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How 5G is actually going to make a difference for businesses

Consumer gadgets get all the airtime, but what 5G can do for businesses, especially in the post-COVID world, will be equally as transformative.

How 5G is actually going to make a difference for businesses

AT&T Business's Mo Katibeh using 5G to virtually hang out with a Dallas Cowboys player at AT&T in November.

Image: AT&T Business

Despite the pandemic, telecoms companies have been plowing ahead with their 5G network rollouts. Earlier this month, AT&T rolled out its nationwide 5G coverage for consumers, but it had already been offering 5G services for businesses, especially indoors, for the better part two years.

The pandemic has shifted just about every business' plans for the coming years, but the growing need for connectivity remains — especially in the medical industry right now. Stories have been spun about the magical experiences that 5G may one day bring to consumers, but the stories for business, although perhaps less flashy, are just as transformative. Being able to track every pill that passes through a pharmacy, or have every doctor instantly know the medical history of every ER patient, or try on clothes in a virtual mirror without having to touch a thing — these are all things AT&T is working on for clients that only 5G could solve.

Protocol recently spoke with Mo Katibeh, AT&T Business' chief product officer, about the work the company has been doing to outfit businesses across the country with 5G, the new capabilities it's unlocked for them, and how to build the devices that will best take advantage of all that 5G could offer in the coming years.

This interview has been edited for length and clarity.

Assuming life goes back to normal in the near future, what sorts of things do you expect to see 5G enabling in health care that LTE couldn't?

Broadly, we're seeing enterprise customers, including hospitals and health care, be interested in three things. Those are: How can I create new experiences for my end customers — and in health care those would be your patients; how can I drive new outcomes for my employees, safety-related or taking costs out; and the third one is how do I create a more efficient organization?

It's about efficiency, business outcomes. So with that as your backdrop, we're seeing 5G really start within the health care industry in the hospital. You're able to fairly effectively deploy 5G (both millimeter-wave and sub-6 variants) within the confines of the hospital. It's a very finite location, and then you can deploy adjacent technologies with that 5G.

There's two or three that come to mind for me: The first one is edge compute. It's the ability to manage application-level data at the hospital. That means that now as an administrator inside the hospital, I can prioritize and keep on premise the traffic that's associated with my MRI machine or with a 4K sensor, and restricting access into certain parts of the hospital. It's the ability to manage that application traffic and separately allow guests' traffic to route back to wherever it needs to go on the internet, like over-the-top streaming, music or social.

And then the other adjacent technology is IoT. When you think about what 5G really enables, it's a fabric, an enabling platform, it's incredible speeds and very low latency, especially when it's coupled with something like edge computing. That's where IoT comes into effect. So when you think about wifi, it would allow you to connect a couple of hundred things per access point. LTE allows you to connect a thousand things per access point — 5G allows you to scale into the tens and hundreds of thousands of things over time. So when you think about a hospital, the sheer number of things that they could connect, 5G becomes something that truly enables experiences and operational outcomes both for their patients and doctors that they couldn't do historically with LTE.

I hadn't thought about the actual number of things that can connect at any given moment. How will that play out in other industries?

That dynamic is playing out in retail, in stadiums and venues in manufacturing environments. It's really about all three of those things — the speed, the latency — but then also the ability to connect staggering numbers of devices. And then over time that's what's going to shape our society more broadly is the ability, using the outdoor networks, to connect millions of things, which is a key differentiator to today's existing LTE networks.

What sorts of IoT products are you seeing that you can show to prospective 5G clients to show how the market is maturing, on the enterprise side?

Let's start with health care. The earliest use case is around the ability to transfer massive amounts of data very quickly. If you think about something like an MRI machine, the size of the files can be over 1GB each. Both the doctor and patient experience [historically], you were trying to transfer that file over the Wi-Fi. It would take some amount of time, which then makes it less efficient and drives incremental costs. MRI machines usually are a shared resource that will be used to support different doctors in a hospital system.

