MWC Topic: Connectivity – The 5G Era

Introduction

2019 has seen the first commercial 5G deployments, with much fanfare. South Korea claims to have more than 2million 5G subscribers on its networks. Aggressive rollouts in the USA, China and Japan have been much discussed in the press, while Turkcell recently claimed the fastest speeds over a commercial 5G network. European operators from Ireland to Finland have been making services available for enterprise use. We are, without a doubt, at the dawn of the 5G era.

Scratch below the press releases, though, and a much more complex story emerges. This might be the dawn of the 5G era, but proper ‘daytime’ for 5G is still some distance away and there are still many deep shadows.

5G as currently deployed uses Non-Standalone Architecture to add 5G New Radio to their existing 4G core network. This enables faster uplink and downlink speeds for enhanced mobile broadband, but we are already seeing in the UK, USA and elsewhere that this is not in itself a proposition that will attract much additional revenue from consumers, if any. Development of more advanced applications will rely on investment in end-to-end software-defined (read Open), cloud native networks that can support the radical flexibility and automation required for the ‘real’ 5G proposition.

This raises questions about what the benefits of 5G currently are and what the return on investment will be to the operators. While arguments have been raised based on cost efficiency, without the intelligence and automation in place to support simple 5G rollout and optimisation the numbers don’t quite play out in practice. Meanwhile, arguments are still raging about use cases and credible business models to generate additional revenue in B2C and, especially, B2B environments.

All of this implies a strong ongoing role for existing technologies from 2G to LTE-A for the foreseeable future, especially when combined with emerging offerings such as edge computing and private networks. Waiting and sweating existing assets, supported by developments in lower-cost infrastructure options such as LEO satellites, may well be a smart if unsexy choice in the near term.

Industry Impact

It is becoming increasingly clear that the benefits that have been argued for 5G are:
a) Not about ‘5G’ solely as defined in 3GPP Release 15 and 16, but depend on a variety of simultaneous evolutions in technology such as a shift to software-centric networks; automation and/or AI; complementary interfaces such as fibre, NB-IoT, and LTE; cloud; edge computing; and much more robust systems of network and service management.

b) Unrealistic as commercial propositions unless the requirements of enterprise and government-grade users are ‘baked in’ to deployments. While consumers are relatively forgiving of service issues, enterprises will place any financial risk on the operators as part of contract negotiations. Reliability, security, and transparency in the upholding of SLAs are essential, as is the ability to clearly identify and resolve any issues. Unless 5G can deliver better against these measures than any previous generation of technology, it’s hard to see widespread adoption in major enterprise settings.

c) Reliant on telecoms providers creating the right kind of business environment, mindset, talent and skills within their companies, and delivering staff the tools they need to go along with this. For example, if commercial teams are to make suitable commitments in contracts, they need to know on an ongoing basis what the operator’s current capabilities are and, in all likelihood, what timelines are realistic for capabilities to evolve further. They need to be able to move beyond a model of pricing for connections and data flows towards models such as pricing for results or profit-sharing.

d) Arrived at incrementally at a pace determined by: The clarity of the operator’s commercial strategy; the ability of the operator to invest in line with this strategy; business evolution within the operator; a technology supply chain that can live up to operator requirements; and external factors such as the availability/cost of fibre and spectrum assets. Approaches to infrastructure ownership and/or sharing will play a critical role in determining the ROI – and hence the pace – of network evolution, which is where regulators can play a key role. Meanwhile an increasing number of operators are developing their own software and services and/or contributing to open source programmes, reflecting dissatisfaction with existing vendors’ solutions.

e) Unevenly spread in most cases, raising questions about the growth of a digital divide and the resulting social inequalities within countries. A GSMAi report shows that even in high-income countries, around 25% of the population today does not have access to broadband internet and the services that accompany this. An equivalent differentiation in capabilities available to the enterprise market – for example, between large companies and SMEs – is potentially problematic for competitive environments.

