By Robin Kent, director of European operations, Adax
Whispers about 5G are getting louder and expectations to implement it are increasing as it will serve to connect industries accounting for as many as 1.1 billion connections by 2025 [GSMA]. The evolution through 2G to 4G has prompted rapidly increasing use of services and applications that are data heavy, and often the telecoms industry is struggling to keep apace. This illustrates that the industry has yet to fully implement a working and reliable 4G experience for users, which begs the question, can operators ensure 5G works sufficiently to provide a good consumer experience whilst making money?
Mobile data use has rocketed over the past five years according to research firm Ovum, which claimed in its 2016 figures that data from mobile devices had increased 74% alone in 2015, taking the overall global figure to around 3.7 exabytes per month. Behind this data explosion is the growth of streaming services said Ovum, such as Netflix, and consumer’s growing use of apps, all underpinned by the expectation of having a high speed data connection at all times.
This rising expectation of ‘always connected’ consumers and the proliferation of multiple connected devices including self-driving cars and delivery drones are driving service providers to take the lead in the 5G race. Similarly, 5G’s support of IoT is another key driving factor for its high demand; after all, Gartner estimated in 2013 that the amount of connected IoT devices will reach 26 billion by 2020. Mobile operator, Three, is ready to implement an overhaul of its network, which is likely to cost hundreds of millions of pounds per year over several years, to meet the demand for data as it prepares for 5G to be introduced.
Work to do
Despite this data ‘demand’, there is still work to do in identifying the right business models and revenue opportunities to monetise 5G. With 5G theoretically 40 times faster than the hypothetical limit of 4G, it will take a great deal of expensive upgrading of the current infrastructure to fulfil its claims.
It is evident that the infrastructure overhaul will be huge, and expensive. The 5G roll out will require the current mobile networks to be more wired and the applications running on 5G need not just high bandwidth but low latency. Similarly, service providers must ensure have the correct protocols in place to unlock the potential of 5G. They will need to ensure they have an effective Stream Control Transmission Protocol (SCTP) solution in place for Diameter signalling. As implementations begin to roll out, the growth of Diameter will continue to accelerate so the need for a good transport layer should be a priority. If service providers aren’t prepared they could face not being able to carry the huge levels of traffic required by the host application to any and all of its possible destinations.
With this expensive upgrade in mind, will consumers be willing to pay more for 5G data to support this and if not, how will operators pay for this new infrastructure? There is no clear plan as yet as to who will pay for this or how 5G can be monetised. If you look at the traditional business model, the service provider makes money from the subscriber, which the service provider then invests in new equipment and services. Yet, there is a danger of this chain being broken with 5G roll out. Service providers cannot guarantee that they will make money out of the subscriber because they’re not developing the new services for consumers to increase revenue. If service providers are going to play the long game, they have to understand where that monetisation can come from. If they get it wrong, it precludes them from making money further down the line.
Despite all this talk of 5G, there is still a lot that can be done to improve current 4G networks. Research from consumer watchdog Which? found that the rest of the UK is lagging behind London when it comes to accessing 4G data services. Therefore, service providers perhaps should focus on developing a strong 4G service for subscribers and not believe the 5G hype coming from OEMs who are desperate to develop new handset features that will require 5G capabilities.
Adax provides compact EPC solutions, SIGTRAN software, SS7 Signalling platforms, and DPI, IPsec Security, and GTP acceleration products for traditional legacy TDM networks to LTE and beyond.