The 5G journey is only just beginning and the shape of its implications are barely visible, but the anticipation among industry participants is palpable. Bank of America (BofA) telecom analyst David Barden examines 5G use cases across different industry verticals. Examples span across Healthcare, Industrials, Energy and Consumer just to name a few.
While there is not a “killer app” for 5G yet, BofA expects the app economy to develop the right applications over time as 5G networking deployment and phone adoption is stimulated by the generational tech war between U.S. and China.
Long-term possibilities include doctors performing remote surgeries, flying cars, haptic bodysuits that fully immerse you in the game world, machines proactively monitoring and warning of breakdowns and predictive maintenance, automated loading at warehouses and smart grids for utility providers. Other examples are included in this excerpt from BofA’s global research report.
5G in the wild:
Over the last year, the 5G conversation has evolved from ‘What is 5G?‘ to ‘Why do we want it?‘ to ‘What do you do with 1Gbps speed?‘ What you do with that kind of speed, latency and connectivity capability is push massive amounts of information across a vast number of devices very fast. One example relevant to the drone and auto industries is the notion of ‘beyond the line of sight‘. Take an example where metro traffic cameras can collect and process sensor information from an entire city and feed it directly into your car so your car already knows there is a stopped vehicle in the middle of the road one mile ahead of you on your planned route and adjusts accordingly.
Examples are endless, and are as big as one can dream – think remote surgeries performed by doctors thousands of miles away due to the power of robotics while using 5G powered medical devices and a lightning fast network, 5G-empowered flying vertical takeoff and landing (VTOL) cars, connected diapers, haptic bodysuits that fully immerse you in your game world, beyond just ‘looking‘ but also now ‘feeling‘.
While it is still tough to conceive of the killer 5G app that will drive adoption, there is no shortage of people thinking about it. Based on a recent McKinsey study (‘The 5G Era‘), companies are willing to adopt to 5G in order to enable ‘new standard‘ use cases or to comply with future connectivity standards. And these ‘new standard‘ use cases are expected to drive 5G IoT unit sales over the next decade. Below, we survey different industry verticals (from healthcare to industrials, energy to consumer) and specific use cases that may utilize this next generation of connectivity most heavily today and how they may evolve.
Sizing the IoT opportunity:
In the next few exhibits, we will look at the potential market size and economics of 5G-powered IoT technology. By comparing the IoT addressable market in various industry verticals side-by-side we found that while the Consumer IoT market would grow to be the largest IoT market vertical at about $142b in 2026, it would be growing at the slowest rate of 17%. The Internet of Medical Things (IoMT) Market closely trails Consumer IoT as the second largest market opportunity, with a market size that is expected to reach around $123b in 2026 but growing at a faster rate of 27.2%. The industrials IoT market would be growing by far the fastest with a CAGR of 79.1%, but off of a relatively small base of just $500m in 2020.
We note that the consumer IoT market is currently the largest as the term ‘IoT‘ broadly covers a wide array of devices that range from smartphones and fitness wearables, to end-use applications such as in-car entertainment, traffic management, connected cars, home automation and more. It is the vertical that is furthest along the adoption curve in the ‘IoT space‘, thereby explaining the slower-than-peers projected growth rate. Because consumer use cases have been most widely covered in our previous reports, we focus on commercial 5G and IoT use cases in this report.
The consumer vertical would be the largest IoT Market
Albeit slowest growing at 17%
In $ millions
Source: Market Research Engine report from 2019
BofA GLOBAL RESEARCH
The industrials IoT market is the smallest today
Growing the fastest vs. peers at 79.10%
In $ millions
Source: MarketandMarkets report from February 2021
BofA GLOBAL RESEARCH
The energy IoT market is expected to reach about $75b by 2026
It is expected to grow at 25.05% CAGR through 2026
In $ millions
Source: Facts & Factors research report from March 2021
BofA GLOBAL RESEARCH
Internet of Medical Things market would be growing at 27.20%
It is expected to reach $156b by 2027
In $ millions
Source: Acumen research and consulting report from December 2020
BofA GLOBAL RESEARCH
Revolutionizing healthcare with 5G:
5G will play a pivotal role in shaping tomorrow‘s healthcare infrastructure. The common use cases for 5G in healthcare can be broadly bucketed into two key areas 1) providing connectivity everywhere to enable the omnipresence of telemedicine and 2) powering the Internet of Medical Things (IoMT).
Enabling the omnipresence of telemedicine:
The adoption of telemedicine has been accelerating due in part to the COVID-19 pandemic. Based on a market report by ReportLinker in April 2020, the telehealth market is expected to grow at a 29%+ CAGR from 2019 to 2025. Following the outbreak of the COVID-19 pandemic, telehealth has transformed from a “nice-to-have“ to a necessity as traditional healthcare providers encourage patients with mild to moderate illnesses to be treated virtually rather than via in-person visits. The latest McKinsey study titled “Telehealth: A quarter-trillion-dollar post-COVID-19 reality?“ estimates that up to $250b of current US healthcare spend could be virtualized.
