A 5G research report by Arthur D. Little revealed two main business models for telecom operators to make investment in 5G and maximize revenue.
According to an earlier report from Juniper Research, telecom operators’ 5G service revenues are expected to reach $269 billion in 2025 from $851 million in 2019.
5G investment
There are no reports available on investment in 5G networks. The Arthur D Little report suggests two approaches for telecom operators. As per the big-bang approach, telecoms need to invest heavily in 5G. Under the evolutionary approach, telecom operators should move from 4G to 4.5G to 5G and reap benefits from investments – though the boundary between 4G to 5G is not clear.
ALSO READ: How telecom operators can maximize return from 5G investment
“Millisecond latency, network slicing to manage quality of service and improved corporate security features differentiates 5G from 4G. A big-bang approach could give telecom operators a headstart on competition, enabling them to offer gigabit speeds with millisecond latency and next-generation services with network slicing,” said Arthur D. Little authors Karim Taga, Richard Swinford and Glen Peres.
In some models, it will involve a change in the relationship and interfaces between the operators and corporates, moving towards a joint plan-build-deploy-operate model.
In other models, it will mean reconfiguration of the core networks, linking the core networks of the telecom operator with its corporate customers. It requires updates to the transport and backhaul networks with greater fiberization and IPization.
Large changes to the access networks, with heterogeneous networks coming together and new 5G technologies being deployed, such as small cells, MIMO and beam forming, will be necessary.
The above chart shows telecom operators’ outsourcing to support their digital plans. Top telecoms are going to drive the outsourcing industry.
Telecom operators usually classify 5G projects around six key areas
# Build application ecosystem
# Prepare spectrum for future macro 5G network
# Prepare for future small-cell 5G network
# Fiberization of fixed-access network
# Cloudify the core
# Prepare the computing and networking infrastructure
Telecom operators should start forging partnerships with application and service providers. Because the life cycle of applications is much shorter and riskier than the life cycle of investing in a telecom network, telecom operators find it difficult to be agile and responsive in developing applications on their own.
Spark in New Zealand established a successful application ecosystem by creating a new business unit called Spark Ventures, which incubates and partners with a variety of startups active in the ICT sphere.
Since its launch in 2014, Spark Ventures incubated start-ups, launched 10 new business ventures, and is reported to have obtained 500,000 new subscribers from these new ventures.
Telecom operators should prepare for re-farming of existing low-band spectrum, in the 700-, 800-, 900- and future 600 MHz bands that can be deployed for 5G coverage. Operators should also -farm high-band spectrum in the 2,500-, 2,600- and 3,500 MHz bands, which can be used for future small-cell deployment. Telecoms are using 5.2GHz and 28/39/60 GHz for 5G pilots.
5G will require macro sites and small cells with a fiber backhaul connection. A key challenge to invest in small cells is to have access to locations on the ground with a fiber backhaul.
Telecom operators can start deploying “WiFi home spot”-ready CPEs to customers’ homes. These CPEs can broadcast two of more SSIDs (networks). Customer can use one for home, and telecom operator can remotely configure and control the other one for a public WiFi network.
The operator will also be able to offer small-cell-as-a-service to other operators. Home spots are fast becoming a big investment item for telecom operators.
Comcast is estimated to have rolled out a massive 16 million home spots in the US, while UPC is estimated to have rolled out 6 million home spots in six countries in Europe.
New players such as Fon are partnering with traditional telecom operators. Fon has rolled out 20 million hot spots/home spots in more than 50 countries.
5G requires gigabit speeds to be delivered to the handset; hence, each mobile site (both macro and small cell) needs to backhaul multi-gigabit throughputs to the aggregation network. Fiber and Docsis (cable) technologies can deliver backhaul throughput over distances of more than a few hundred meters.
Many telecom operators are in the process of investing in fiber – FTTH, FTTB, FTTC, FTTN, etc. This fiber-access network will be valuable in backhauling gigabit traffic from small cells and macro sites on an end-to-end network or wholesale basis. An IP-based backhaul built on a fiber network is better able to handle traffic than a traditional circuit-switched backhaul network.
By “cloudifying” the core, telecom operators can configure services on a dynamic, elastic, real-time basis. Telecommunication networks are slowly moving away from monolithic hardware stacks to software-based modules that can be remotely configured and scaled up when needed using NFV/ SDN-based technology.
The transport network is automated and simplified, and the control plane is virtualized to allow control of the network. This will enable dynamic management of internet traffic and provisioning of services centrally, all the way to the end user.
Many telecom operators are already investing in data centers. However, instead of centralized large data centers, operators can consider decentralized topographies of data centers, so there is a data center in each urban area at network-density nodes. Such an arrangement brings the “cloud closer to the user.”
In a future 5G world, there will be a need for multiple distributed data centers at the network edge to deliver millisecond latency. Beginning rollout into such a data center topography will be a step in this direction.
Since many 5G use cases depend on computing intelligence, mobile operators will need to prepare their computing and networking infrastructure accordingly.
Since centralizing the processing is not feasible, edge computing must be used, for both processing and retrieval of data from storage systems. Traffic flowing to and from a server cluster is a factor five to 10 times less than traffic flowing between servers or between storage systems and servers. There will be 5 to 10 times more traffic-handling capability required to connect the computing intelligence and storage infrastructure.
In the future, non-telecom players such as Google, Apple and Amazon, which are active in the IoT space, might also join with 5G-based solutions of their own. Hence, it is important that telecom operators and vendors play an active role in driving the 5G standardizations in the right direction.
