Accelerating enterprise innovation and transformation with 5G and Wi-Fi 6

Introduction

In our hyperconnected era, the number of networked devices may reach 29.3 billion by 2023—more than three devices for every human being on the planet.¹ Next-generation wireless technologies such as 5G and Wi-Fi 6 are poised to become a crucial part of the networks that link machines and people. By offering significant performance improvements—such as faster speeds, increased data capacity, lower latency, greater device density, and precise location sensing—these new wireless technologies are already enabling novel solutions, including autonomous vehicles, precision automation and robotics, telemedicine and telesurgery, immersive retail and entertainment experiences, and augmented-reality workplace collaborations.

Innovative solutions such as these are why leaders across industries see advanced wireless networks as increasingly essential to their strategies. And rising urgency is accelerating a shift in focus to 5G and Wi-Fi 6, far faster than what executives forecast less than a year ago.

Networking executives have rapidly shifted their focus to advanced wireless

Deloitte’s early 2020 study found that US-based networking executives still viewed 4G/Long Term Evolution (LTE) and current (or previous) versions of Wi-Fi as the most critical wireless technologies for their businesses. Most viewed 5G and Wi-Fi 6 as up-and-coming over the next few years.⁶

Attitudes shifted quickly: Nine months later, global networking decision-makers regard 5G and Wi-Fi 6 as the most critical wireless technologies for their business initiatives (figure 1). And in the next three years, as physical 5G infrastructure is built out and 5G devices become more available, leaders expect the new technologies to become even more significant.⁷ It’s worth noting that executives now see 5G and Wi-Fi 6 as higher priorities than 4G LTE and Wi-Fi 5 (and older versions) in nearly all the countries we studied.⁸

About two in five executives ranked Narrowband IoT (NB-IoT) in their top-three most important wireless technologies, although enthusiasm varies considerably by country—in China and India, three in five networking executives ranked it within their top three, reflecting higher uptake in those countries.⁹ As part of the upcoming 3GPP Release-17 5G specification, NB-IoT can play a role in organizations’ 5G IoT evolution strategy.¹⁰

The COVID-19 pandemic is accelerating wireless investment

Why has leaders’ focus shifted toward advanced networking technologies much faster than our 2020 study suggested? For several reasons that the world saw play out in real time over the nine months that separated our two surveys. The COVID-19 pandemic caused surging demand for better connectivity to support remote working, online learning, and automation. The crisis vividly underscored organizations’ need for ubiquitous, secure, high-quality connectivity to reduce onsite personnel, maintain business operations, and support virtual employee interaction and customer engagement. And it highlighted the value of virtualization and automation capabilities that enable more flexible, remote management of enterprise operations.

Others have noted the extent to which the pandemic has catalyzed change in the technology, media, and telecommunications industry, compressing what was expected to be years of gradual change into several intense months.¹¹ Our study findings corroborate this: Half the networking executives we surveyed expect to boost their wireless networking investment due to the pandemic (15% report they’ll invest significantly more), while less than a quarter report pullbacks (figure 2).

Strategic importance and adoption are on the rise

Networking executives recognize the importance of advanced wireless for their business success today and believe it will be essential to thriving in the postpandemic era. Four in five currently see advanced wireless technologies as very or critically important for their business—and the same number expect to hold that view in three years. Adoption is set to take on more urgency: One-fifth of networking executives view the technologies as critically important for their enterprise today; one-third say they will be critically important in three years.

Backing up their strategic view, these executives are planning significant wireless networking investment over the next three years. Considering all the wireless technologies (such as 4G, 5G, various types of Wi-Fi) they expect to use over this period and the cost of devices (such as 5G smartphones), hardware/equipment, software, installation, and operations services (but not including costs for spectrum), our respondent organizations estimate their three-year spending at US$149.7 million on average. In our earlier study, US networking executives reported they would spend an average of US$115.7 million on their wireless investments over a three-year time frame. The higher spending estimate outside the US likely reflects the passage of nine months between surveys, as well as the catalyzing effects of the pandemic.

The surveyed organizations are going all-in when it comes to adopting advanced wireless technologies. By design, our survey included respondents from organizations that are in the process of adopting 5G and/or Wi-Fi 6 or plan to adopt either technology within the next three years. In practice, we found that adoption is well past the planning stage: Two-thirds of respondents’ organizations are either running pilots or deploying Wi-Fi 6 solutions, while 58% are doing the same with 5G (figure 4). Roughly another quarter are in the process of actively “preparing to use” each technology—for example, acquiring devices/infrastructure or identifying potential providers and partners.

