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The Push for 5G and What it Means for Network Economics Featured

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The Push for 5G and What it Means for Network Economics Image Credit: Mavenir

The promises of 5G go well beyond high data rates, spectral efficiency, ultra-low latency, or massive sensor networks. 5G is the next-generation mobile networking standard that will build on the global 4G Long Term Evolution (LTE) ecosystem and enables a raft of new service opportunities and the underlying change from just people communicating on phones, to fast real time low latency data transmission between things.

Besides working towards making 4G pervasive, the mobile network industry needs to start future-proofing for 5G, estimated to be deployed in 2020. That is when a new set of standards are being defined and new infrastructures will need to be developed and put in place to support new business models.

The fundamental appeal of 5G lies in the fact that the entire infrastructure acts as a cohesive, distributed platform for innovative applications and provides services tailored to their unique characteristics. It is designed to be a fully flexible, scalable, programmable and an interoperable framework both in the core and radio resource management.

Flexibility and adaptability make 5G important for service providers, working towards transitioning to 5G architecture with technologies that use minimal power and bandwidth. The smart network infrastructure and an enhanced ability to support exponential scale for connectivity open the doors to innovative applications across a variety of markets such as connected cities, smart agriculture, smart manufacturing, connected healthcare, virtual reality, and autonomous vehicles.

But, it’s the decisions that are made today that will have the most impact on how these networks will be able to support the new services, and manage to stay in business. Today’s mobile network providers are feeling the pinch from reduced ARPUs combined with exponential mobile data demand. In the 5G world, today’s network economics won’t work.

Laying the groundwork for 5G

Based on an Analysys Mason report, 28 percent of mobile operators in the Asia-Pacific (APAC) region expect to offer some level of 5G service by 2020. With 5G not yet a reality, LTE technology continues to be the cornerstone of mobile broadband communication, since its launch in 2009.

5G prototype testing being conducted on larger scales, such as the PyeongChang 2018 Winter Olympics and the Tokyo 2020 Summer Olympics, is spurring operators to prepare their networks and upgrade infrastructure to embrace the eminent 5G future.

The Analysys Mason report notes that operators are going to have to ramp up their investment in fixed wireline infrastructure if they want to benefit from 5G services, as less than 25 percent of mobile operators in APAC have a fully integrated wireless/wireline strategy.

According to the report, new revenue streams from 5G, like video streaming, enhanced broadband, connected vehicles, and the industrial Internet of Things, will only be possible if operators converge their wireline and wireless networks to maximise network capacity and share resources. The research firm also identified three key technologies that APAC operators need to invest in to leverage 5G:

Software-defined networking (SDN).

Network functions virtualisation (NFV).

Network slicing

Per a 2016 Heavy Reading market research on Virtualizing Messaging Services, majority of communication service providers (CSPs) are highly committed to virtualising their networks, with 70 percent planning to virtualise some, if not all their messaging platforms by 2020. While modernising their networks and services, CSPs are looking at how to best support new next-generation IP-based messaging services, alongside those already in place.

Cloud RAN deployment is a cost-saving advantage

In terms of deciding which messaging services to bring online first, Short Message Service (SMS) was a clear leader, with more than a quarter (27%) considering it a priority for migration to an NFV-based virtualised platform. Spam and Fraud messaging control was next, followed by IP messaging. These findings indicate how CSPs are looking to virtualise their most heavily used services first.

However, CSPs are increasingly finding that, with much of their existing hardware reaching their end of life, some products are no longer supported, forcing them to either evolve or replace. These are key decision points. Shopping for new hardware can be costly and unnecessary, particularly with virtualised environments theoretically allowing services to run anywhere. Breakthroughs in technologies have allowed operators to essentially prepare for and get, a 5G network with their 4G expansion budgets. That’s the type of decision that is key today.

It’s perhaps unsurprising therefore, that the past few years have seen both mobile and fixed CSPs approach software network providers, such as Mavenir, make the transition towards virtualising their networks by implementing NFV which is, on many levels, the perfect architecture for delivering messaging services.

According to a Total Cost Ownership model study conducted by Mavenir, the analysis finds that operators, with a Cloud RAN deployment can save 37% in deployment and operational costs over a period of 5 years, due to a 49% reduction in Capex, and a 31% reduction in annual Opex, thereby making complete business sense for operators to adopt a Cloud RAN deployment strategy.

The majority of Tier 1 telecom operators are expecting to adopt NFV and SDN technologies within two years, according to Telecom Business Research (TBR). According to the research, 80 percent of telecommunications operators in APAC, plan to adopt NFV by 2018.

4G and 5G are the key drivers for operators choosing NVF and SDN, while digital service creation is the third largest contributor. Adoption of NFV and SDN enables programmability, flexibility, and automation afforded by software-mediated solutions.

Product interworking, orchestration, and migration complexity were identified as being some of the biggest barriers to NFV implementation. Cultural challenges and business case definitions were identified as the top business challenges an organisation can face regarding NFV implementation – When it comes to an organisation’s culture, the main challenge tends to stem from the inevitable power struggle over where the responsibility lies as these are fundamentally different business models.

LTE networks are still improving to keep up

All these doesn’t mean that 4G, the first IP-based network, is a dead end. LTE networks are still improving, and in many areas, are still being deployed, and operators will continue to enhance network capabilities as they are used as the backbone for early 5G deployments. 5G relies heavily on the 4G backbone for services and control.

Developing markets in APAC, such as Malaysia, Cambodia and Indonesia are focussing their efforts on laying a strong 4G network foundation in preparation for a smooth transition into 5G. Many major carriers have identified 4G as extremely important to implementing 5G and the future of their networks. While the industry pushes for 5G, there is still much work to be done in 4G.

5G has clear similarities with 4G such as considering the shift as an end-to-end challenge. The changes are significant across all areas as we move to 5G. However, 5G will be introduced as an overlay to the 4G networks we have and its introduction will be less of a big bang, with the introduction of 4G/5G-ready elements. Operators can take advantage of NFV and Cloud RAN technologies to save Capex and Opex5 and protect their investments as these technologies can futureproof their 4G networks for 5G use, redefine and transform their network economics.

So, fret not 4G users. The future is going to be very bright.

As a veteran of the mobile industry, a board member for 5G Americas, and a sought-after industry speaker, John Baker heads up the business development team at Mavenir, a software company intent on disrupting the market. A visionary and driving force behind Mavenir’s business strategy, John is at the forefront of the company’s drive to change the way operators think about the deployment of their wireless infrastructure - taking a software-focused approach to innovation, with no ties to supporting legacy hardware. Prior to joining Mavenir, John held senior positions with leading wireless companies including GM Mobility Infrastructure, Spirent Communications, VP& GM Network Solutions, CommScope, VP & GM Base Stations at Nokia and VP of Technology and Chief Technology Officer at Pacific Bell Mobile Services. John also contributed significantly in the development of the GSM standards. He graduated with an honours degree in electrical and electronic engineering from Loughborough University, Leicestershire, UK.

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