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Mobile operators must act soon as 5G business models emerge

Full deployment of a commercial 5G mobile network is still at least two years away, but new business models are already beginning to crystallise around the technology, and operators would be wise to start preparations soon, a new report claims

Communications services providers (CSPs) and mainstream enterprises are already beginning to get ready for the transition from 4G to 5G mobile networks, and new business models are emerging around the technology, which promises ultrafast, gigabit browsing speeds, according to analysts.

In a new report, titled “5G deployment models are crystallising” research consultancy Arthur D Little (ADL) said that both CSPs and businesses alike are seizing the opportunity to construct new ecosystems around 5G. In the enterprise world, this means deeper collaboration to collectively exploit the potential of 5G in relation to wider disruptive trends, such as smart cities and smart manufacturing.

For CSPs, said ADL, 5G will be a chance to improve their market positioning, and early adopters will be able to shape market dynamics to their advantage to win market share from their rivals. The report claimed that 5G would support a strategic shift among CSPs from being connectivity providers to enabling next-generation ecosystems.

Some telecom operators are taking a strategic lead in 5G deployment – announcing their future plans with ‘big bets’, which will impact the course of future 5G roll-out and the development path for the technology,” wrote the report’s authors.

“Telecom operators have a vital role to play in bringing enterprises and industry verticals together to deliver not just connectivity, but also solutions. This report is designed to provide useful and relevant insights to operators as they decide on their future 5G roadmap and make their own bets on where to focus initial investment,” said Karim Taga, global head of ADL’s telecoms, IT, media and electronics practice.

Even though 5G networking standards are still being standardised, ADL has identified five different roll-out models for 5G networks based on a number of pre-emptive announcements already made by the likes of T-Mobile, Verizon and Vodafone.

These are, as a way to provide gigabit broadband services to residential properties and act as a last mile complement – or indeed replacement – for fibre to the premises networks; as a way to build countrywide mobile experiences that enable new use cases driven by virtual reality, artificial intelligence and so on; as a way to deliver reliable, low latency networking to businesses to boost efficiency and productivity; as a way to develop industrial ecosystems around machine-to-machine (M2M) and the internet of things (IoT); and finally as a way to deliver nationwide intrastructure as a service (IaaS).

Business models challenged

However, just as CSPs have seen their business models challenged by the emergence of over-the-top (OTT) service providers levering CSP networks to make money, ADL warned that non-traditional players would also try to deploy 5G networks to deliver specific services.

These could very likely include the likes of Apple and Google, which are working on initiatives around virtual reality and autonomous vehicles, and Facebook, which is actively working on disrupting networking models with its Terragraph small cell and Aries Massive MIMO trials in the US.

Other future competitors to CSPs could include municipal authorities seeking to construct 5G networks to offer smart city services to citizens, and automotive companies.

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  • European operators may be more concerned with getting the maximum value for money from their 3G and 4G networks than rushing to roll out 5G.
  • Experts from three major UK technology research institutions have been awarded a government grant to develop a 5G test network.
  • Comms infrastructure supplier Arqiva recently bought two 112MHz bands of wireless spectrum to support its 5G wholesale ambitions.

In light of these competitive challenges, said ADL, CSPs should already be acting to stake their claim in the 5G world. The report set out two approaches to prepare for the changes – either by adopting a “big bang” attitude, investing heavily in future technology, or by taking a more evolutionary attitude, phasing in new technology sequentially.

The first approach could give some CSPs a head start on their competitors, while the second approach will spread out the investment needed to move to 5G over multiple silos, and multiple years.

The second approach can be broken down into multiple phases, which could include building an application ecosystem through new partnerships; preparing spectrum for a future 5G network by re-farming low-band spectrum and buying newly-released spectrum from national regulators; deploying Wi-Fi hotspots to prepare for small cell networks; deploying more fibre into the fixed access network; upgrading core networks to network functions virtualisation (NFV) and software-defined networking (SDN) and distributing datacentres to the edge of the network; and preparing IT infrastructure by setting up multi-gigabit access between compute, storage and the network.

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