5G is making waves for good reason, but beyond faster streaming speeds and improved connectivity, it also enables new concepts like service-based and cloud-native architectures and policy-driven network slicing. While the flashy impact for end users is driving buzz, these benefits will be a flash in the pan for technology and communications service providers (CSPs) compared to the impact of these new business models.
Most operators plan to move on to standalone 5G launches in the next three years. It’s important to avoid thinking of 5G as just another “G,” as it will truly be an ecosystem in which CSPs can bring together the mobile connectivity, service/device management, and monetization expertise that is the heart of what they have to offer. The combination of their unique capabilities and resources with vertical-specific applications will yield highly customized innovations related to Smart Cities, Healthcare, Smart Homes, Industry Automation, and Finance.
Because 5G introduces several innovative and disruptive networking paradigms—many of which had not been applied to mobile networks in the past— the one-size-fits-all approach to network infrastructure will no longer work. Instead, 5G will bring service-based architecture, IT-centric cloud services, and unprecedented ability to personalize network “slices.” As a result, specific requirements of industry-vertical applications can better match the needs of targeted customer segments.
Although the concept of a dedicated core network is not new and was introduced in 4G as the DECOR feature, 5G bakes network slicing into its core service. Network slicing is a highly dynamic process involving defining, instantiating and selecting, scaling, and de-instancing slices. Hence in order to fully support network slicing, numbers of disciplines such as resource and life-cycle management, orchestration, real-time selection, and KPI monitoring should be considered.
Ultimately, network slicing allows service providers to tailor connectivity services to the precise requirements of any given application, user, device, or context, by logically isolating virtualized network resources. By working with third-party cloud providers and leveraging network slicing, CSPs can experiment with new service offerings that previously were not an option. Steep upfront CapEx and OpEx costs historically made such offerings risky.
The TM Forum’s “Network as a service: Addressing the full enterprise opportunity” research found there is great potential for growth with B2B services like Network as a Service (NaaS). The May 2019 report found that almost half (46%) of CSPs respondents indicated their companies were deriving less than 10% of revenue B2B services. However, thanks to changes made possible through NaaS in the long term, more than 70% of CSPs expect to generate more than half their revenue from B2B services by 2024-2029. CSPs embracing this approach will be more empowered to rapidly launch and evolve custom-fit network slices-as-a-service and cloud-based applications, opening doors to new revenue streams. Examples include:
Ultimately, the opportunity for network slicing extends far beyond the slice itself. Because network slicing allows service providers to tailor connectivity services to the precise requirements of any given application, user, device, or context by logically isolating virtualized network resources, it represents a massive opportunity for untold applications. The question that remains is who will take advantage of this opportunity.
This will undoubtedly be a formidable task for service providers, one that requires them to reinvent themselves to stay relevant to the emerging trends, regulations, and business models of their respective industries. Fortunately, they can achieve this with agile IT practices like cloud-native and DevOps, which will allow them to embrace the multi-cloud environments that are essential in the digital era of smart end-to-end ecosystems.
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