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01/11/2019

Do SMEs need to get ready for 5G?

01/11/2019

Do SMEs need to get ready for 5G?

It’s never been more crucial for businesses to stay ahead of the technological curve in order to survive and thrive. From Industry 4.0 changing the manufacturing sector, to high street retailers taking a hard hit from e-commerce giants, a surge of emerging markets, ideas and innovations continues to shake up industries across the UK. 

The next innovation due to cause a step-change for businesses is 5G. Strategic testbeds are underway in select regions of the UK as the government seeks to keep up with rollouts across the globe. The rest of the country is scheduled to go live on 5G networks as soon as early 2020, with many businesses already investing to ensure they’re 5G ready.

But, isn’t 5G just faster 4G? 

5G is far more than faster download speeds for mobile phones - it’s the next generation of internet connectivity. 4G enables individuals to operate effectively in a digital way, through mobile web access. Thanks to 4G we get angry if we can’t download the latest blockbuster movie to our smart phones within a few seconds. 5G seeks to bring a significantly greater level of speed, security, and connectivity than 4G, to every element of our built environment, and telecommunications companies have identified a huge array of use cases.

In essence, 5G offers enhanced mobile broadband, massive machine-type communications and ultra-reliable, low latency communications. Offering broader coverage and better connection stability, 5G networks leverage the power of combined data, meaning instant mobile access to huge amounts of real time data will become standard practice. One hundred times faster than 4G, 5G means any industry requiring absolute up-to-the-second accuracy, will no longer be held back by poor data speeds or latency.

5G will act as a catalyst for the implementation of pioneering technologies like Artificial Intelligence (AI), Augmented and Virtual Reality spaces (AR/VR), and wearable technology. It brings together the complex “Internet of Things”, allowing smart devices across the world to communicate in real-time. The scope of 5G’s application within both industry and society is potentially limitless.

Industries embracing the new wave of automation, such as manufacturing, utilities and healthcare will become more agile through 5G networks, as it removes the reliance on physical cables, increasing flexibility and connectivity on the shop floor. Rural areas without access to fibre will no longer be inhibited by poor broadband speeds, presenting credible new commercial development opportunities. 

The use of uninterrupted high-quality streaming to AR and VR devices will become far more prevalent - imagine a specialist engineer on the other side of the world inspecting a piece of equipment using VR technology. AR and VR can help research and develop innovations, and test new products in a collaborative, virtual environment.

Data exchange can happen autonomously on 5G, triggering real time actions and responses independently. Analysing and processing “big” data quickly means that predictive automation can become more accurate, allowing for huge efficiency savings.

The implications of 5G for businesses should not be underestimated and it certainly isn’t just faster mobile phones. Businesses need to prepare for a new way of working, especially if they are to meet expectations from suppliers and customers who on-board 5G early.

Does this really affect SMEs?

It’s tempting for SMEs to see 5G as an issue for big corporations, especially as preparing to integrate 5G could have significant costs. However, many, if not all, sectors will be able to utilise 5G in some way to enhance their product or service delivery. Big corporates may face steep R&D costs to remain competitive, but for SMEs 5G presents a real opportunity to innovate. According to Deloitte’s 5G: The chance to lead for a decade early adopters could gain a decade of competitive advantage over other businesses. As we’ve seen with other technological advances, the businesses that wait to see what happens are likely to be left behind.

For example, within the manufacturing sector, Industry 4.0, smart factories and automation can be introduced more easily using 5G. With the pressures to deliver components quicker and cheaper than competitors, having 5G optimised processes in place will make a supply chain business more attractive to OEMs. 5G can enhance machine condition monitoring, allowing for better maintenance and shortening the time equipment is “out of action”. These kinds of competitive advantages can be transformational for an SME.

What are the challenges SMEs face implementing 5G?

Businesses that want to adopt 5G networks, including SMEs, will need to execute some organisational and strategic change in order to incorporate 5G into their operations. 

Implementing 5G will require an overhaul of hardware, ensuring that technologies are compatible with new high-speed frequencies. Though 5G allows significantly more devices to connect simultaneously, the signal has a smaller transmitter range, meaning antenna need to be strategically placed throughout a premises or location to guarantee 100% coverage.

To reap the full benefits of superfast connectivity businesses will need to invest in technology. Whether it’s buying new handheld devices, acquiring large smart factory machines or utilising drones, 5G implementation needs time, research and funding to identify the best applications for a particular business case. 

5G doesn’t eliminate human interaction, and workforces will need to be trained to use 5G technology. In particular, digital security is paramount for today’s businesses, so firms will need to be more vigilant when it comes to data loss and ensure all employees are properly trained to spot cyberthreats.

How can SMEs finance 5G integration?

In the Autumn Statement 2016, it was announced that as part of a £1bn government funding package, a nationally coordinated programme would roll out 5G. The programme encourages the development of UK testbeds, and is offering businesses the opportunity to explore the benefits and challenges of deploying 5G in demonstrations and trials. An update of which can be found in the Department for Digital, Culture, Media and Sport’s 5G Testbeds and Trials Programme report.

In the context of the wider funding landscape, it is essential that business leaders plan for 5G networking now. Being an early adopter could see a business take an innovative lead over its competitors, and smart investors will be expecting to see SMEs reflecting this new era of technological innovation in their business plans. Therefore, SMEs need to start developing an understanding of the impact of 5G in their market and integrate this into their wider strategy, so that they can identify the capital expenditure required for 5G preparations and calculate the return on that investment.

Frontier Development Capital Ltd has a track record of providing growth capital to ambitious businesses, with flexible funding packages of up to £10million. For more information take a look at our Growth Capital page, or call an Investment Director on 0345 319 4528.