, and leveraged AI technologies such as exception identification and mass-fault prediction to help the carriers ensure stable network operations.
As 5G sees large-scale commercial rollout and enables various vertical industries, network requirements and problems will multiply. This will also raise the bar for real-time services. Therefore, carriers need to consolidate their know-how of the telecom industry on digital platforms, and apply AI in daily network operations to improve the reliability and predictive capabilities of their networks. Only then can they deliver real-time and highly reliable services to users and customers.
How will business models evolve in the 5G era?
While upgrading services and network operations, 5G and AI will also change business models. Value-based pricing may become the new norm. Not long ago, China's big three carriers announced that they would, for the first time, levy price tariffs based on the speeds of their commercial 5G networks. That means service experience will become one of the key measures for value creation. A network that delivers an excellent user experience will bring tremendous benefits, which in turn will help build stronger networks. This will form a business model that fosters a virtuous cycle and provides positive incentives. In South Korea, for example, the number of 5G users exceeded 3.5 million within just half a year of commercial 5G networks being deployed. Driven by services such as virtual reality (VR) and augmented reality (AR), the average daily traffic per mobile user has risen to 1.3 GB, up more than 300 percent. These new services bring more traffic for carriers; more importantly, new types of business, like VR live streaming and AR games, have created new opportunities for the industry.
The same is true for vertical industries. These industries need to create business models that support a virtuous cycle, as this will be the foundation for 5G to reshape society. This will profoundly change how different parties collaborate and do business with each other. New network features will stimulate new industry demands, which will enable more innovative applications and business forms. These will in return increase demands on networks. Innovative business models for 5G will bring shared success for consumers, industry users, carriers, and partners. Value-based pricing and new service processes will produce brand-new business results.
As the adoption of 5G and AI ramps up in China, all industry partners will be presented with new business opportunities. Now, China Mobile, Huawei, and other partners have taken the first step to set out and work in 14 industry application scenarios. Moving forward, Huawei will remain committed to openness, collaboration, and shared success. Underpinned by our Kunpeng and Ascend ecosystems, we will help China Mobile implement its 5G+ plan and build a ubiquitous intelligent infrastructure and ecosystem that revolves around 5G.
Huawei is ready to work with its partners to continue promoting innovation in 5G technology and the development of the 5G industry as a whole, bringing the benefits of technological innovation to more people. The time is now to sail for new horizons.