Based on data from FAIR Health from December of 2020, a nonprofit manages the nation‘s largest database of privately billed healthcare insurance claims, telehealth claims increased 2,980% nationally from September 2019 to September 2020, albeit from a small base (0.16% in ‘19 of total claims to 5.07% in ‘20). According to Center of Disease Control and Prevention (CDC) data, during the beginning stages of the pandemic last March, telehealth visits increased 154% compared to same period in 2019. CDC used data collected from the major participants in the space such as Teladoc (Ticker: TDOC), Amwell (Ticker: AMWL), MDLive and Doctor On Demand.
With accelerating adoption, a fast and reliable network that can support near real-time, HD video without congestion has become pertinent. Today‘s broadband speeds and coverage are sufficient to address the majority of the use cases within the population. Remote areas and physicians, however, will need access to reliable connections sooner rather than later. As applications and technical requirements in telemedicine grow more robust, 5G will play a critical role in enabling the need for speed and applications at the edge.
In addition to providing the connectivity part of telemedicine carriers have introduced solution suites to make the experience more seamless for end users.
Verizon announced BlueJeans Telehealth in April 2021. The platform offers a holistic suite of telehealth solutions that will address two key concerns which are 1) ease of use, and 2) security (i.e. HIPPA compliance and more). The platform offers a one-click, download-free telehealth platform that powers the patient experience from onboarding to education.
AT&T’s Business segment has announced a partnership with VitalTech, a virtual care and remote patient monitoring company. The partnership offers 60 days of free telehealth services through VitalCare to AT&T business customers, such as hospitals, to support physicians and patients.
Empowering the Internet of Medical Things (IoMT):
What is the Internet of Medical Things? It is a blanket term for all medical devices and applications that can be connected to healthcare IT. The adoption of connected medical devices is becoming embedded in healthcare providers‘ buying decisions at the margin. One trend in the healthcare space is the blossoming of outcome-based contracts (OBC). According to an industry survey done by Avalere Health, 59% of payers executed an OBC in 2019 vs. 24% in 2017. In this type of contract, med-tech buying agreements will be tied to whether specific clinical or economic outcomes are met, with provisions for “profit sharing“. In some cases, the agreement may be priced on the value provided for the patient (i.e. treatment outcome vs. cost of delivering the respective outcome).
Remote patient monitoring is expected to grow at a CAGR of 19.7% through 2028
It is expected to reach $4b by 2028
In $ millions
Source: Grand View Research Report from January 2021
BofA GLOBAL RESEARCH
Beyond patient monitoring, an increasing number of connected medical devices are enabling the ability to generate, collect, analyze and transmit health care data and images to healthcare providers. PTC, a major player in the IoT space, sells ThingWorx, an IoT platform that can be embedded into virtually any medical device. The possibilities are endless. As an example, Sysmex, a manufacturer of hematology analyzers, wanted to create a smaller, faster and more agile blood analyzer.
Leveraging PTC‘s ThingWorx, Sysmex created Sysmex XW-100, a smart, connected blood analyzer that not only is smaller and more easily deployable, it also enables blood test results to be delivered for same day diagnosis and rapid response.
The broad adoption of IoMT would lead to more accurate diagnoses, fewer mistakes and a lower cost-of-care in the long term. 5G and edge computing are essential for accommodating the volume of data generated by IoMT devices as the number sensors and endpoints increases alongside adoption among care providers and patients alike.
Other use cases for 5G in healthcare:
The examples shared above are the most concrete and immediately monetizable market opportunities in 5G-powered healthcare solutions thus far. There are additional emerging opportunities that will require the capacity and low-latency that 5G can provide including the following.
Healthcare AR/VR: 5G will enable VR/AR clinician training and patient care. As an example, AT&T is collaborating with VITAS Healthcare to study the effect of 5G-enabled AR/VR on hospice patients. By using calming content via 5G-enabled VR/AR, the study tested whether certain patients were able to experience lower pain and anxiety.
Transferring and processing of ultra-high resolution medical imagery: PET scans can generate up to 1GB of information per patient per study. 5G networks will enable instantaneous transmission of large data sets generated from MRIs and PET scans.
Robotic surgery (?): There are many benefits to robotic surgeries, especially in the case of minimally invasive procedures. Robotic surgery is done with more precision, smaller incisions, reduced blood loss, less pain, and quicker healing time. The global robotic surgery market is expected grow at 14.79% CAGR from 2020 to reach $6.5b by 2024, with a focus on developing low-cost robotic surgical systems. At the scale it operates today, it is still relatively costly compared to traditional methods. 5G‘s ultra-low latency is crucial (with zero margin for error), however, in enabling robotic surgeries as they will require massive data transmission, image processing and analysis across large distances at very low latency.
