Next-generation connectivity

Mar 05, 2019

Written By Article contributed by Osborne Clarke

OSBORNE CLARKE'S latest research explores how the introduction of more sophisticated technology will change both our lives, and how we do business in the future.

Connectivity is a word with a lot of traction in the modern world. You seek out connectivity when you’re on your phone looking for Wi-Fi hotspots. You compare various broadband providers, holding connection speed as a priority. It’s not just convenient to be connected—it’s becoming harder and harder to exist without digital connection.

Next-generation connectivity is the latest research focus of Osborne Clarke; it commissioned the Economist Intelligence Unit to research the implications of next-generation internet connectivity on businesses.

The result is a detailed report on connectivity, which takes into account the perspectives of 550 senior, technology-briefed executives from across the real estate and infrastructure, digital, energy and utilities, financial services and transport and automotive sectors. The research has international scope, collating data from Belgium, China, France, Germany, India, Italy, the Netherlands, Spain, Sweden, the UK and the US. In doing so, Osborne Clarke and The Economist Intelligence Unit have produced a cross-sector, international prediction of how the advancement of internet connectivity could influence businesses.

It all starts with 5G

Most mobile-phone users in the UK will be familiar with 3G and 4G, the third and fourth generations of wireless mobile telecommunications technology. In not too many years’ time, they could also become consumers of the next generation: 5G. Due to be finalised at the World Radiocommunications Conference in November 2019, 5G and its characteristics cannot currently be verified for sure. But experts agree that 5G will bring faster network speeds—20 gigabits per second or higher—and latency of around a millisecond (down from 50 milliseconds with 4G).

With much work to be done, a large burden in particular will fall on the service providers who will need to install new antennae, base stations and fibre-optic cables. This is costly work, so many may delay until there is evidence of clear demand, and that demand is likely to be led by consumer-focused mobile broadband services rather than business use cases.

Companies across the world are thinking about the impact of 5G already. The report finds that 87% of businesses believe that connectivity will become more important to their business in the next five years. Responses to 5G differed across the world, with India, Italy and the US most likely to regard 5G as strategically important, and France- and UK-based businesses least likely. There are already predictions as to how specifically 5G might be a resource in a connection-fuelled world. The new technology is due to hit the market at a time when AR and VR streaming is becoming increasingly popular. There is huge scope for AR and VR in the business world, whether for “an entertainment business serving consumer gamers, or a digital healthcare business investigating the viability of remote surgical operations”.

AR and VR require technology that can “handle large amounts of data without lag”, the report finds. Based on what experts are initially saying about 5G, the next generation in cellular technology could be the answer.

The Internet of Things

Experts predict that 5G will just be the start of a hyper-connected world. More sophisticated technology will give way to driverless cars, remote surgery and real-time drone management. We’re already part of a merging process between the physical and the digital; commonly called the Internet of Things. Physical objects with digital elements are already starting to spring up, with objects themselves becoming loci of connectivity. The Osborne Clarke and Economist report details buildings, infrastructure, vehicles and more, all with the hardware to feed into connectivity.

The Internet of Things takes digital connectivity one step further. There has always been the internet and real life, but that boundary is being blurred by new ideas, some of which are yet to be converted into business strategies. The report covers a current idea being considered by the EU: smart vehicles with the ability to communicate with the highways on which they travel. Such a connection would provide real-time data from the roads, assisting with traffic management.

The report also draws attention to Sodexo, a French facilities-management company working with IBM to collect data in order to monitor air quality, temperature and lighting in its buildings, which include hospitals, schools and factories. Both projects demonstrate how physical structures can provide digital feedback on how they are used.

This integration of the physical with the digital, and the greater spread of connectivity, creates huge wells of data the world over. Access to this data has the potential to improve quality of life, better understand behaviour and help pinpoint likely sources of untapped demand.

The business of connectivity

Already, businesses are being shaped by increasing connectivity. Many new businesses are changing the way in which their products are consumed. Some businesses, the report says, are providing their products as a service, with different charges for usage and add-on services—a model made possible by real-time instant links. Rolls-Royce, for example, charges its aircraft-engine customers based on how many miles are flown, whereas Ericsson is working with a water-pump manufacturer to create a tap that will charge customers based on monthly water usage, rather than by one-off payment.

