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How 5G Opens Up New Business Models

Setting the Scene

In a separate post, we indicated the main ways in which 5G supports current telco business models – largely by enabling the efficient provision of additional capacity in support of broadband connectivity. In this blog, we explore how new business models are opened up by 5G.

4G and 5G share a common underlying foundation radio technology – OFDMA (Orthogonal Frequency Division Multiple Access). In 4G it was specifically configured to optimally support relatively large cells (very much the norm at the time that 4G was specified). However, this configuration effectively limited 4G the frequency bands that we see 4G deployed in today.

In 5G, the OFDMA configuration is a lot more flexible. This allows effective support for much higher frequencies, that in turn enables access to massively increased spectrum availability (both licensed and unlicensed), increased efficiency through the use of massive antenna arrays, and easier small cell deployment. All of this was dealt with in the separate blog post titled: 'How 5G Supports Current Telco Business Models'.

One thing that wasn’t mentioned in that blog is that the additional flexibility that 5G brings also enables improved performance and more diverse capabilities across all of the key technical benchmarks. This opens up a whole new range of use cases, deployment options and areas of connected innovation that can be effectively supported – in the form of extended or entirely new business models.

An Opportunity to Re-Align the Technology

The key point for enabling new business models is that the requirement to specify the more flexible OFDMA interface provided an opportunity to go further and to look at the entire system end to end. It allowed us to align 5G with some of the very important ongoing industry initiatives that were only partially aligned or supported in 4G. Virtualisation, MAEC (Mobile Access Edge Computing), Narrowband IoT, and Broadband Fixed / Mobile Convergence are just some of those initiatives.

Specification of 5G also allowed us to look ahead and to use 5G as a framework to support any number of new use cases and deployment options – some relatively simple in nature, others highly complex. Some future use cases are easy to identify and define, others haven’t even been imagined yet. This being the case, in order to extract maximum value and potential, 5G has to be seen as an overall “framework of capabilities” that can be applied in an incredibly wide range of scenarios – rather than a collection of well-defined services, as was the case for previous generations.

Defining 5G Capabilities and Bench marks

Defining the “framework of capabilities” is an easier task than trying to identify and plan for all possible scenarios. We need first to get a feel for what the probable / possible use cases might be in order to establish rough benchmarks for the overall capabilities. This “use case” work has been extensively developed by a range of different industry bodies, not least by 3GPP. But once the overall benchmarks were established through this work, the 5G system could then specified to meet those benchmarks within a very flexible structure.

So what capabilities are we talking about? It really comes down to some specific connection attributes - Latency, Energy Use (battery life), Connection Range, Connection Type (IP / Ethernet / other), Connection and Mobility Anchor Points, Reliability, Security, Device Density, Maximum Device Speed, Priority, and of course Data Rate.

5G brings improvements and/or greater flexibility in pretty much all of the attributes listed when compared to 4G, but the real value will only be realised if operators can effectively and efficiently use those improvements to support existing and future business models. With so many potential opportunities enabled by the 5G capabilities, as well as by MAEC, Virtualisation, IoT, and FMC etc., – operators need clarity.

Creating a Usable Framework - Slicing

This need for clarity and focus is fully recognised within the 5G standards, in the form of Network Slicing. This enables precise network configurations to be abstracted and viewed as specific virtual frameworks (or more simply, virtual networks). Each slice will have associated capabilities and attributes and can be used to support [any single or combination of] specific use cases, service type(s), customer(s), or deployment scenarios.

Slices in support of the Business Model

As a business enabler, one or more slices can be used to support extended, or even completely new, business models. An example could be private networks deployed in support of industrial / factory automation. In this case, the slice would just be one part of the overall business model – together with a range of commercial enablers. Once developed for the first time though, this model becomes portable, able to be deployed more rapidly and with greater confidence for future customers.

Some standard slice identities exist already in order to help the industry align on the most obvious requirements – not least to support those requirements in roaming scenarios, and to allow vendors to rapidly develop their products. However, many slices will remain proprietary and will be developed individually by the operators, alone, or with their vendors. However, a lot of work has been completed to assess service requirements for some of the key areas that 5G is set to support. An example is the control network for the Electrical Grid. Here, some very stringent requirements in terms of latency have been identified, not least to “trip” connections under failure conditions. It is very conceivable that standard (or de-facto standard) slices will rapidly emerge for this set of requirements.

The work on the Energy Grid above, together with work assessing requirements to support Railways, Autonomous Vehicles, and Industrial Automation (amongst others being added) are set out within relevant 3GPP Service Requirement documents. With the 5G capabilities just starting to be realised within the network, all of these areas (in addition to many more being worked on, and others not yet identified) represent huge areas of opportunity for telecoms operators.

Summary

So, the new 5G capabilities provide the underlying foundation to support existing, as well as new use cases. At the same time, amongst other key 5G features that haven’t been mentioned here, slicing [if embraced] will provide the level of abstraction that allows operators to develop capability sets. This, in turn, will enable them to focus their efforts and build the reusable frameworks (technical and commercial) to extend or build new business models in order to fully realise the value of 5G.

Looking to brush up on your 5G knowledge? Our team of highly experienced trainers have developed a brand new complimentary course: Introduction to 5G. Learn all about the origins of 5G, the essential aspects of 5G technologies and more.

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