5G transforming industrials
Enterprise 5G applications can provide proactive asset management to directly create value for manufacturers. 5G may be used to connect low-power sensors to machinery and machinery parts, enabling factories, airlines, automakers, and other industrial operators to proactively monitor and manage equipment repairs and replacements. Data collected from the sensors is transmitted via the 5G network to processors with machine learning algorithms to predict the future behavior of the equipment. For example, if a tractor‘s engine begins overheating, sensors would sense the rising temperature and relay the message to the monitoring processors, which would then alert the operator of a potential breakdown before any serious damage occurs. Proactive management of assets can reduce total capex spending in the long run by extending the life of assets.
Why not WiFi? A McKinsey study found that within factories and plants generally speaking, currently available connectivity option have several major shortfalls, making 5G necessary in order to implement the next generation of technology and Fourth Industrial Revolution (4th IR) use cases. Wi-Fi networks often experience interference, especially when sensors and agents grow in mass quantities. Wired connections, while reliable, are not as agile.
A recent survey conducted by Nokia where it interviewed a thousand key stakeholders in IT across the US and UK found that in terms of 5G functionality, video-related use cases are the most common across various business to business (B2B) and business to consumer (B2C) verticals. For example, 75% of businesses surveyed are currently using video for monitoring purposes. With 5G, each end point could be empowered and connected with video and analytics functions. Simple as that sounds, video married to analytics can function as a sensor to detect defects in a factory or monitor any industrial operation via real-time detection of objects, risks, and incidents. As the number of endpoints grow, 5G will be the critical backbone due to the need for uninterrupted connectivity that can handle massive amounts of data traffic.
The manufacturing vertical currently has one of the highest awareness level of 5G and has ventured into advance uses cases such as remote machine control and robotics, a trend that has been accelerated due to the COVID-19 pandemic. In Exhibit 8 below, we see how 5G enables the fourth industrial revolution across a range of applications within industrials by satisfying the application‘s technical requirements across reliability, security, speed, latency, data volume, and density.
5G, AI, and IoT will transform factory floors with predictive maintenance
Minimizing downtime is a huge part of cost control for manufacturers. Furthermore, unplanned downtime can cost up to 9x more than planned downtime. Imagine a scenario where a machine in a high speed assembly line breaks down, the entire production line will halt until the machine is fixed. Studies shows that the cost of machine failing in such a scenario can be more than $10,000 per minute.
The historical way of preventing unplanned downtime was to schedule routine maintenance which also incurs spending in the form of maintenance costs rather than repair costs. This is where advanced predictive maintenance powered by 5G would solve both problems.
By equipping the factory floor with sensors and agents at each endpoint, machine conditions may be monitored in real time and advanced diagnostics may be run to both avoid break-fix events but also unnecessary preventative maintenance spending. 5G is critical to power these sensors because advance analytics will run along dozens of parameters when monitoring assets such as temperature, vibration, humidity, pressure, and many more. The data needs to be holistic and complete in order for connected devices to accomplish what‘s promised making the size of the data a challenge to transmit and process in real time, necessitating the promise of 5G.
Ericsson is one of the most advanced 5G users in manufacturing. In 2018, Ericsson partnered with Audi to roll out and run field tests for various industrial applications in the Audi‘s manufacturing headquarters in Ingolstadt, Germany in a smart factory named the ‘Audi Production Lab‘. In Ericsson‘s factory in Nanjing, the company has approximately 1,000 high-precision screwdrivers that require routine calibration and lubrication based on utilization. This has been a high-touch manual process historically which required manual documentation. By fitting these tools with real time motion sensors that analyze collected data, the factory was able to replace manual tracking with an automated solution to cut the manual workload by 50% and is planning on phasing out manual tracking entirely in the future.
5G can enable precision manufacturing like never before
The availability of advanced, predictive analytics in machinery extends an asset‘s life and lowers the cost for factories, but the real lever for increasing productivity is precision monitoring and control enabled by 5G. With this technology, the entire production process is monitored in real time. 5G connectivity will allow machines to feed real time data back to applications that have machine learning and AI functionality to analyze an item currently in production and compare it to the planned model for any discrepancies. By recognizing when a machine is not working optimally and re-calibrating accordingly to maintain cycle speeds, based on research done by a survey done by STL Partners with manufacturers in August of 2019, manufacturers believe machine productivity could improve by 15% on average.
The concept of precision monitoring is easy to grasp and can transform the way factories run quality control. In order for this model to work properly, ultra-low latency is required (sub 10 milliseconds) due to the need for constant data collection and comparison to the digitally planned model at each sensor endpoint.
This BofA research report continues, but we will end here in deference to BofA clients.
For more information: https://www.bofaml.com/en-us/content/global-research-about.html
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