How will 5G unlock revenue streams and increase profitability?

5G is swiftly becoming a reality as Mobile Network Operators (MNOs) continue with their rollout of next generation services and connectivity in markets around the world. In the UK, EE and Vodafone have already launched 5G services, which deliver speeds that to this point were only available over optical fibre. However, this is less impressive if 5G cannot be delivered at a fair price to subscribers and there are no applications or use-cases that leverage these rather impressive performance gains.

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Is 5G even worth it?

A staggering 39,000 homes in the United Kingdom and businesses are unable to access a decent fixed or mobile broadband service or get good 4G coverage. 4G typically delivers connection speeds of 2 Mbps — fast enough to browse the web, stream music, and make a video call, but not much else. With 5G, MNOs will have the ability to meet the demands of mobile data while supporting new services, applications, and use-cases, such as the Internet of Things (IoT) and autonomous vehicles. As these opportunities expand, the adoption of 5G is inevitable and will support a clear demand in the industry.

It is not only IoT which will drive this acceleration, the gaming industry will also have a pivotal role to play. The promise of high-speed and extremely low latency for gamers offered by 5G networks will add to an already expansive industry. According to the market research firm Newzoo, mobile gaming on smartphones and tablets is forecast to generate revenues of $68.5 billion in 2019, accounting for 45% of the entire global games market. Of all mobile game revenues, 80%, or $54.9 billion, will come from smartphone-based games. The success of mobile gaming is due in part to the use of advanced technology including artificial intelligence (AI) and augmented/virtual reality (AR/VR), which offers a more immersive (and addictive) experience. However, for this technology to work, it requires the support of the MNO to deliver optimal connectivity, which comes down to wireline infrastructure, the critical part of the network interconnecting radios and data centres where accessed content is hosted.

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Unlocking revenue streams and increasing profitability

The move from 4G to 5G is going to be a multi-year journey, but with the right strategy, MNOs will better serve their customers, provide integrated services, and achieve a lower overall cost structure.

5G is comprised of several technologies that incorporate previous versions of wireless mobile systems, while utilising the existing fixed network, at least initially, for wireless radio access and transport.

To achieve a full 5G rollout, network operators must also modernize the wireline part of their end-to-end network by deploying a flexible and virtualised architecture incorporating spectrum, Radio Access Network (RAN), and transport from base stations to the core network.

However, as the modernisation rollouts will be costly, it’s crucial that MNOs seek ways to monetize 5G. Collaborating with other industries, such as entertainment, sports, and healthcare will unlock broader and more profitable 5G business opportunities. For example, in partnership with BT Sports, EE staged the first live sporting event using their 5G network. The live two-way broadcast was carried over 5G and then produced remotely by the BT sport production team. Using remote production, BT reduced the number of technicians required at the match, thus reducing the cost.

By adding 5G to its existing 4G network, increasing reliability and speeds, EE is keeping its new and existing customer base connected and offering a new service at a low cost. The trial highlights the capabilities of 5G to provide broadcasters with a more reliable data connection, increased speeds, and new revenue streams.

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Investment in wireline infrastructure is key

There is no doubt that 5G will bring new innovations to many industry sectors, but MNOs must invest in the underlining wireline architecture to make it a commercial success. It’s all well and good having an incredible wireless signal, but if the wireline network is not able to process the request from end-to-end, then performance and the resultant overall quality of experience will undoubtedly suffer.

To make the most of 5G, MNOs must make significant investments in their core networks, including spectrum, RAN infrastructure, and transport networks. While this may seem like a significant investment, MNOs can actually utilise existing network 4G infrastructure to build upon, where possible, to help reduce the Total Cost of Ownership (TCO) for successful 5G rollouts.

In preparation for end-to-end 5G services, Three UK has pumped over £2 billion into infrastructure upgrades. Services will include wireless home broadband, and with its substantial spectrum portfolio, a faster more reliable mobile phone service will be delivered. Upgrades to cell sites for 5G and enhanced 4G will be undertaken alongside a new fibre network connecting 20 data centres to create a virtualised core network. Additionally, Three UK will upgrade its IT system, which will see 80% of the network operator’s IT hosted in the public cloud. MNOs can take an evolutionary approach to infrastructure investment, as many 5G technology elements build upon existing 4G networks, such as leveraging existing backhaul networks through simple capacity upgrades to handle 5G traffic growth.

To maximise return on 5G, MNOs must understand how network infrastructure and the associated cost base will evolve over the next few years, if their 5G commercialisation plans are to succeed at minimal cost and associated risks. This insight allows MNOs to be in a strong position to develop an infrastructure investment strategy that will set them on a path to monetise 5G and drive new revenue.

Written by Brian Lavallée, senior director of Portfolio Marketing at Ciena


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