noun_Email_707352 Breadcrumb arrow noun_917542_cc noun_Globe_1168332 Map point Play Untitled Retweet

Will business optimization in 5G kill cross-industry collaboration? 

Telecom and automotive industries must find a common tune to open huge opportunities based on billions of connected cars and devices

Mikel Echegoyen / October 10, 2019

Recently I’ve been involved in interesting, yet slightly frustrating, discussions with executives from the automotive and telecom industries. Both parties have such high interest in 5G but there is a lack of common business vision. It seems that both are trying to maximise their own interests.

5G is expected to open huge opportunities for digital services, enabling new types of services based on billions of connected cars and devices. There’s just one hitch: telecom and automotive industries must find a common tune. 

Collaboration challenges to overcome 

Building 5G infrastructure is costly for operators, but mobile subscribers won’t pay enough of that bill. Operators hope that 5G-based industry solutions, e.g. automotive, will generate them a great deal of new business, justifying investments. They see automotive manufacturers and brands as key customers consuming 5G services for connected and autonomous cars.  

But some automotive players don’t seem to trust that telecom service providers can answer their needs. Consequently, they want to build their own local 5G infrastructure for their manufacturing plants. They are also wary that telecom network providers may not be ready for 5G deployments fast enough. Car manufacturers wish to handle the security and reliability of the network without relying on third parties. They are also reluctant to expose strategically important digitalization activities and valuable data.  

Moreover, uncertainty rises in Europe as safety standards are being legislated related to Vehicle-to-Everything, or V2X, as it’s commonly called. Two clear camps have formed, and they both have strong backing:  

  • Mature, but long-term limited DSRC (Wi-Fi-based) supported by automotive and traffic industries  
  • Up and coming C-V2X (Cellular, 4G based today and 5G based in the future) providing more future-proof support and functionality, promoted by the telecom industry and some leading car brands   

The debate is ongoing – but having full interoperability between both technologies is an expensive and complex solution, which doesn’t bring any additional value.  

Calling for industry collaboration – highways would be a great place to start 

Telecom operators are focusing first on 5G rollouts to large cities, but from an autonomous driving perspective, highways would be an easier problem to solve.   
 
While Automotive OEMs could run their own 5G networks in-factory, building and running a widely available 5G network for their fleets is not feasible, as they lack the economies of scale.   
 
To meet automotive safety standards, 5G infrastructure for highways must have co-investments from several parties in order to make a reasonable business case.  
 
Timelines are critical because automotive OEMs need to plan and integrate technologies in vehicles 3-4 years ahead to account for their lead-time. Yet operators are not ready to provide rollout, coverage, pricing and business models for 5G just now.    
 
While there are cross-industry alliances such as 5GAA (in the C-V2X camp) and Car2Car (in the DSRC camp), there is just too much agenda to push and lots of future business at stake.  
 
At present, we still lack serious discussion about the broader ecosystem. I hope to see much more concrete co-operation cases and promising pilots. Tieto serves both the telecom and automotive industry, and we are keen to facilitate this development. 

Read also: How will 5G and network slicing revolutionize business?

 

Mikel Echegoyen
VP, Business Development & Strategy, Product Development Services 

Mikel is a senior business leader with broad experience in helping global customers bring next-generation high-tech products to market. His passion is to combine business, technology, and software to create value. At Tieto Product Development Services, he is responsible for looking beyond the horizon and leading both customers and teams towards a bright future. 

Author

Mikel Echegoyen

VP, Business Development & Strategy, Product Development Services 

Share on Facebook Tweet Share on LinkedIn