What is Network Economics?
| Identifying cost-efficient innovations unlocking additional value for mobile networks |
What is Network Economics?
5G, the fifth generation of cellular network technology, is attracting global attention in the mobile industry with its capability to cater to new use cases in addition to the traditional mobile broadband use case. The deployment of new 5G networks requires significant resources.
There are also challenges above and beyond this, for example in urban settings, it is becoming ever more difficult to acquire/secure sites for new base stations due to the costs of real estate and aesthetics concerns. Furthermore, the unique features of 5G, which address diverse requirements from numerous applications, increase the complexity of operations leading to additional costs. With ARPU (Average Revenue Per User) stagnating in many markets, how do operators offset the substantial investment required in their networks?
To quickly bring the 5G network into reality, mobile network operators can devise mechanisms to improve the capital intensity at which they operate. The long-term goal of Future Networks programme is to boost population coverage of high-speed broadband while optimising capital intensity* (e.g. <15%) by unlocking additional value from networks in a cost-efficient manner.
The Future Networks programme has developed a Network Economic Model which first baselines existing network topology, and then iteratively overlays and profiles new disruptive technologies or network management strategies that can deliver efficiencies or new revenues. Modelling is ratified via an operator review to evaluate the potential impact.
Ultimately, the economics will drive the deployment of MNO (Mobile Network Operator) networks and services in the future, and the case studies we cover are a reflection of the emerging picture. To date, we have considered Infrastructure Sharing (present-day applications, i.e. active and passive), 2G/3G rationalisation and innovation in Radio and Wireless Network Transport.
*Capital Intensity defined as the CAPEX plus OPEX divided by the revenue