Sailing in a new blue ocean of verticals

5G laid the foundation, ready to spark digital economy

There is no doubt that connectivity is the foundation of digital development in all countries. The Middle East's connectivity leadership is significant, especially in the development of 5G. The Middle East, together with China and South Korea, is one of the best 5G developed regions in the world. Currently, there are more than 9 million 5G users, including about 900,000 5G FWA users. We see that some carriers in GCC leading 5G regions have begun to reap the benefits of 5G, with traffic ratio exceeding 30%. In Kuwait, one of the country in GCC with the earliest and fastest 5G development, carriers have achieved 4% growth in revenue and 13% growth in profitability.

More importantly, we have started to see the application of 5G in vertical industries. More than 20,000 5G Lease Lines have been deployed in the Middle East, bringing rich returns to carriers, such as ARPU increases by 5 to 10 times. Beyond revenue, 5G leased lines have brought great social values in key projects. For example, 5G leased line plus mobile video in Dubai large-scale event campus and 5G plus IdeaHub in smart education projects in Kuwait. Indeed, 5G leased lines plus any service will bring more business and social values to carriers and societies in the coming years.

In addition to 5G Lease Line, the exploration of 5G dedicated network applications has also made positive progress. Together with our industry partners in the Middle East, we have incubated 8 5G industry use cases and deployed in some large-scale industry campuses, including 5G plus drones and vehicle-mounted cameras to improve campus security; HSE compliance status of on-site workers is checked through 5G+AI+real-time HD video to improve personnel safety; 5G+AR enables experts to remotely guide onsite workers to handle most problems in their office, which saves the cost of dispatching a large number of experts to on-site work.

Currently, these 5G use cases have been deployed in industries such as Digital Oil Gas and Smart Port and will be promoted to more industries in the future. They will bring new revenue streams to carriers and enable carriers to deeply participate in digital transformation of some key industries. This is not the end, it is not even the beginning of the end.

Beyond connectivity, telecom swing into actions to embrace the new ICT market trends

Although 5G has made remarkable achievements in the Middle East, so far, all existing 5G projects are low-hanging fruits, especially in vertical markets, They do not currently occupy a large piece of the industries' ICT spending cake and they also don't have significant future growth.

According to Gartner, Enterprise ICT spending is about 16 trillion US dollars in the next five years. There are two key trends:

• From devices to services, 65% of CIOs indicated that they would prefer to purchase outsourced services rather than self-built IT systems. Saudi Arabia has also set OPEX as the preferred method for most of government's ICT investment.
• From fragmented procurement to full-stack procurement: In China, a joint survey shows the one-stop cloud-network service is one of the top six ICT requirements from more than 400 enterprises. In UAE, the police have purchased full-stack services from carriers, covering computing, storage, video collection and analysis for mobile patrol. This avoids additional overheads caused by scattered procurement and better focuses on its own services.

This kind of transformation requires ICT providers to be proficient in connectivity, cloud services, and industry know-how. Carriers possess the natural capabilities to deploy, run, operate and optimize a connectivity network securely and reliably. Governments and large enterprises generally trust carriers to a higher degree. Therefore, beyond connectivity, by continuously improving other two key capabilities of cloud services and industry know-how, carriers will expand their service boundaries and play a more important role in the digital transformation of industries. The ToB services beyond connectivity can lead carriers to surpass the population and achieve "Connectivity Renaissance".

Unleashing new capabilities, sailing into a new blue ocean of verticals

Digital transformation of verticals is a long journey. Carriers are the backbone of the national digital economy, therefore the core capability of connectivity need to be further strengthened to meet industry-oriented connection requirements. E2E network SLA assurance is necessary and is the differentiated value from ToC services. The network capability openness and the network-as-a-service connectivity capability supply mode are necessary to meet the connection requirements of diversified ToB applications.

Based on connectivity, carriers can further build the cloud strategy and cloud-network synergy capabilities:

1. In the next five years, the size of the Middle East cloud market carriers can participate in will increase from US$2.3bn in 2021 to more than US$5.6bn in 2025. Considering enterprise size/security/service requirements, we can define three scenarios or approaches for serving enterprises:

• First approach is a one-to-one scenario which corresponds to private on-premises cloud. Carriers can sell BOT (Build, Operate and Transfer), system integration and managed services. This is in the case of strict security and service requirements like real-time operations. This certainly requires investment to build an enterprise edge.
• The second approach is one-to-N scenario, using the telco edge where data centers need to be located domestically. A cloud platform for centralized management needs to be built, corresponding to cloud stack solution. This mainly focuses on large enterprises, governments, and finance industries, etc., where there is a moderate security and service requirements. Carriers provide reliable infrastructure and XaaS to end-users leveraging their capabilities and ecosystems to provide end-to-end cloud solutions
• The third approach is through public cloud, through the N-to-N scenario. Carriers provide cloud services integration to enterprises, collaborating with multiple cloud providers. The main value proposition is service availability. Public cloud cooperation helps carriers to develop markets, branding, and enable their internal teams. This can also build the foundation for the development of scenario 2.
• In scenarios 2 and 3, carriers have more advantages who can fully leverage the value of cloud-network collaboration and leverage carrier's 5G, ecosystem and partner, campus network, professional service, managed service, and consulting capabilities to provide end users with comprehensive and competitive solutions, empowering the industry digitization.

2. According to FlexEra 2020 state of the cloud report, 92% of enterprises will choose multi-cloud/hybrid cloud for access. This will create two main challenges for enterprises:

• First, the need for multiple private lines for cloud access resulting in multiple subscriptions; slow service provisioning. The status is invisible, costs are not standard, and services are not unified. Service provisioning generally takes two to three months.
• Second, Best-effort networks cannot guarantee QoS. Enterprise users or cloud service providers lease connectivity resources from carriers. Carriers' networks cannot treat the service requirements differently, but only conduct best-effort forwarding based on basic principles, which cannot guarantee different SLAs.

However, by using one-stop cloud network synergy solutions, carriers have the unique advantages to address these issues in enterprise multi-cloud access. Enterprises only need to negotiate services with one carrier, and can have network and cloud access services provisioned quickly from end to end. In addition, with SDN controller and SRv6 multi-factor path computation, carriers can treat services requirements of different enterprises differently, guaranteeing SLAs for various services and improving user experience. In summary, achieve four "Ones" experiences: one hop to cloud, one network for multiple Clouds, one click to fast scheduling, one connection for multiple services.

In addition to making full use of traditional connectivity capabilities and introducing cloud and cloud-network synergy capabilities, some carriers can make further efforts to provide industrial solutions and play a more important and key role in the industry chain. Of course, Industry know-how, solution consulting, eco-system Integration and verification capabilities are all the keys to explore the vertical market. 

In general, based on strengthening infrastructures layer such as 5G, further improving optical networks, data centers, the capabilities of cloud infrastructure construction, cloud services, and solutions ecosystem, will guarantee that carriers can provide agile, deterministic, on-demand network services for the industry market through cloud-network synergy and diversified cloud offerings. Network is the foundation, cloud is key, holistic industry solution is the ultimate goal, carriers can play a stronger role with more capabilities. Becoming integrated ICT providers of "connectivity + cloud + industry solutions" will be the key to carriers' long-term competitiveness in the market, as well as the main force of national digital economy development. Huawei promises to bring the most innovative technologies to the Middle East, explore new blue oceans of vertical markets with carriers, and help the Middle East continue its leadership in the digital world map. We surpass together and we grow together, to light up the future of all industries in the Middle East!