Following the five-fold increase in 4G penetration in China over the last two years, similarly rapid take-up is projected for its successor, making China the world’s largest 5G market by 2025. For this reason, delegates gathered last week at the GSMA’s Future Networks Seminar in Shanghai, to discuss the business challenges that must be overcome to bring this prospect to pass.
As Head of the Future Network Programme Henry Calvert reminded the session, 5G is not just about superfast mobile broadband. The advantages 5G technology presents in addition to this – such as ultra-low latency communications and massive IoT – are, from 2020, set to increase productivity at a pace never before witnessed in the industry.
The key question then, as Mr Calvert put it, is this: “how can we connect the vertical industries to the infrastructure that we are developing? How do we ensure those vertical markets can talk to mobile customers and understand what they need?”. The challenge ahead is to expand the ecosystem to include vertical industry requirements: how manufacturing, finance and health industries can be brought into the development process to ensure their needs and expectations are considered. Questions remain over how to make best use of the remaining development time, to stoke customer demand from the outset, and how 5G technology can be made to yield positive returns for investors from the very start.
The answers to these will come from 5G network slicing for industry-specific services. Slicing is effectively a way of delivering multiple networks from a single physical network, and is set to be principal way in which operators can enable verticals to provide bespoke solutions to their end users. For operators, it will enable effective management of their networks in a multi-access context, as they start to offer a wider variety of services, and how the service level with verticals can be agreed and monetised. David Gannon, VP of Technology Strategy and Industry Relations at Deutsche Telekom, was very clear: “At Deutsche Telekom, we’re big believers in slicing.” A key issue under consideration at Deutsche Telekom – in partnership with China Mobile, as co-chairs of the GSMA’s Network Slicing Taskforce – is how best to agree common standards. “Among our top priorities at the moment is trying to define a standard definition of precisely what slicing is, so that we can take it to the vertical business partners and conduct a consistent conversation.” By September of this year, therefore, the GSMA will announce a definition with industry-wide recognition, allowing the work of those developing vertical markets to proceed without delay.
With traditional value levers on a downward trajectory in terms of profitability – text revenues being effectively gone, voice revenues diminishing rapidly, and roaming revenues in Europe at zero as of June this year – the challenge becomes making a positive return on access to networks. Customer demand for access to 5G services will therefore drive the economics of network monetisation in the years ahead. To make the cell-densification necessary for 5G rollout economical, however, operators cannot vary network provision to match different hardware and software across different vendors. As Mr Gannon explained, therefore, the key to enabling network operators to thrive in this new context will be disaggregation of hardware and software. High-intensity deployments of IoT technology such as autonomous driving will require significant cell-densification. And – as Core Network Architect at SK Telecom Jong Han Park outlined in his supporting case study – the strategy of disaggregation and slicing has already been shown to be successful.
Vertical businesses will become the largest contributors to 5G uptake, and will therefore constitute the greatest draw on bandwidth. In more extreme circumstances as things currently stand, traffic could leave as little as 20 – 30% available, which could well affect user experiences. China Mobile’s Head of Network Innovation LAB Lu Lu therefore urged delegates to consider the challenge posed by the requirement for end-to-end optimisation. To tackle the challenges, China Mobile called for the network innovation, emphasising the need for a customer-orientated approach, isolated security and guaranteed quality of services.
Bin Fan, Director of the 5G Innovation Centre at China Unicom, stressed that only by understanding verticals’ needs, and discussing potential business models with them, can the imminent common understanding of slicing be put to best use. The potential gains are highly significant, more so than perhaps even some in the industry realise. 5G is not just about connectivity: the bandwidth and low latency of 5G allows for possibilities not only for progression to the Internet of Things, but also to the intelligence of those connected things. Intelligent connections enabled by developments in AI will prove a key direction for progress in 5G as rollout proceeds over the coming months and years.
As several speakers reminded us, even the industry’s most informed experts cannot anticipate the creative uses the market will make of such a dramatic advance in technological capability. Even after a single year, as David Gannon pointed out, IoT city biking here in Shanghai went from literally zero to an abundant feature of the city. With 428 million 5G connections expected in China by 2025 – 39% of the world’s total – a great many of those innovations in 5G deployment will be on show around us, during future sessions of the Mobile World Congress. As we work towards that point, we know the immediate task is to seek close collaboration with our vertical industry partners, who share our interest in making it possible.