EY report: Asia Pacific is pulling ahead in 5G investments

EY report: Asia Pacific is pulling ahead in 5G investments
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Bulk of respondents feel that telco operators, when compared to IT vendors, still lack the competence for digital transformation.

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A study by EY on how COVID-19 has accelerated digital transformation reveal that organisations in Asia-Pacific are leading the world, with 78% of organisations currently investing or planning to invest within the next two to three years, compared with 71% in both the Americas and Europe.

EY’s Reimagining Industry Futures Study 2021 found that 27% of Asia-Pacific organisations are having a greater interest in 5G and IoT since the COVID-19 pandemic, compared with 13% and 15% in the Americas and Europe, respectively. Overall, the study finds European enterprises are lagging compared with the other regions in terms of recognising 5G’s potential: 70% believe that 5G will enter the heart of their business processes, compared to 80% in Asia-Pacific and 75% in the Americas.

Access to 5G networks will be key to realising the potential of industrial disruptive technologies such as AI and IoT that will enable enterprises to establish their market leadership. Laggards will face strong barriers to entry and struggle to bridge the digital divide.

- Joongshik Wang, EY Asean Technology, Media & Entertainment and Telecommunications (TMT) Leader Elect

Post 4G, SouthEast Asia is lagging too

Singapore, Thailand and Vietnam have also publicly announced their 5G network deployment plans, and Malaysia is targeting to roll out its plans by the end of 2021.

Looking at the current and future state of 5G deployment in Southeast Asia, Wang said: “Despite strong government support for 5G in the Southeast Asia, the region is lagging behind other markets. After all, telco operators in Southeast Asia are still recuperating their investments from laying out 4G networks.”

EY said the capital expenditure of 5G technology is significantly higher than that of 4G, and industry demand is still nascent given that 5G business use cases are still emerging. Without clear and established cost benefits, overall delays can be expected in the region.

“If the status quo remains unchanged, and enterprises are unable to leverage 5G as a key enabling technology in their digital transformation plans, this will significantly impact the fundamental competitiveness of the region. The resulting bipolarisation of technology-enabled productivity could lead to a widening digital and economic gap between developed and undeveloped countries.

“Addressing the complex and critical challenge of enabling 5G in the region will require more than government support alone. The collective buy-in, as well as collaborative investment and effort of enterprises, telco operators and all stakeholders in the entire ecosystem, will be needed for the successful rollout of 5G,” explained Wang.

Telcos lack digital transformation expertise

The report finds that only 18% of respondents see telecommunications operators as digital transformation experts, a vital competence that must be improved as enterprises increasingly turn to 5G to drive transformation agendas forward.

The majority of respondents see IT services and application/platform vendors (51% and 65% respectively) as digital transformation experts.

When asked what their top 5G priority was, 36% stated it was around exploring 5G’s relationship to other emerging technologies; while 5G’s integration with existing technologies and processes was seen as the number one challenge, cited by 38% of business respondents.

Tom Loozen, EY Global Telecommunications Leader, said: “Telcos should take steps to improve their transformation expertise, recognising that businesses want suppliers to act as partners that provide end-to-end solutions. For this to happen, operators should explore new ecosystem positions while focusing on the opportunities for business model overhaul that 5G can enable.”

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© iTnews Asia
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