5G network slicing: the economic opportunities for operators
With 5G on the horizon, the Internet of Things (IoT) offers great potential to transform industry and society. That said, in order to capture the opportunity, operators will need to carefully consider the new demands being placed on their networks and make strategic investments in order to deliver high-quality, efficient IoT services.
New business models, new services
Network slicing is one solution that has emerged which enables the establishment of new business models across a broad industry spectrum. It allows operators to segment their networks to support particular services. Multiple networks can be deployed for different service types over one common infrastructure, while enabling fast implementation and better resource utilization. The varying services from IoT technology deployments will include massive machine type communications (mMTC) such as smart meters through to critical machine type communications (cMTC) like remote surgery and everything in between including connected cars, machines, sensors, point-of-sales terminals, consumer electronics and wearables.
The question for many is: how can network slicing deliver a better economic outcome when enabling the IoT, compared with more conventional network models?
New study explores economic impact, benefits
At Ericsson, we’ve launched a new study of 5G network slicing for IoT service deployment, together with UK operator BT, to explore the potential economic impact and quantify the benefits of the technology. Despite extensive industry discussions on network slicing, we are unaware of any other existing economic study that quantifies the benefits of this technology.
The joint study looks at three ways to introduce new services into a network: via one multi-service network; via individual networks with dedicated resources; or via network slicing (including operational automation) across common resources. A key finding from the report shows that network slicing enables a 35 percent increase in revenue when compared to a single multi-service network, and a 15 percent increase when it is implemented instead of individual, separate networks with dedicated resources. Better still, the initial investment in network automation can be returned in as little as one to two years.
We assessed the yearly and cumulative discounted benefits of network slicing and investigated the corresponding results when reducing the number of service launches from 40 per year to five. We found that operators would still enjoy a three-year discounted payback period with from the initial service launch on network slicing compared to one big network. This shows that even with a limited number of services, the economic reward is significant. These increase dramatically with the more services that are brought to market.
Aside from the obvious financial benefit, a flexible network that enables the deployment of more services through network slicing will enable service providers to support industries’ various needs and deliver an enhanced user experience. Network slicing provides a logical setup that can be tailored to technology applications and, as a result, it enables the swift delivery of new services.
With many operators positioned to bring new mMTC and cMTC services onto their networks to deliver the use cases for industries, networks are becoming more complex. It is important for networks to support the huge variation in requirements demanded by these new use cases. As we define the services of the future, network slicing will provide the flexibility and capability to meet those needs, a key next step in providing a long-term return on investment. Results show that the more services operators deploy with network slicing, the greater economic benefit they stand to gain.
Read more about the increasing economic benefits of 5G network slicing in the full report here