WinWin Issue 43
Director of Network Infrastructure, CCS Insight
Digital Transformation and New Service Opportunities for 5G
With a rising number of 5G networks now deployed and evolving, MWC Barcelona 2023 saw the emphasis shift from 5G rollout to profitability.
The improved performance characteristics of 5G — speed, latency and so on — compared with 4G means that the creation of new services is central to generating revenue from 5G. 5G network capabilities enable tiered pricing plans based on levels of connectivity, as well as network-as-a-service models or, with support from partners, custom offerings based on emerging technologies like artificial intelligence, edge computing or data analytics.
So, what are some of these new 5G service opportunities?
Data gathered from CCS Insight's survey of 20 firms providing 5G networks, shown in the chart below, shows that the vast majority had already launched a range of 5G services or had plans to do so in the next couple of years. Unsurprisingly, enhanced mobile broadband was the most-launched service in late 2021, but there are clear intentions to diversify 5G services in 2023 and beyond by adding services such as real-time gaming and ultra-reliable and low-latency communications.
We've also heard many service providers talk positively about various 5G service opportunities in enterprise and consumer market segments. One of these is the burgeoning private mobile network market, which several providers have acknowledged as a potentially high-value opportunity to serve various industries with custom network services to support their technology transformation.
The rise of private mobile networks is driven by the increasing digitization of industry sectors and the adoption of emerging technologies such as edge computing, cloud services, artificial intelligence and data analytics, as well as 5G itself. Innovations in 5G open new possibilities for industry based on its connectivity characteristics, such as high capacity, low latency, mobility, reliability. These combine with the security improvements inherent in a private network to enable enterprises to process data locally without transmitting it over the public Internet.
Private 5G can play a vital role in pushing digital transformation strategies in enterprises and addressing new customer segments. For example, Deutsche Telekom launched a private 5G network solution earlier in 2023, with Hagen Rickmann, its managing director for business customers stating: "Our new 5G campus network solution comes with low entry barriers regarding costs and effort. Therefore, we can address customers in the small- and medium-sized business segment. They can adopt 5G technology easily and push their digitalization further — while maintaining flexibility."
This indicates that service providers are increasingly positioning for this emerging segment, which is already starting to accelerate. As a market data provider on behalf of the Global mobile Suppliers Association (GSA), CCS Insight tracks live commercial contracts in the private mobile network market.
The number of enterprises with private mobile network deployments has grown rapidly over the past three years. According to data from GSA, the number of customers with 4G or 5G private networks rose from 224 in 2019 to a staggering 1,077 in 2022. The majority are based on 4G, but CCS Insight expects this to transition to a 5G-led market in the near future.
Among service providers, there's a growing awareness of private mobile networks as transformational for operational processes, services, new revenue streams and customer experiences.
In an interview, David del Val, CEO of Telefonica's research and development department, said: "5G and edge are bringing a new wave of transformation in the same way as mobile broadband and the cloud did some years ago. By using cloud-native principles we have transformed how the services are delivered to generate turnkey services. Now we can spin up private networks connected to apps on the cloud edge in hours or days, not weeks or months. This will enable us to reach more client segments and industries in the coming years."
But it isn't just the enterprise market that's optimistic about the opportunities presented by 5G. At an event for the media and analysts in Paris in April 2023, the global head of extended reality and metaverse for Orange, Morgan Bouchet, talked about the operator's vision of using 5G networks to capture opportunities in immersive technologies and services, saying that "VR is an impacting machine" and customers are "just crazy about the power of the technology and the emotion created by it."
5G will play a major role in supporting metaverse-ready connectivity as part of services that include adjusted tariffs based on speed and latency, as well as bundled content and devices such as augmented reality glasses or virtual reality headsets and controllers.
The concept of differentiated experiences and services is particularly interesting, as it nods to an aspect of 5G that's only now beginning to be exploited by providers but presents a significant opportunity, especially as mobile operators transition to standalone 5G networks. Upgrading to a cloud-native 5G core provides an enhanced range of capabilities, most notably network slicing.
Network slicing allows multiple virtual networks to be created on shared physical infrastructure — "slicing" the network to enable different services to run across it. This could be transformative, offering a cost-effective method to deliver differentiated connectivity, customized to the needs of customers, applications or service environments, maximizing the network's operational efficiency.
This could include applications in a smart factory, a drone system or real-time video streaming — a multitude of new service requirements based on performance characteristics like speed, latency, prioritization, security and cost, or even the location to which traffic is routed to suit different traffic or application types.
For example, network slices for voice would be engineered to minimize latency, video stream slices would accommodate larger packets and allow buffering, and so on. These services could be offered in pricing tiers based on different levels of guaranteed service. Cayetano Carbajo, director of core and transport and global chief technology and information officer at Telefonica, said that "network slicing is a key part of our 5G monetization strategy, and we plan to bring the technology soon to our live networks."
This also drives a change in the strategies of network-based providers in terms of market positioning, customer relationships, internal skill profiles and, of course, revenue streams. This technology evolution must bring about a commercial evolution in the firm — a transformation of the process by which the business plans, markets and executes new services.