By Karim Taga, Glen Peres and Richard Swinford, Arthur D. Little
5G is becoming a strategic priority for telecom operators.
It is expected to embrace and integrate partially existing and partially new innovative technologies, as well as accelerate the digitisation of the economy further due to its ability to transmit large volumes of data with low latency in real time on a massive scale.
Users will continue to expect new services such as augmented reality and immersive customer experience based applications built on high-speed, low-latency communication, with imperceptible resulting delay, jitter or interruptions.
Early adopters have been able to use new technologies to change market dynamics to their advantage and gain market share.
In 5G, the potential for success is higher – driven by the rolling out of successful use cases and becoming pioneers and trusted partners in the building of new ecosystems.
However, the risks are also bigger, since it involves significant new investments while clarity around the technology, performance, regulatory regimes and customer demand is still materialising.
Arthur D. Little has identified five deployment models, below, that operators are considering or using for 5G deployment.
Each model addresses a distinct opportunity and leverages a particular infrastructure advantage of the telecom operator.
1. Gigabit broadband to the home
5G can be used for gigabit speeds to homes.
There will be a need to provide hundreds of megabits, if not gigabits, of speed to a significant proportion of households in the near future, initiated by competition, regulatory targets and stimulated by bandwidth-intensive applications.
5G can be used to provide high-speed, fixed-wireless broadband to selective urban and suburban regions, complementing FTTH/Cable Docsis networks.
We expect that the commercial model will not only rest on revenues from gigabit connectivity, but also potentially on revenue-sharing models with next-generation service providers.
In terms of technology, 5G will provide an attractive alternative to complement existing provisioning of gigabit home broadband.
Key success factors are for operators to jointly develop next-generation services for the end user with service providers.
2. Next-gen mobile user experience
5G can be used to provision gigabit nationwide mobile connectivity.
By focusing on introducing human- and mobile-centric next-generation services building on augmented reality, virtual reality and tactile internet, a “wow” customer experience can be created with 5G.
Commercial models likely rest on charging end users for greater speeds and lower latencies.
However, 5G also enables telecom operators to establish partnerships with service providers that can use gigabit data throughput and low latency to provide end users with better customer experience and high-quality service, thus providing the telecom operator with additional sources of revenue.
The key success factor for operators is to develop partnerships with other service providers, so their 5G services are not just about gigabit speeds, but can also deliver a truly new customer experience.
3. Future corporate networks
Operators can leverage 5G to move closer to being trusted partners of enterprises, in order to improve their overall productivity and efficiency.
5G, with its ability to handle large volumes of data with low latency within controlled quality-of-service parameters, provides a valuable tool for telecom operators to co-design solutions with corporates for their core businesses.
In terms of commercial model, it is an opportunity for telecom operators and corporates to jointly plan their network architecture and production models.
Technical models will require close cooperation between the telecom operator and the corporate.
A key success factor for telecom operators is to build intimate network-oriented cooperations with enterprises that have distinctive networking requirements.
4. Digital industrial ecosystems
In order to address certain segments of the market, some corporate entities and service providers need to operate as parts of industrial clusters or ecosystems.
Such ecosystems are usually specific to particular industries, each with their own sets of rules, infrastructure, communication and enabling technologies bound by a common value chain.
The commercial model rests on operators providing neutral infrastructure to industry participants, at reasonable fees, that scale with the growth of the ecosystems themselves.
In terms of technology, a digital industrial ecosystem network would require ultra-reliable, low-latency communication networks (URLLCs), massive M2M and other dedicated features that depend on the particular use case.
The key success factor for telecom operators is to win over “flagship tenants.”
The success of such a model is “platform play” – the higher the number of users of this platform, the more attractive the platform and the lower the cost for each participant.
5. Next-gen infrastructure-as-a-service
5G infrastructure-as-a-service is addressing the fact that not all telecom operators are able to invest in nationwide 5G networks – many are still investing in 4G, and others are still recovering from investments in 4G.
Some countries may not have the size and scale of economics to support this level of competitive infrastructure.
Deploying an operator-neutral 5G network together with partners such as other telecom operators, the government and local city authorities will make 5G investments more feasible.
Operators are thinking of an open access model for two main reasons – to compete with larger operators with deeper pockets, or because they anticipate new business models and are looking for partners to co-invest and share the risk.
Such partnerships can also unlock routes to other infrastructure.