When we think about broadband services, we tend to think about speed. But over the years, as bandwidth demand has grown, operators have not been able to raise ARPUs proportionately. This has meant lower rates of return from their networks than might have been expected.
But new opportunities are now at hand; opportunities that some market analysts expect to represent a $24 billion opportunity for operators by 2028 [1]. And this time, brute speed isn’t the only game in town.
Many customers, both residential and commercial, are looking for a better, more predictable, more reliable quality of service (QoS), and they’re ready to pay for it. There’s a unique opportunity here for network operators to generate new revenue streams from premium B2C and B2B offers and differentiate themselves in a highly competitive market. The question is how.
The answer lies in end-to-end network slicing, where applying QoS is not restricted to the transport and core networks, but differentiation is consistently applied incorporating the PON access and Wi-Fi connection. By extending the slice all the way into the home network, content delivery can now be controlled in an end-to-end manner. This allowsoperator to launch new digital experiences and advanced B2B services.
SDN in action
SDN leverages greater compute power, the use of big data, and especially programmability to create far more powerful, flexible and agile networks. With SDN you can take a single infrastructure and partition it into discrete, virtual slices, creating several networks in one. Each virtual network can be given its own performance characteristics – bandwidth, latency, security, etc. – optimized for the service running on that slice. In other words, each slice becomes capable of delivering a bespoke, guaranteed QoS. To enable slicing models, the network has to support service differentiation and traffic isolation, as well as allow the slice to be managed, modified and customized independently for each individual application.
At a macro level, a single infrastructure can have separate virtual slices to carry residential broadband, business class plans, mobile transport, smart city and Industry 4.0 connectivity, all at the same time. But on a micro level, it can deliver a specific, enhanced premium service to individual customers: say, lower latency for a gaming fanatic, or dependable bandwidth for an enterprise.
Previously, guaranteed QoS would be offered on a dedicated private network, like a point-to-point fiber connection, where the connection’s resources are not shared with other users. But network slicing and SDN control mean the same level of assurance can now be given to a virtual slice – a virtual private network – even though PON and Wi-Fi are both shared mediums. Within a virtual private network, data packets and time slots are automatically and dynamically managed to ensure performance always matches the required QoS.
Taking an end-to-end approach means that the performance of each segment can be managed independently to complement the others. Take latency, an important performance criteria for many applications. PON now uses innovative ranging processes and multiple bursts per frame per ONT and WiFi 6 uses Orthogonal Frequency Division Multiple Access (OFDMA) to deliver bounded and ultra-low latency for Time Sensitive Networks (TSN). Every ms gained in the access network can compensate for latency in the metro or core transport segments. Each slice can thus be optimized from cloud to device to meet the desired performance, and the health of the slice monitored continuously throughout use, with automation and intents maintaining a consistent QoS. Nokia has exactly the SDN technology and networking expertise needed for this end-to-end control.
Figure 1: Network slicing: a private network slice for differentiated service performance
Slicing opportunities
Network slicing can be used innovatively and dynamically to create premium QoS experiences that can be monetized to consumers or businesses. These new revenue streams accelerate the ROI of network upgrades.
Importantly, the SDN controller creating slices can be initiated from either end: the end user or the service provider. This gives network operators a variety of business model possibilities across a wide array of vertical markets. For example, an application provider such as a cloud gaming company could offer a premium experience as part of a subscription to their customers (B2C) and pay for a private slice from the internet provider (B2B). Alternatively, an individual gamer could request a private slice for a premium experience directly from their internet provider. This could be a permanent service level upgrade as part of a subscription, or a temporary on-demand service billed per session.
The nature of an SDN-controlled network means that all these services can be automated, initiated, and scaled up or down dynamically. This gives network operators the ability to offer new edge services and lets them focus more on service innovation rather than just bandwidth-based offers.
Use cases
Let’s take a look at some of the most promising use cases for end-to-end network slicing.
Corporate remote working
The dramatic shift we’ve seen in remote working in the last couple of years has raised the demand and expectations for broadband at home. Employees working from home don’t just need high-speed internet; they need to be an extension of the corporate office network, accessing business applications with the same experience as when they are on-site. This requires high reliability and traffic prioritization so that another member of the household on Netflix doesn’t steal the bandwidth during that all-important meeting. This service could be a B2B play with operators selling the service to corporations that pass it on to their employees. Alternatively, individuals could sign up for this service directly.
Cloud gaming and VR
While VR hits the headlines again with Apple’s new headset launch, cloud gaming has been quietly – and rapidly – growing in recent years. Microsoft claim 20 million people streamed games using Xbox Cloud in 2022 [2] while one analyst’s report estimates the global market will reach USD 85 billion by 2030 with a CAGR of 46.9% [3]. Low latency is crucial for cloud gaming: <20 ms from gaming device to the edge cloud. A virtual private slice between user and the gaming cloud server can provide this guaranteed performance. This makes for a perfect subscription model, either B2B where a gaming provider like Microsoft bundles the service into their subscription, or a B2C subscription directly to the consumer. This could also be transactional, with a slice created and released per gaming session (e.g., 2 hours).
Industry 4.0 applications
Industry 4.0 had brought a wave of value-add applications that depend on high-speed connectivity. Digital twins, video surveillance, computer vision, machine automation, and robotics are just a few areas where high bandwidth and low latency are needed. For example, a picking robot in a warehouse must always have a highly reliable connection, free from other devices competing for bandwidth. A product inspection solution that uses high-definition video and cloud analysis for anomaly detection and sorting must have enhanced, stable bandwidth. These applications need guaranteed performance levels that can be provided by a virtual private slice.
Vertical market solutions like these could deliver up to 20% increase in average revenue per user (ARPU) [4].
Adding it all up
Other applications for smart cities (video surveillance), automotive (autonomous vehicles) and hospitality (augmented event experience) easily spring to mind, all of value to end users and possible new revenue streams for operators. But there are also operational advantages that bring cost savings. Let’s take latency again: a key contributor to latency is, of course, distance. Any application that improves latency means that servers don’t need to be as close to end users. For every millisecond saved in latency, a server can be positioned 200km deeper into the network. Centralized servers mean less real estate, lower maintenance and simpler operations.
Figure 2: A millisecond saved is a millisecond earned for centralizing edge computing
So, not only does end-to-end network slicing generate new revenues, it can lower operating costs as well. Surely, any operator would want a slice of that?
If you want to explore more, please visit:
- Software-Defined Access Networks | Nokia
- Accelerate into Gigabit with fiber | Nokia
- Discover Home WiFi | Nokia
Sources:
- 5G Slicing Revenue to Grow from US$309 Million in 2022 to Approximately US$24 Billion in 2028, ABI Research, August 2022
- Microsoft says more than 20 million people have used Xbox Cloud Gaming, the Verge
- Cloud Gaming Market Size, Share & COVID-19 Impact Analysis, Fortune Business Insights
- 5G monetization for consumer use cases | McKinsey
