Unlocking revenue through premium network performance
Leading service providers are utilizing their 5G standalone (SA) networks to provide differentiated connectivity services, allowing them to grow their revenue through premium network performance.
Key findings
Differentiated connectivity offers the opportunity to support and monetize the diverse needs of mobile users.
To benefit from these opportunities, service providers need to configure and dimension their networks based on required performance.
Aligning pricing with performance would allow service providers to better manage network costs while still delivering tailored services.
With applications demanding connections with characteristics such as predictable latency and throughput, service providers should ensure their networks are ready to meet these requirements. 5G SA is essential to achieve this, combined with technologies such as network slicing which allows applications to separate traffic streams with different requirements and map them toward correct performance in the network.
Network preparation and dimensioning
Service providers need to configure and dimension their networks based on the required performance. This involves understanding where the business potential for high-performance services is, and ensuring that network resources in those locations can meet demand.
One key metric in network dimensioning is the available bandwidth (MHz) per device.[1] This indicates the network’s capacity to offer more differentiated connectivity services. Increasing MHz per device allows the network to host new apps that create additional value through predictable connectivity.
Service providers also need a set of available tools to configure their networks, such as traffic steering, resource partitioning, priority scheduling and rate adaptations. It is noteworthy that there is no single solution for achieving differentiated connectivity. Service providers can decide on the optimal configuration for their networks, as long as the statistical KPIs of the desired performance can be delivered.
Performance classes and cost
Wireless data transmission can be categorized into four distinct performance classes based on if the size of the data can be adjusted (fixed or adaptive) and how quickly data needs to arrive (immediately processed or buffered before use).
Significantly, there is a different level of cost associated with delivering data across these classes. Figure 19 shows the conceptual network capacity required to deliver streams of traffic via different performance classes. Generally, when it comes to supporting connections with higher requirements on latency, the effective load on the network to deliver the connection needs to be lower. This means that to support traffic in more demanding performance classes, the effective network capacity needs to be higher.
This increase in capacity has direct cost implications. More network resources must be allocated to maintain the characteristics required for premium connectivity services. Thus, service providers should factor in these increased costs when planning and managing their networks to offer differentiated connectivity services.
Figure 19: Dimensioning the network for different performance classes
Note: Conceptual network capacity.
From a vicious to a virtuous circle
Currently, there is a vicious circle of lowering data prices and increasing data buckets (to virtually unlimited), because there is close to zero incremental network cost for service providers to support more users and data with best-effort connectivity.
The introduction of differentiated connectivity creates an opportunity to support and monetize the diverse needs of mobile users. This will foster increased possibilities for service providers to differentiate by further investments in networks for enhanced performance, coverage and availability tailored to users’ needs.
To create a virtuous circle, service providers would need to adopt consumption-based models that reflect the cost of delivering data with specific performance. For instance, customers who need consistent low-latency, high-reliability connections, such as real-time video streaming or industrial automation, would pay a premium. This shift from unlimited best-effort data plans allows service providers to charge based on the value delivered, pricing higher-performance services according to network resources consumed.
By aligning pricing with performance, service providers can better manage network costs while still delivering tailored services. This model not only supports service providers in recovering investments in network upgrades and expansions, but also ensures that customers receive appropriate value based on performance.
