Detecon Market Survey
Energy Distribution Companies Address 5G Strategies
- Diverse high-potential opportunities for providers
- High level of readiness to offer their own infrastructure
- Lack of clarity in the general regulatory framework seen as the greatest obstacle
Sixty-three percent of energy distribution companies (EDCs) and city carriers in Germany have long since begun deliberating on how to address strategy and positioning for the topic of 5G. Fewer than one-third of them, however, have finalized a strategic decision, much less begun implementation. These are the results of the latest Detecon survey entitled “5G in the Energy Business.”
Ninety percent of the respondents regard 5G to be significant or highly significant from a general market perspective. In addition, almost half the respondents (45%) see high potential for their own companies.
5G for operational procedures in the EDC core business
When asked about 5G applications that promise the greatest success for the future, 84% answered with the sector Industry 4.0 (campus networking). Moreover, mobility and logistics (autonomous driving) and topics with a close relationship to municipal utilities (e.g., smart grid, public transportation, smart city) were each mentioned by 63%, while 53% regarded smart city itself as a potentially successful application.
“Energy distribution companies definitely see high potential in the use of 5G for their own operational purposes such as better control of the energy grids or the intelligent design of complex processes in public transportation,” explained Volker Rieger, Managing Partner in the division Business Ecosystems at Detecon. “The participation in the development of smart cities for communities in their own distribution region is also viewed as attractive.”
Asked about their desired role on the 5G market, one of two companies (53%) want to offer infrastructure services such as optical fiber, electric power, or locations for the large mobile network operators and in this way to support the national rollout. “The willingness to make existing infrastructure such as land, lines, antennas, and connections as an advance service is definitely there,” concluded Jörg Borowski, Managing Partner and telecommunications expert at Detecon.
According to the survey, 37% of the respondents could also imagine playing a role as providers of services using their own infrastructure. Options for action include (for instance) the provision of innovative IoT services for a smart city such as the tracking of public transportation.
The survey also reveals, however, that energy distribution companies and city carriers see that there are certainly challenges in the performance of 5G projects. They regard the missing clarity in regulatory conditions, a poor cost-benefit ratio, and the lack of internal competences in the establishment and operation of the complex infrastructure as the greatest hurdles.
Companies need positioning strategy
What value do partnerships with the national operators offer? What role can the municipal utility or the city carrier play from the community viewpoint with respect to the age of digitalization? What assets are available for use right now, and what competences must be newly developed? “The bandwidth of the possibilities for positioning in the future 5G ecosystem for energy distribution companies is great, and making the right decision requires careful discussion with all stakeholders,” concluded Volker Rieger from his project experience.
“One thing has become clear even now,” emphasized Marc-Andreas Schultze, Managing Partner at Detecon in the division Global NetWorks. “The possibilities for 5G are far-reaching and the road to a network for all players is not a simple one. Existing assets such as optical fiber or locations for towers/small cells or electricity that municipal utilities and city carriers can contribute in the infrastructure sector must be used or developed intelligently in any case so that both commercial and economic benefits are realized,” continued Schultze. The extent to which it makes sense to increase investments in Industry 4.0 (campus networking) or topics with a close relationship to municipal utilities such as smart grid, smart mobility, or smart city is a decision that is dependent on framework conditions such as regulation or competencies and with an eye on the corresponding profitability factors.
Twenty-five representatives from energy distribution companies and city carriers in Germany were questioned for the survey “5G in the Energy Business.” More than half of the respondents were executive officers or came from divisions at a similarly high level. The survey was conducted online in May 2019.
The survey and all results are available for downloading here.