With today’s 5G networks, that “one size fits all” paradigm is no longer an option as different elements are needed to support new services and use cases, such as critical IoT and massive IoT. There is a need to optimize the network so enterprises and communication service providers (CSPs) can meet the diverse performance requirements of these different applications. And that solution lies, in part, with the use of network slicing.
Network slicing is all about taking a single end-to-end physical network and dicing it up into virtual slices on a common shared hardware. Each slice is managed independently and does not interfere with other slices. This allows different customers to receive dedicated resources depending on their needs and performance requirements.
While most CSPs and enterprises are familiar with the technical aspects of network slicing, few have a clear path on how to commercialize and monetize the technology. Additionally, much of the discussion around network slicing has been driven by polarized opinions or assumptions that have slowed widespread deployment. These uncertainties revolve around when and where to start the transformation journey; how to go to market and offer slicing based services; how to monetize those services, and if the technology conflicts with dedicated networks.
The reality is that:
- Network slicing is here and is a feature of 5G that should be part of the transformation journey today.
- Network slicing itself is not an offering, but a key service enabler for differentiated services.
- Network slicing is part of the end-to-end story, not a piece of the 5G landscape.
- Network slicing and dedicated networks go hand in hand.
Growing momentum behind commercial 5G network slicing
Thanks to 5G, network slicing is here and can give CSPs and enterprises the value proposition they need to drive new business models and opportunities. While 4G networks can support network slicing capabilities, 5G networks will serve as the critical driver for those developers that have a clear intent of enterprise adoption. To start, CSPs need to formulate an enterprise business strategy to plan their transformation journey. This will take time, which is why it’s critical to start today if they hope to gain experience and capture market share.
By thinking of the 5G network as a platform, small and larger operators from the beginning can utilize network slicing to create diverse enterprise offerings. 5G standalone (SA) deployments are superior to non-standalone 5G networks in that they incorporate end-to-end slice identifiers that play a critical role in fostering security and flexibility. 5G SA deployments will also usher in 5G core (5GC), which will bring network slicing closer to reality. 5GC can be scaled to meet changing demands not seen in traditional broadband services.
Operators should ensure they have a proper plan in place for network slicing and slicing-based offerings before rolling out 5G SA. A well-thought-out strategy can make the biggest difference between an operator that succeeds and opens up new revenue streams, to one that is just scratching the surface.
Recently, Taiwanese operator Far EasTone made a breakthrough in network slicing capabilities on a 5G SA network. The operator’s first 5G end-to-end multiple network slicing on multiple Android devices has paved the way for future developments in this area.
Creating differentiated services through a network slicing offering
Many enterprises incorrectly believe that network slicing is a specific offering provided by a CSP. CSPs offer a virtual private mobile network that makes use of the network slice, such as manufacturing processes for industrial campus areas or mobile cloud gaming. The objective of network slicing is to allow a mobile network operator to divide its network resources so its customers, or “tenants,” can co-exist over a common infrastructure. It is the quality of service of that mobile virtual network that CSPs are selling – the part they are committed to providing. The technical solutions for slicing spans across the entire network.
Additionally, operators do not need to provide a network slice for each customer. It is not necessary to provide an independently deployed end-to-end network slice for each one because it may not be their requirement. One network slice could potentially serve different types of customers simultaneously.
A common question about this technology also lies in the number of network slices that could be used. In theory, a CSP could offer thousands of slices. The reality is that the amount depends on the performance and operational requirements of the services that need to be supported. At the start, we will likely see few slices, but as technology and experiences evolve the number will only increase.
Capturing value with the end-to-end story
The key benefit of 5G for CSPs lies in the possibility of capturing new revenue streams from services provided to enterprises. Network slicing is key to monetizing 5G investments because enterprise and IoT-based solutions offer the best revenue upside.
In fact, it is a $200 billion opportunity that will dramatically impact all aspects of a CSP’s 5G ecosystem. It will usher in consumer use cases such as mobile gaming, augmented reality (AR), and virtual reality (VR), among others. Beyond that, the top six industries – health care, government, transportation, energy and utilities, manufacturing and media, and entertainment – account for 90% of the revenue potential for CSPs, a massive opportunity with substantial returns.
Capturing value with network slicing means focusing on the end-to-end story where CSPs incorporate the technology across all aspects of the network. It can’t be facilitated in just one domain or by adding a single product somewhere. If operators are looking to make use of 5G for different types of customers, they need to be thinking about how to leverage this key enabling technology to make 5G use cases profitable beyond what we see in today’s services.
Leveraging dedicated networks
When should CSPs leverage dedicated networks and when should network slicing be prioritized? While the debate between public and private networks and network slicing isn’t new, the answer has become more complex.
Network slicing combines the benefits from public and private networks while being more flexible and cost effective. It provides CSPs with enormous potential in terms of wider coverage areas and a reduction in equipment investments. For enterprises that already have a private network in place, it’s possible to incorporate a hybrid model. One doesn’t cancel out the other and studies indicate that more than 50% of enterprises will have both.
The bottom line is that both network slicing and public and private networks are critical components for 5G and future mobile networks. While they have different applications, they complement each other.
A new outlook for the telco industry
5G is the best opportunity for CSPs to increase revenue streams and grow their businesses. The technology is unlike anything the telecommunications industry has witnessed in years. Network slicing alone is projected to make up 25% of 5G use cases with a potential of generating more than $200 billion in revenue by 2030. Additionally, when it comes to developing consumer services, such as mobile cloud gaming or that new “killer application” that has yet to be discovered, 5G SA deployments with network slicing will become a must have capability for CSPs, similar to how 4G became a necessity to support mobile video.
The enterprise space in particular, which is a fairly untapped segment, holds the largest potential for CSPs looking to capture market share within specific sectors. With the right business strategy, partners, and go-to-market models, these players can expect to produce new opportunities that could set the benchmark for others to follow in the decade to come.
In our new report we’ve analyzed more than 400 5G use cases and isolated the network slicing value potential. Want to know how CSPs can get a slice of the action?