In the same vein, there's experimentation going on with the connected ambulance. The experience today in a nonconnected or Wi-Fi-enabled world, the ambulance is coming into a hospital. There is a patient inside of it. There's a significant amount of diagnostics that will have happened, and that's being handed off manually. In a 5G-enabled world, as the ambulance is pulling up to the hospital, you can seamlessly transfer that information over to the waiting nurses and doctors, triaging a lot faster, which means both a lower-cost experience, as well as an improved patient outcome, where the goal obviously would be to save more lives because you're not having to manually convey that information. It's automatically moving over to the next device in the critical path of the care of that patient.

Longer term in health care, we are absolutely seeing 4K video as a sensor becoming prevalent in a lot of different solutions. In a 5G world, you're able to connect your pill cabinets, restricted areas of your hospital. As a doctor, I walk up and the doors will automatically open for me because the sensor has recognized my face. I don't even have to touch the door and potentially transfer germs. Using connected shelving, I know exactly what's been removed, and then that's tracked and logged and there's a trail that allows someone to come back and audit that.

Is it a tough sell for hospitals or any company to get them to invest in new hardware right now? I've got to imagine capex budgets are pretty tight right now.

In a large enterprise, technology is deployed in service of outcomes, so there's always a conversation around what outcome will I be driving relative to the cost of the technology that is enabling that outcome: Can I make a better experience for my employees, whether it's safety operational efficiencies, or can I take some sort of cost out of my business in terms of the back end? Whether it's 5G, or any technology, those are the conversations that we have with our business customers.

If you're in the retail industry and you sell clothes in a post-COVID environment, one of the key questions that you're asking yourself is, "Will my end customers come in, try on clothes and then buy those clothes off of the rack?" And that question is giving rise to how can these technologies help create a safer, more friendly environment for both my employees and my customers. There are magic mirrors — connected displays — today that, using 4K sensors and very large digital displays, can replicate the experience of standing in front of a mirror. Instead of having to physically try on clothes, I can swipe left and right, and try on any number of combinations of shirts, jackets, accessories, and then using a connected tablet, a person helping that customer can place the order for them in their sizes. And then those clothes are drop-shipped to their home in 24 or 48 hours. This will become a reality that a lot of retailers will be embracing. We're seeing this adoption begin.

To the question that you asked: That is the financial driver that enables and offsets the infrastructure costs associated with that technology.

For all of these transformational experiences, you're reliant on other companies designing these amazing things to be able to sell the network. What sort of work are you doing to ensure that these devices actually come to fruition so that you can sell these to clients?

There's the business-to-business environment we've been talking about, and there's a lot of interest already from both startups as well as established companies to create experiences that drive these sorts of outcomes. There's a very healthy ecosystem. As I think about the expansion of 5G coverage from an outdoor, broader consumer environment, I'll take you back to the beginning of LTE. LTE enabled the smartphone, and the rise of the smartphone gave way to the rise of the app store.

At the beginning of that last decade, none of us could have imagined things like Lyft, or that Airbnb would become the single largest purveyor of hotel rooms in the world. When I get in a car and I look for directions to somewhere six hours away, and it's precise within three minutes factoring in traffic, it's like magic; the rise of the cloud, effectively all of the music ever created in the history of mankind is now resident on my device. None of us could have imagined the innovation that LTE was going to bring to life.

And what I know is that 5G is going to give rise to the exact same innovation. Extraordinary individuals that are at home in their garages are creating new companies that are going to take advantage of 5G to create the next Waze, the next Airbnb, the next connected cloud experience. And I can't wait to see what they come up with over the course of this next decade.

Image: Yuanxin

Yuanxin Technology doesn't hide its ambition. In the first line of its prospectus, the company says its mission is to be the "first choice for patients' healthcare and medication needs in China." But the road to winning the crowded China health tech race is a long one for this Tencent- and Sequoia-backed startup, even with a recent valuation of $4 billion, according to Chinese publication Lieyunwang. Here's everything you need to know about Yuanxin Technology's forthcoming IPO on the Hong Kong Stock Exchange.

What does Yuanxin do?

There are many ways startups can crack open the health care market in China, and Yuanxin has focused on one: prescription drugs. According to its prospectus, sales of prescription drugs outside hospitals account for only 23% of the total healthcare market in China, whereas that number is 70.2% in the United States.