Enterprises pursue a variety of usage scenarios

To leverage the capabilities of advanced wireless, adopters tend to target a blend of indoor and outdoor usage scenarios, and a blend of fixed and mobile networks (figure 5). Organizations use advanced wireless networks to connect employees, machines, and customers. When it comes to employee connectivity—both inside and outside the office—the top two use cases involve enhancing workplace communication and collaboration (figure 6). For example, organizations can use Wi-Fi 6 to increase the speed of voice and video, untethering workers from desktop phones and wired connections.¹⁵ And with so many professionals working remotely during the pandemic, 5G may enable new ways to improve collaboration and productivity, such as high-resolution, multiperson videoconferencing, interactive digital whiteboards, and immersive collaboration experiences enriched by virtual reality (VR)/augmented reality (AR) technologies.¹⁶

The third-most-cited use case for employee connectivity relates to IT administration and remote troubleshooting. For example, 5G is poised to play a role in remote management of workers’ mobile devices, enabling IT professionals to rapidly push data-intensive updates to a large number of devices.¹⁷ Companies are already using 5G technology to connect remote 3D designers and video editors to their high-end workstations back at the office, providing 4K-quality streaming and allowing them to perform CPU-intensive tasks from afar.¹⁸ A UK water company has been using a private 5G network to enable a “remote expertise” use case: As newly hired technicians encounter issues with equipment in the field, AR headsets relay the situation to experienced colleagues who guide the troubleshooting remotely.¹⁹

Advanced networking also enables many new applications for machine connectivity—inside facilities, on campuses, and in broader areas such as shipping ports and international airports. For example, video surveillance in factories can allow human operators (or AI systems) to remotely supervise equipment in real time, and 5G can deliver the ultrareliable, low-latency communication needed to drive maintenance via robots. Augmenting a smart-factory floor with wirelessly linked IoT sensors enables massive streams of data about the performance and health of equipment, and analytics can predict problems before they occur.²⁰ Companies are also using wireless technologies to connect machines directly to other machines—for example, in vehicle-to-vehicle safety systems.²¹

Wireless technologies are also powering enhanced customer experiences. Municipalities are already employing a combination of Wi-Fi 6 and 5G to drive smart-city solutions that improve public services, including real-time traffic monitoring/optimization and geofencing applications that can deliver personalized alerts to anyone within a predetermined geographic area.²² In health care, next-generation wireless initiatives enable real-time remote patient monitoring, high-definition video consultations, and even remote medical procedures using robots—the need for which grew more urgent during the pandemic.²³ Sports organizations are using 5G and Wi-Fi 6 to deliver more engaging, immersive stadium experiences. And retail companies are combining advanced wireless with IoT sensors and analytics to support smart inventory systems, optimize product pricing, and personalize shopping experiences.²⁴

Enterprises adopt Wi-Fi 6 and 5G in parallel

The huge amount of attention advertisers and news editors have lavished on 5G has undeniably overshadowed Wi-Fi 6. But both will have a significant role to play in the future of wireless. Unlike past generations of wireless, 5G cellular and Wi-Fi 6 networks will be able to interoperate seamlessly with one another and are widely regarded as complementary technologies in the wireless ecosystem.²⁵ Standards bodies and wireless alliances continue to propose solutions for the remaining technical challenges around seamless interoperability.²⁶

Networking executives report their enterprises are adopting both technologies for their wireless initiatives, indicating they prefer Wi-Fi 6 for indoor, on-campus, and fixed network situations and 5G for outdoor, off-campus, and mobile network environments. Adopting the technologies in parallel makes sense. Fully 45% are already deploying both Wi-Fi 6 and 5G in their business or piloting/experimenting with them, with another 35% actively preparing to use both—for example, acquiring devices/infrastructure and identifying providers (figure 7). Nearly all expect their organization to be using both 5G and Wi-Fi 6 within the next two to three years. Projected investment reflects coadoption as well: Over the next three years, these organizations expect to split their wireless spending fairly evenly between Wi-Fi (48%) and cellular technologies (52%).

