After years of R&D and two 3GPP Release cycles, it is worth reminding ourselves that we are still only in the early stages of 5G deployment. The development of new business models arising from those 5G deployments is even less advanced.
The GSA, an industry body that tracks technology rollouts and mobile operator service launches, said that although there are 806 operators with commercially launched LTE networks only 140 operators in 59 countries have launched commercial 3GPP-compatible 5G services (either mobile or FWA). In 2020, more investment went into LTE networks globally than 5G: 2021 will probably be the year in which 5G network investments overtake 4G, globally.
“The long term goal of 5G – to effect industry transformation by unlocking new revenue models, new go-to-market strategies and new ways of operating a telco business – remains firmly in the “to do” column.”
Even of those operators that have deployed, the vast majority are using the Non Standalone (NSA) mode. NSA mode ties control of 5G services to the 4G core, meaning that the “true” potential of new 5G uses cases that take advantage of the capabilities of both a 5G radio network and a 5G Core are necessarily untapped.
The GSA has identified 61 operators that are “investing” in 5G Standalone core network technology. According to research company Omdia, operators that embrace a single core over multiple technology-specific cores are better positioned for network integration and migration to 5G, reducing both OPEX and CAPEX over the next two to three years. You could currently count SA 5G Core commercial deployments in single figures.
In turn, that means that the long term goal of 5G – to effect industry transformation by unlocking new revenue models, new go-to-market strategies and new ways of operating a telco business – remains firmly in the “to do” column.
That’s not to denigrate industry efforts so far, which in many cases have seen a new network generation brought to commercial operation in record time. But what it does mean is that it is by no means too late to assess the strategic priorities that 5G raises for mobile network operators.
Chief amongst these is to ask what additional value 5G can truly bring to your business, and then to assess what steps to take to unlock that value. That includes technology choices but it also means deciding how you are going to align your processes and people behind it, and who you are going to choose to work with to make it happen.
Alongside the 5G timeline we have seen increasing focus on how to exploit the upsides of Cloud technologies – flexibility and openness – to underpin the service possibilities that 5G networks offer. The 5G Core itself takes advantage of Cloud technologies to define a Service Based Architecture that decomposes monolithic software stacks into micro-services that can be containerised and leverage common network data layer.
We are now seeing the industry grapple with the potential benefits of doing something similar, as far as is possible, in the radio network. One goal of Open RAN is to design a disaggregated environment where best of breed software from any provider can be on-boarded to a radio controller or within a radio network to fulfil a particular function.
Decomposing layers and elements of the network in such a way means that they can also be distributed across a network, at the edge and even on premise for private enterprise networks. That means that new service delivery models could also be enabled, with network operators open to co-creation of services with external application developers and cloud-based as-a-service providers. It also requires operators to integrate and iterate their networks in a new way, invoking new processes and skills.
Open RAN, a bit like early 5G, perhaps generates more media attention than it does actual investment so far. Dell‘Oro Research estimates that operators spent around $300,000 on Open RAN technologies in 2020. Analyst company Omdia says that Open RAN will account for about 10% of RAN spending by 2024 – and that was an upgrade to a previous forecast. The political urgency occasioned by the removal of High Risk Vendors in certain markets has perhaps masked the current status of Open RAN. Even integrated Cloud RAN – where a single vendor offers a cloud version of their radio base stations – is in its early stages.
Although the deployment of 5G technology, and the move to a cloud-based and cloud-enabled network, is still in its early stages it is fair to say that momentum is accelerating and the eventual destination looks secure.
Industry commitment to Open RAN and to cloud-based network transformation should not be under-estimated. Vodafone, for example, has made conformance with Open RAN specifications a requirement for RAN contract tenders. ABI Research predicts spending on just one area of the network – Open RAN radio units (RUs) in the outdoor macrocell network – will reach US$69.5 billion in 2030.
5G, then, brings the potential to deliver differentiated performance across the network. Cloud-enabled functions bring with them the promise of deploying resources and functions in a flexible and dynamic manner. Combined, they offer the potential for new services, and new operating and business models.
Generating business value from 5G
It is in this area that a new report from World Wide Technology elevates the discussion. It defines the key questions facing operators as they consider the business possibilities raised by this technical transformation.
It makes the very good point that constructing networks in a radically different manner should not be an end in itself. Service providers should first define their desired outcomes – who are their customers, what services will they offer, what will the partnership model be – and then design their capabilities accordingly.
It also highlights very well where the typical mobile network operator might see the need for reinforcement of their capabilities.
Its key questions, therefore, are both timely and valid: are you ready to make 5G work for you to generate new business value?