5G achieves extraordinary success in the Middle East

An Jian, President of Carrier Networks Business Group, Huawei Middle East talks to CXO DX on the role of 5G in the region and Huawei’s role in the telecommunications industry.

How can you describe 5G’s process and positioning in the Middle East?
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 the GCC have begun to reap the benefits of 5G, with traffic ratios exceeding 30%. In Kuwait for example, 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 significant 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 Lines, 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 the digital transformation of some key industries. This is not the end, though. It is not even the beginning of the end.

Talking about the industry, what are your insights on digital transformation of vertical industries?
While 5G has achieved extraordinary success in the Middle East, we have also seen that so far, all the things that have happened in the vertical market through 5G only bring low-hanging fruits. The telecom industry should further unlock more capabilities to play an important role in the digital transformation of industries.

According to Gartner, Enterprise ICT spending is projected to total USD 16 trillion in the next five years.

There are two key trends in the industry’s ICT spending:

– First, 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 the OPEX method for most of the government’s ICT investment.

– Second, is the trend 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 are now utilizing 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 services.

This kind of transformation brings new opportunities for carriers to enter the vertical ICT market. Beyond 5G, industries also need integrated ICT services such as cloud services and industrial solutions. This kind of B2B services beyond connectivity can lead carriers to surpass the population and achieve “Connectivity Renaissance”.

How to position Telecom in vertical ICT Markets and pursue industry ICT trends?
Carriers have the key capabilities to deploy, run, operate and optimize a connectivity network securely and reliably. Governments and large enterprises generally trust carriers to a higher degree. Beyond connectivity, by continuously improving the 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.

Therefore, based on strengthening infrastructure layers such as 5G, optical networks, data centers, the capabilities of cloud infrastructure construction, cloud services, and solutions ecosystem should be improved for carriers, These will guarantee carriers to provide agile, deterministic, on-demand network services for the industry market through cloud-network synergy and diversified cloud offerings.. We summarize it as “network is the foundation; cloud is key and holistic industry solution is the ultimate goal”. In general, 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 industry market, as well as the main force of national digital economy development.

Could you specify how telecoms can improve the capabilities you mentioned?
Digital transformation of verticals is a long journey. Carriers are the backbone of the national digital economy; therefore, the core capability of connectivity needs 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 the core capabilities of connectivity, carriers can further build the cloud strategy and cloud-network synergy capabilities:

1. In the next five years, given the size of the Middle East cloud market carriers’ can participation could increase from USD 2.3bn in 2021 to more than USD 5.6bn in 2025. Yet cloud strategy towards enterprises is dependent on a few factors, mainly security and service requirements. But other factors like the enterprise size and available investment are also important.

2. According to FlexEra 2020 state of the cloud report, 92% of enterprises will choose multi-cloud/hybrid cloud for access, and the average cloud requirement of each enterprise will be five. 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 carrier. Carrier’ 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, carrier 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, carrier can treat services requirements of different enterprises differently, guaranteeing SLAs for various services and improving user experience.

What can Huawei do for telcos in this regard?
As a leading global ICT provider, Huawei always believe that continuous innovation is the engine of technological progress. In the past two years, we have invested more than 15% of our revenue in R&D, especially in network domain for example 5G, optical, data center, green energy, and autonomous driving network. This will help carriers build future-oriented sustainable target networks.

Huawei has been working in the Middle East for 22 years and we are honored to be the most trusted partner of Middle East carriers. We have not only built the best experience 5G networks with the leading carriers, bringing great social value to people’s work and life during the pandemic, but also contributed more in national ICT infrastructure development, including the deployment of all-optical cities, data centers for carriers, governments, and enterprises, to help vertical industry lay the foundation of digital transformation.

In the cloud market, we have also built a full-stack solution and can provide more than 220 types of cloud services and work with more than 100 local cloud service partners for all countries in the Middle East. In the Middle East industry market, we have cooperated with more than 300 industry ecosystem partners and constructed 3 Open Labs to develop innovative industry solutions. As Euler and Harmony open-source platforms are promoted globally, we will provide more open platforms and win-win cooperation with partners.

In Middle East, for Middle East. 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!