Parallel adoption of 5G and Wi-Fi 6 is also apparent when we take a deeper look by country (figure 8). In all geographies studied, more than half the networking executives report their organization deploys or pilots Wi-Fi 6, and in Germany, Brazil, the United Kingdom, China, and Australia, the adoption percentage reaches 70% or higher. These countries also report the highest levels of 5G deployments/pilots.

Wi-Fi 6 has an adoption lead over 5G in all countries studied, but double-digit gaps are apparent in India, the Netherlands, Brazil, and the United Kingdom. Spectrum availability is likely a contributor to the comparatively slower pace of 5G adoption: While Wi-Fi 6 uses unlicensed spectrum (and therefore has a lower-cost path of entry), 5G initiatives generally require that government regulators auction or allocate spectrum suitable for 5G services, and some auctions have faced delays. The Netherlands didn’t complete its first 5G spectrum auction until mid-2020.²⁷ Both India and Brazil had targeted 2020 for auctions, but the pandemic postponed those plans.²⁸ It’s no surprise that the three countries with the highest levels of 5G adoption—Germany, China, Australia—all had 5G spectrum auctions in 2018 or 2019, giving their commercial rollouts of 5G a head start before COVID-19 hit.²⁹

Advanced wireless is foundational to innovation and transformation

An overwhelming majority of networking executives expect advanced wireless technologies to transform both their enterprises and industries in the near term—especially remarkable considering that 5G and Wi-Fi 6 are the latest generations of technologies that have been evolving for decades. Four in five believe advanced wireless will substantially transform their organization within three years, and nearly as many say the same about the effect on their industry (figure 9). Because their industry peers will be transforming nearly as fast as their own organizations, many of these executives are likely feeling enormous competitive pressure to quickly realize benefits.

Fueling innovation

Advanced networking is becoming an essential part of organizations’ innovation architecture. Rather than merely representing the latest-and-greatest improvements in wireless technologies, next-gen connectivity is becoming an integral part of how companies are innovating and transforming—changing how they operate, develop new products and business models, and engage with customers. Indeed, three-quarters of networking decision-makers believe their organization can create significant competitive advantage by leveraging advanced networking technologies and four in five believe advanced connectivity will be critically important for enhancing customer interactions within three years.

A majority of survey respondents (56%) see their company’s current networking infrastructure as preventing them from addressing the innovative use cases they want to target—and that drive to innovate is motivating them to adopt next-gen networking. In fact, the desire to take advantage of new technologies, such as AI, big data analytics, and edge computing is a top driver for advanced wireless adoption, tied with improving efficiency (figure 10). Enhancing customer interactions rounds out the top three sought-after benefits. It’s worth noting that, in our early 2020 study, improving efficiency was solidly in the top spot, while taking advantage of new technologies placed third. The latter has now risen to first place. Another innovation activity—creating new business models—has also moved up several rungs. Leaders cited improved performance and operational characteristics of advanced wireless—such as faster data speeds, improved coverage, lower latency, enhanced security, better reliability, and interoperability—as important attributes for achieving the benefits of advanced wireless.

Taking a closer look at countries, the top three overall motivators—taking advantage of new technologies, improving efficiency, and improving customer interactions—generally resonate in most geographies (figure 11). However, some countries place high emphasis on certain objectives outside these three—for example, new business models (Japan, Netherlands, Portugal), better products/services (Germany, Portugal), creation of new products/services (China, Australia), and reduced costs (Brazil).

Advanced networking at the core

Networking executives resoundingly view advanced wireless as integral to their efforts to deploy innovative technologies at the heart of their digital transformation efforts, including big data analytics, cloud computing, edge computing, AI, and IoT. Remarkably, 99% of our respondents said their companies are pursuing each of these technologies in the coming year, despite it not being a requirement for survey participation. Four in five networking executives consider advanced wireless very/extremely important to their organization’s ability to implement IoT, big data analytics, AI, and edge computing—and even more say the same for cloud computing (figure 12).

More than ever, these technologies are intertwined and converging in enterprise innovation initiatives (see sidebar, “Innovating globally with advanced connectivity”). With advanced networking becoming intrinsic, how organizations adopt and architect their advanced wireless solutions is no longer a separate decision from how they implement other innovative technologies: Leaders should increasingly consider advanced networking a key component of an organization’s end-to-end enterprise architecture.