The upshot of all this is a significant diversity in how industries are relating to operators as they pursue their own digital transformations, and also the approach that regulators are taking to questions around spectrum sharing and ownership for the 5G era in order to reduce enterprise dependency on established telcos. We are entering an age in which established telcos could grasp major new income streams in industry and enterprise, but third parties, MVNOs or new entrants are also being enabled to compete more easily for those revenues.

On the other hand, while 5G pricing models may not be creating a sustainable premium in traditional consumer ARPU, this has caused many to overlook the opportunities that new networks may open up in, for example, B2B2C propositions built around services in media, gaming, smart devices beyond the phone, personal AI and more.

For the operator, decisions on a technology roadmap are far more integrated than for previous generations with commercial strategy, operational implementation and the culture, skills, talent and mindset of the company and its employees. Any decisions are going to require both a clear vision for the role(s) of the operator and, ultimately, making some big gambles on where and how to compete.

However, the sheer complexity of the technology decisions to be made are unprecedented in themselves; not only what to invest in and in what order, but how to commercialise it and, therefore, how to deliver the required operational performance. As a relatively simple example, providing a dedicated network slice to a corporate requires SLA management and visibility into the network to a degree hitherto unnecessary for customers, and therefore operators. The operator now isn’t just measuring uptime, but must be able to identify how and why any failures in performance happened across a range of different requirements; correct them in real or near-real time; understand how to avoid them in future; determine where any commercial liability lies; and make this explicable for the customer. This is breaking new ground and throws up a myriad of questions around how, in detail, to handle automation, intelligence and service management in the network; how to price and bill for the service; and how to create the value proposition, customer interfaces and customer support.

The 5G era will belong to those companies that can take advantage of diverse network technologies to support a clear commercial strategy and can operationalise it effectively. It remains to be seen whether these are the telco heavyweights of today.

Connectivity: The 5G Era at MWC Barcelona

Monday 25th 16:00 – 16:45 Value Creation in 5G

Tuesday 25th 11:00 – 12:00 The Big Debate: Is Consumer 5G an ROI Nightmare?

Tuesday 25th 14:00 – 15:00 Edge Computing: Value, Competition and its Place in the 5G Era

Tuesday 25th 15:15 – 16:15 Discussion: “A Next-Gen Network Demands a Next-Gen Organisation”

Wednesday 26th 11:00 – 12:00 Connecting Everyone & Everything High-Frequency 5G Can’t

Wednesday 26th 12:30 – 13:30 Must a 5G-Era Telco Own Physical Infrastructure?

Wednesday 26th 15:45 – 16:45 How Do We Turn Network Tech Into Enterprise Services?

Thursday 27th 11:15 – 12:15 Private LTE & 5G Networks: Saints or Sinners?

Thursday 27th 12:30 – 13:30 Is the Telco Supply Chain Fit for the 5G Era?

Bibliography

Cohere: OTFS White Paper

GSMAi research reports, including Standalone 5G: Balancing new revenues with network efficiencies, August 2019 & Global 5G Landscape Q2 2019, July 2019

RCR Wireless: 5G Innovation Report Series, including August 2019 Europe

RCR Wireless: Small Cells & Densification: Policy, Spectrum, Fiber & Mobile, July 2019

Rethink Research: Wireless Watch eds. 781 – 789, June-September 2019

Senza Fili webinars, reports & research. E.g. Getting Edgy: optimizing performance & user experience with edge computing , AI & Machine Learning: Why Now?

TM Forum: CTIO Outlook 2020, July 2019

Briefings thanks to: Affirmed Networks, Amdocs, Bearingpoint, BICS, Brunswick Group, Ciena, Cohere, Corning, Ericsson, EXFO, GSMA, HCL, HSBC, Huawei, Interdigital, Mavenir, MWC Advisory Board, Nokia, PWC, Ribbn, Samsung, SOLiD, Spirent, Telit, TM Forum, Trustonic, Vertical Bridge, ZTE