Operators and Service Providers’ Lucrative 5G First-Mover Opportunity

February 4th, 2021

The next-generation of mobile connectivity is rapidly bringing supercharged mobile gaming, Internet of Things technology, and a smarter, better-connected world to consumers’ fingertips. As 5G rapidly evolves and brings new possibilities, it presents a wealth of opportunities for mobile network operators (MNOs) to differentiate their services with high performance applications; and for wireline operators to deliver differentiated backhaul transport services, but they need to act quickly.

5G is already the fastest-growing mobile technology, with 225 million new 5G subscribers between Q3 2019 and Q3 2020, including a 66% growth in the final quarter of that period alone, according to Omdia research. 5G-enabled devices are also coming to prominence, with Ericsson revealing 69% of leading service providers had launched commercial 5G smartphones by November 2020.

These figures prove that 5G is growing even faster than was already anticipated. 5G now presents a wealth of opportunities for multi-system operators (MSOs) and mobile providers, but they need to act quickly.

5G’s first-mover advantage

3G and 4G networks targeted consumers with best-effort mobile broadband and connectivity, and it wasn’t difficult for providers or countries to catch up if they were late to the party. However, 5G networks target far more than best-effort connectivity, and the markets it targets offer a significant advantage to first-movers.

For example, the deterministic ultra-reliable low-latency communication (URLLC) and mass connectivity that 5G offers is hugely appealing to enterprises and industries. It promises to help enterprises move towards Industry 4.0, allowing them to embrace the productivity, quality, and flexibility improvements that this brings. These benefits offer a substantial commercial advantage but, on the flip side, those that start behind and fail to invest in the infrastructure early enough will find it very difficult to catch up.

5G’s $150 billion, 2 billion customer opportunity

Mobile gaming is one of the most exciting and more lucrative opportunities for 5G network operators and providers. Recent improvements in access connectivity have sparked colossal growth, with more than two billion mobile gamers worldwide. Research from market analyst Newzoo suggests mobile and tablet gaming will account for at least 50% of the market by 2022, overtaking both console and PC gaming.

The most significant opportunity in mobile gaming may be a new wave of cloud gaming platforms, which began with PlayStation Now and GeForce Now. More recent platforms like Google Stadia and Microsoft X Cloud were followed by Amazon’s Luna and Shadow, which remotely connects mobile devices to a high-end virtual edge computing environment.

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The new world of cloud-based gaming presents exciting opportunities for the growing mobile gaming community. However, their experiences are still being held back by latency - or “lag” - issues and low network bandwidth that the speed and reliability of 5G networks can step in to solve.

Ribbon-commissioned research found that gamers will pay extra for a network that reduces or removes lag. The study found that 95% of 5,000 “ardent gamers” would pay extra for the improved experience that 5G networks offer. Furthermore, 60% of the gamers would pay 50% more than they pay for their existing broadband and mobile network to get a 5G subscription.

As a result, the study outlined a $150 billion opportunity for carriers that launch high-performance 5G networks that meet the needs of the billions of gamers demanding faster, consistent, and more reliable mobile connections. Additionally, any wholesaler that provides the transport network to support this will gain a significant advantage to capture that backhaul market.

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Operators’ 5G transport networks requirements

Current transport networks are not capable of meeting the requirements of 5G. The single homogeneous, consumer-focused transport network, which provided static connectivity between 4G radio resources and the associated mobile core, will become a thing of the past.

Instead, 5G requires a dynamic network that can design deterministic connectivity and capacity wherever it is needed. Key differences in this new-look network include:

Disparate services: 4G is focused on providing best-effort mobile broadband, and it does that exceptionally well. However, mobile consumers are looking to run new services, which require deterministic and assured performance, such as latency and reliability. Crucially, instead of providing mobile broadband, 5G supports end-to-end services using mobile access for connectivity.

Custom requirements: Someone browsing the mobile internet has a different set of needs than a doctor providing remote consultation via an HD video link or teachers using mixed reality AR and VR for immersive learning in virtual classrooms. It’s not cost-effective to build a separate network for each service type, so different users require separate networks that perform differently in terms of latency, reliability, security, capacity and availability.

Network slicing for multi-tenancy: 5G uses a concept of network slicing, which creates multiple virtual networks that each have individual performance characteristics. The network is viewed as a resource pool of physical network functions, virtual network functions and cloud network functions. A slice is created for each service type by combining the relevant network functions to meet the service performance required. MNOs can create value-added services by delivering completely isolated slices of their network to Mobile Virtual Network Operators (MVNOs) or large enterprises or government entities as tenants. Wireline backhaul operators can provide a strongly differentiated offering by being able to support x-haul transport slices that complement the slicing offerings of the mobile operators they are serving.

Architecture: The new range of 5G services, and the need to deliver them cost-effectively, has driven a paradigm shift in mobile architecture itself. The monolithic architecture of 4G needs to be replaced with a virtualized, disaggregated approach. 5G networks split the base station into radio units (RUs) that provide the radio access, distributed units (DUs), that support the lower layer of the protocol stack, and centralized units (CUs), that support the higher layer of the protocol stack. Both need to be instantiated whenever and wherever required, which will provide more compute and storage as needed.

Mobile core: The mobile core is also virtualized and disaggregate and includes separation of the control and user planes(CUPS). And mobile core functionality is instantiated when and where required. The IP and optical transport network’s job is to dynamically provide connectivity and capacity to each of these functions whenever they are instantiated so that they can meet the performance criteria of the transported services.

As these differences clearly highlight, the benefits of the fifth-generation technology standards go well beyond the obvious long-term advantages such as faster bandwidth, pervasive IOT and smart cities. There are immediate revenue opportunities such as ultra-low latency and the ability to deliver new service offerings to exploding market segments. But operators and service providers must act quickly to be among the first-movers that capitalize on these competitive advantages or risk being caught flat-footed.