How adoption of advanced wireless is unfolding

Organizations are approaching advanced wireless adoption as a strategic technology initiative, led by technologists both inside and outside the enterprise. The IT function—both C-level executives and practitioners—leads the charge to adopt, followed by C-level business executives (figure 13).

When it comes to influencing an organization’s decisions around advanced wireless, IT staff and technology vendors hold the most sway, followed by wireless carriers and the company’s executives (figure 14).

Complex and evolving ecosystem

Fulfilling the promise of advanced wireless initiatives, particularly those involving 5G, involves a complex ecosystem of players, including application and cloud providers, wireless carriers, consultants and integrators, equipment manufacturers, and infrastructure providers. About one-third of the networking executives we surveyed prefer to purchase full end-to-end advanced wireless solutions, but the other two-thirds prefer to acquire best-of-breed components or a blend of components and full solutions, offering more of an opportunity to customize and control (figure 15).

In order to assemble complete solutions, organizations generally bring together capabilities and technologies from a range of players (figure 16). On average, advanced wireless adopters engage with about eight of the nine listed types of vendors. Moreover, when it comes to cloud providers, application providers, component providers, consulting firms/integrators, and network equipment providers, about half of enterprises engage with two or more vendors of each type. The relationships are evolving: For each type of vendor in the ecosystem, at most three in 10 adopters prefer to keep engaging with their current vendors; the remainder are open to exploring new ones.

Enterprises choosing best-of-breed solutions face a great deal of complexity and need to coordinate the efforts of multiple parties. Beside their own in-house teams, they’re looking to cloud providers (such as the hyperscalers), network technology vendors, consultants/system integrators, and wireless carriers to help them weave together and orchestrate the pieces. Even when adopters choose integrated solutions, the vendor handles a great deal of behind-the-scenes complexity. Today’s reality is that no single vendor can offer full-stack, end-to-end solutions on its own. While some may already have the vast majority of the required components and capabilities, they still need to partner with others to acquire and integrate additional pieces to create complete solutions.

The architecture of 5G networks is expected to become more virtualized, open, and programmable, allowing best-of-breed components to proliferate.³⁷ The role of orchestrators that assemble all the pieces is likely to become increasingly important, whether that role is assumed by telecom providers, tech providers, or system integrators.

Challenges to adoption

One way vendors can up their game is by helping customers address their networking challenges. With advanced wireless enabling a hyperconnected world, leaders recognize that there are many more potential network entry points that need to be protected, and security tops their list of concerns (figure 17). At the same time, next-gen wireless technologies promise better security. Wi-Fi 6 improves data protection by ensuring that all certified devices support the latest generation of security (WPA3), which offers more robust encryption and key management.³⁸ And 5G slicing supports unique security policies per slice—a boost to security as long as slices are configured and managed properly.³⁹

Another top concern of adopters is backward compatibility with existing systems and devices. Vendors have an opportunity here to show how their components can work well with others, and to go above-and-beyond by offering integration services. When we look at the country level (figure 18), it’s clear that some adopters are still struggling to get out of the starting gate, heavily invested in older technologies (a top-three challenge in Germany), unsure of the business value of advanced networking (a top-three challenge in China, Germany, Japan, the Netherlands, and Portugal), or having difficulty identifying the right use cases to target (a top-three challenge in Australia and Japan). Once again, these difficulties represent an opportunity for vendors to demonstrate the business value of their solutions and the usage scenarios they enable—perhaps by engaging customers in pilot programs.

Cloud and edge in the spotlight

Seven in 10 networking executives revealed that they expect to primarily deploy and manage their wireless networking applications and services on public or private clouds in the next two to three years (figure 19). Remarkably, those who expect to use mainly private clouds are twice as likely to trust traditional cloud technology firms the most to manage their data in the private clouds (56%) than to look first to their own IT department (28%).

Moreover, executives reported relying on technology companies—namely, application providers and cloud providers—the most to help design their advanced wireless network architectures. And enterprises are keenly aware that their networks can’t merely connect their devices but must also connect to clouds, collecting data from machines and sensors, and meshing it with the company’s cloud-based operational data.