Stefano Gastaut, director of Internet of Things at Vodafone, uses bike-sharing businesses as an example: “This is about technology underpinning the original business model at a new business, rather than an older business using technology to change itself, which is an entirely different and much more complicated proposition.” Today, businesses do tend to have their root in connectivity rather than being in a position where they must embrace it.

The research report found that different businesses are at different stages in embracing connectivity as a business strategy. It found that energy and utilities companies were the most likely to have formally assessed opportunities in this area, with transport companies being the least likely.

Ultimately, however, respondents in the Osborne Clarke/ Economist survey indicated that they saw connectivity advances —specifically, the Internet of Things, data analytics, augmented virtual and mixed reality, AI and blockchain—as opportunities, on balance, rather than risks, to their businesses.

Augmented reality, for example, was seen as a significant advantage: 44% saw it as a real opportunity for their business. Tom Harding, a partner at Osborne Clarke, calls the current approach, in which information is extracted and applied to a physical scenario, “hugely inefficient”, and praises AR’s capacity to “instead access and overlay data in real time” as a “game changer”.

“Many pilot AR projects are now morphing into widespread corporate adoption with huge gains in productivity and quality,” he continues. “With that comes a range of legal issues from intellectual property to privacy and health and safety, but it’s this enterprise application of AR where the real change and investment will take place and have the biggest impact across all industries.”

Weighing up the risks

As with any large change, there’s an element of risk involved. Enhanced connectivity means greater access to data, and modern-day data breaches have proven to be large risks to those collecting and exploiting big data. “The exploitation of data for commercial purposes harbours numerous legal challenges: data ownership; the specific restrictions of the principle of purpose limitation for the use of personal data; and the requirements for their sustainable anonymisation are just three examples of such open points,” says Flemming Moos, partner at Osborne Clarke.

Ashley Hurst, also an Osborne Clarke partner, says: “For businesses that rely heavily on the internet, for example, in the retail and financial-services sectors, cyber-attacks are an unavoidable risk. While counter technical measures are improving, there’s a drive towards establishing and practising incident response and crisis-management procedures: 72-hour notification deadlines have put these procedures into sharp focus.”

The research shows that different sectors have different concerns. Digital businesses were most concerned about data protection and privacy concerns. The financial services, as well as real estate and infrastructure businesses, were concerned about lack of talent and skills to handle next-generation connectivity, while energy and utilities as well as transport and automotive businesses cited security as their largest concern.

Just as each sector has different concerns, so too do they each have a different view on how important connectivity is now —and how important it will become. Respondents to the survey from digital businesses were more likely to embrace connectivity: 51% said that they feel it’s very important to their business, compared to 42% across the survey. Real estate and infrastructure businesses were most convinced of connectivity’s growing importance over the next five years.

Global trends

As well as collating data from different sectors, the Osborne Clarke/Economist study also gave equal weight to a number of different countries, offering a global perspective as well as a cross-industry one. For example, the UK perceives that in the next five years, there will be greater interconnectivity between the physical and digital worlds. China, on the other hand, didn’t anticipate this interconnectivity, with a third of respondents saying that it would not change, or decrease.

There are many reasons why different countries embrace and anticipate connectivity differently. India, for example, is described in the report as a “geographically diverse” country, in which a particular business-to-business company must “engage with a large number of different providers in case a particular service goes down”. Further to this, Indian respondents were highly likely to feel that 5G will be strategically important, but also expressed greater concerns at potential barriers, such as safety and complex system management. Meanwhile, Dutch and German businesses “stood out as leading enthusiasts for next-generation connectivity”.

With 5G well and truly on its way, connectivity looks set to continue in its transformation of how we live and also in how we do business. Only time will tell if the opportunities will pan out as predicted. This article is derived from the report “Next-Generation Connectivity”, which was commissioned by Osborne Clarke and researched and written by the Economist Intelligence Unit. To read the full report, search ‘Osborne Clarke next-generation connectivity’.

Commercial Insights