Will adoption rate of 5G be enough to satisfy operators?
November 20, 2019 - Stephen O'Loughlin
The global operator community is investing vast sums of money building 5G networks, and the consensus is that three major use cases -- examined in this article -- will dominate demand for the greater speed, capacity and reduced latency 5G promises. But, while next-generation wireless connectivity has a huge fanfare behind it, adoption will be slower than most operators would hope.
GlobalData recently announced that there will be 1.5 billion 5G users by 2024. That's less than a third of the 4.7 billion 4G users today. This is no criticism of operators, merely representative of how long it takes to adopt a new technology -- especially as 4G is doing a largely excellent job of providing mobile broadband connectivity, unlike its 3G predecessor.
It raises a burning ROI question. Is this rate of adoption enough to satisfy operators? Probably not. Will it see them look to innovate to accelerate revenue enhancement for new services? Absolutely. Are they certain which services will generate most demand? Not really. This uncertainty adds a new element of risk to the traditional "build it and they will come" mantra to new mobile technology adoption.
Reaping the R(OI)ewards
The three major 5G use cases are enhanced mobile broadband (eMBB), ultra-reliable low latency communications (URLLC) and massive machine-type communications (MTC). eMBB is set to bring higher speeds to mobile users, enabling new services such as 4K video and online gaming. URLLC will enable new applications dependent on ultra-reliable low latency applications such as connected cars or mission critical connectivity for first responders, for example. Finally, MTC will make way for smart city applications, connected things and the IoT.
While these use cases are all set to bring about new services and revenue, URLLC and massive machine-type communications will have a greater impact on operators' ROI than eMBB. This is because eMBB, including fixed wireless access (FWA), can be delivered in a non-standalone 5G environment, meaning it can fall back onto a 4G core. On the other hand, URLLC and MTC will require a 5G core, which is still some time away and so may not bring any immediate revenues. Nevertheless, URLLC and MTC are both set to revolutionise the traditional telco business model. At the heart of this will be the enterprise -- a market poised for operator success, but only if operators can leverage and monetise network slicing.
A slice for success
Network slicing allows multiple virtual networks to be created on top of a commonly shared physical infrastructure. Using network slicing, operators can configure individual slices for different applications—from gaming and virtual reality, all the way to connected cars and smart factories. SLAgrade agreements can be made on a per-slice basis to ensure that each service or application requirement is met. Indeed, it is this ability to promise the highest Quality of Service (QoS) to meet the specific needs of applications and services that could be operators' biggest most powerful weapon in the 5G monetisation race.
Operators have long struggled to assure network QoS, and while different tools were used in 3G and 4G to understand network behavior, patterns, and identify outages or faults, network-wide QoS could never be guaranteed for all applications. Until now. Network slicing is changing that as operators will be able to provide greater network flexibility by optimising both the efficiency and the allocation of resources across the network infrastructure. Networking will go from a "one size fits all" approach toward a more bespoke model.
For enterprises, network slicing introduces a new opportunity to receive and enjoy SLA-grade connectivity, according to their individual enterprise needs. 5G will see the proliferation of data like never before. This will place a huge strain on networks and for enterprises reliant on URLLC or MTC services, network outages, faults or lags could simply impact their bottom line.
Take the smart factory of the future as an example; each machine or tool must remain connected at all times to ensure the correct transfer of data from machine to machine. In this scenario, network lags or outages could impact the rest of the production line, and then the rest of the supply chain leading to significant potential profit losses. Enterprises can't afford to stand back and accept mediocre connectivity. Instead, they'll look towards operators to provide performance-guaranteed virtual networks exclusively to enterprises. This will come at a premium of course, but enterprises will have no choice but to make the investment.
Monetising slices, meeting ROI
The enterprise opportunity is there, but operators must have the correct tools in place to ensure they can turn opportunity into revenue. Operators have been held back by outdated vendor systems; these clunky, monolithic monetisation stacks aren't fit for purpose in a 5G world. This is restricting their ability to innovate and implement new services. Tomorrow's opportunities cannot be embraced with yesterday's tools. Operators must therefore rethink their monetisation tools -- upgrades to legacy systems just won't be enough. They must think about what they need, what slicing capabilities they want to support -- in-slicing, cross-slicing or perhaps hybrid-slicing. They must think about how existing charging systems will be impacted; what capabilities do these systems need to exist and evolve in a 5G future.
A "one size fits all" approach will simply no longer do, especially as network slicing principles evolve, and as we get further along the 5G road; no one wants to be left behind with yesterday's technology. Having the flexibility and agility to react to the market demands -- both enterprise and consumer -- will help to separate the digital leaders from the pack in the race to 5G ROI.