Yuanxin started with physical stores. Since 2015, it has opened 217 pharmacies immediately outside Chinese hospitals. "A pharmacy has to be on the main road where a patient exits the hospital. It needs to be highly accessible," Yuanxin founder He Tao told Chinese media in August. Then, patients are encouraged to refill their prescriptions on Yuanxin's online platforms and to follow up with telehealth services instead of returning to a hospital.

From there, Yuanxin has built a large product portfolio that offers online doctor visits, pharmacies and private insurance plans. It also works with enterprise clients, designing office automation and prescription management systems for hospitals and selling digital ads for big pharma.

Yuanxin's Financials

Yuanxin's annual revenues have been steadily growing from $127 million in 2018 to $365 million in 2019 and $561 million in 2020. In each of those three years, over 97% of revenue came from "out-of-hospital comprehensive patient services," which include the company's physical pharmacies and telehealth services. More specifically, approximately 83% of its retail sales derived from prescription drugs.

But the company hasn't made a profit. Yuanxin's annual losses grew from $17 million in 2018 to $26 million in 2019 and $48 million in 2020. The losses are moderate considering the ever-growing revenues, but cast doubt on whether the company can become profitable any time soon. Apart from the cost of drug supplies, the biggest spend is marketing and sales.

What's next for Yuanxin

There are still abundant opportunities in the prescription drug market. In 2020, China's National Medical Products Administration started to explore lifting the ban on selling prescription drugs online. Although it's unclear when the change will take place, it looks like more purely-online platforms will be able to write prescriptions in the future. With its established market presence, Yuanxin is likely one of the players that can benefit greatly from such a policy change.

The enterprise and health insurance businesses of Yuanxin are still fairly small (accounting for less than 3% of annual revenue), but this is where the company sees an opportunity for future growth. Yuanxin is particularly hoping to power its growth with data and artificial intelligence. It boasts a database of 14 million prescriptions accumulated over years, and the company says the data can be used in many ways: designing private insurance plans, training doctors and offering chronic disease management services. The company says it currently employs 509 people on its R&D team, including 437 software engineers and 22 data engineers and scientists.

What Could Go Wrong?

The COVID-19 pandemic has helped sell the story of digital health care, but Yuanxin isn't the only company benefiting from this opportunity. 2020 has seen a slew of Chinese health tech companies rise. They either completed their IPO process before Yuanxin (like JD, Alibaba and Ping An's healthcare subsidiaries) or are close to it (WeDoctor and DXY). In this crowded sector, Yuanxin faces competition from both companies with Big Tech parent companies behind them and startups that have their own specialized advantages.

Like each of its competitors, Yuanxin needs to be careful with how it processes patient data — some of the most sensitive personal data online. Recent Chinese legislation around personal data has made it clear that it will be increasingly difficult to monetize user data. In the prospectus, Yuanxin elaborately explained how it anonymizes data and prevents data from being leaked or hacked, but it also admitted that it cannot foresee what future policies will be introduced.

Who Gets Rich

  • Yuanxin's founder and CEO He Tao and SVP He Weizhuang own 29.82% of the company's shares through a jointly controlled company. (It's unclear whether He Tao and He Weizhuang are related.)
  • Tencent owns 19.55% of the shares.
  • Sequoia owns 16.21% of the shares.
  • Other major investors include Qiming, Starquest Capital and Kunling, which respectively own 7.12%, 6.51% and 5.32% of the shares.

What People Are Saying

  • "The demands of patients, hospitals, insurance companies, pharmacies and pharmaceutical companies are all different. How to meet each individual demand and find a core profit model is the key to Yuanxin Technology's future growth." — Xu Yuchen, insurance industry analyst and member of China Association of Actuaries, in Chinese publication Lanjinger.
  • "The window of opportunity caused by the pandemic, as well as the high valuations of those companies that have gone public, brings hope to other medical services companies…[But] the window of opportunity is closing and the potential of Internet healthcare is yet to be explored with new ideas. Therefore, traditional, asset-heavy healthcare companies need to take this opportunity and go public as soon as possible." —Wang Hang, founder and CEO of online healthcare platform Haodf, in state media China.com.

Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.
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