Another area that bears watching is the proportion of adopters (16%) that expect to chiefly deploy and manage their wireless networking applications and services on the edge in the near future. This represents a jump from 9% of executives in our US study and points to a growing awareness of the significance and utility of edge computing.⁴⁰ Consider that, with 5G, the time for device or sensor data to arrive at a cell tower may be just 2–3 milliseconds, but the time for it to travel to a distant data center for processing (for example, by cloud-based analytics services) could still take hundreds of milliseconds, presenting a problem for applications for which low latency is critical.⁴¹ Moving data processing, storage, and AI-driven analytics to the edge—closer to where the data is collected—can enable applications that require fast response times, such as drones that visually inspect rail lines or bridges to spot possible problems, telehealth systems that capture and analyze video to monitor patient health in real time, choreographed robots on a factory floor, or automated traffic management systems.⁴²

As providers of next-generation networking products and services jockey for competitive position and race to deliver complete solutions, the enterprise networking space is seeing the formation of many innovative collaborations and alliances among technology firms and telecom vendors—even among parties once considered competitors. Edge computing is an especially dynamic area for emerging partnerships, and the large public cloud providers are all rolling out edge computing capabilities.⁴³ Amazon, for example, has been partnering with telcos (such as Telstra in Australia) to embed Amazon compute and storage services at the edge—in base stations or the network operators’ data centers—and customers can continue to use the cloud APIs and functionality with which they’re already familiar, without worrying about the complexity of establishing an edge presence themselves.⁴⁴ Google Cloud is partnering with AT&T in the United States to bring edge compute services (such as cloud-based artificial intelligence and machine learning) to the network edge.⁴⁵ In India, Bharti Airtel has teamed with IBM in an initiative to bring 5G, hybrid cloud, and edge capabilities to its customers.⁴⁶

Considerations for networking decision-makers

Although it’s still early days of rolling out advanced connectivity, leaders already recognize the potential benefits. Adopters strongly believe in next-gen wireless networking technologies’ ability to deliver competitive advantage, unlock the power of other emerging technologies, and rapidly transform both their organization and industry. The strategic decisions that wireless adopters make today may affect their future positions, and organizations may want to take the following considerations into account:

• End goal in mind. Adopters should consider the usage scenarios they want to achieve and determine which wireless technology (or technologies) would be the best choice in different situations. The most successful adopters are likely to be those with the skills to deploy multiple technologies and make diverse networks interoperate as needed.

• Data strategies. When massive volumes of data flow from connected machines and sensors, organizations need thoughtful strategies and policies on how to store, secure, and analyze it. Depending on the requirements of various usage scenarios, some data may need to be stored and analyzed in clouds, with other data processed at the intelligent edge.

• Innovation infrastructure. Given that leaders see next-gen wireless technologies as a significant enabler of other pivotal technologies such as AI, IoT, and edge, wireless will likely become intrinsic to every innovation initiative. Enterprises should regard next-gen wireless as a core part of their innovation infrastructure and strategy, not as a discrete consideration or afterthought. Imagine how advanced wireless may enable new products, services, and business models—and enhanced interaction with customers and employees.

• Integration and network management. Adopters are interacting with a complex ecosystem and a multitude of vendors. With the propensity to acquire best-of-breed components, organizations should decide whether to tackle the complexity of integration themselves or seek out partners. They should assess their organization’s ability to manage, authenticate, and secure networks with thousands of devices. Given that security is the number-one adoption concern, leaders would be wise not to underestimate the level of risk, cost, and effort in shouldering these responsibilities, and may want to engage partners for help.

The advanced wireless ecosystem is complex and competitive, with the overwhelming majority of adopters willing to reconsider their vendors for wireless implementation and management. Suppliers of next-gen networking products and services may wish to consider the following:

• Challenges as opportunities. Adopters cited security and backward compatibility as top challenges to adoption. And, depending on country, there are difficulties around understanding business value or identifying the right use cases. All of these are areas of opportunity for savvy vendors to demonstrate their expertise and value.

• Ecosystem positioning. Evaluate where you can add the most value and carve out your position. Consider whether you can offer expertise in architecting solutions and integrating components—areas where adopters of advanced wireless are likely to seek help. Think about teaming up with other vendors to offer more complete solutions and a more attractive value proposition to adopters.

• Innovation partnerships. Vendors that see next-gen connectivity as adding merely incremental value may miss out on opportunities. Savvy vendors should go beyond offering connectivity products and services and seek to become trusted partners for innovation and transformation.

Both adopters and providers may be able to unlock enormous opportunities as advanced wireless networks become widespread over the next few years.