SPONSORED: 5G monetization will be more profound than 2G, 3G and even 4G network monetization. 5G will fuel the adoption of a multi-vendor, end-to-end programmable and automated service delivery model that will transform how CSPs deliver high-value services to their customers.

Jim Hodges, Chief Analyst - Cloud and Security, Heavy Reading

April 8, 2021

4 Min Read
Beyond connectivity – quantifying and monetizing the 5G effect

If there has been one undisputed observation taken from the past 12 "stay-at-home" months, it is the substantial value of mobile network connectivity. While this is a positive development, it has somewhat overshadowed the more significant evolution that 5G is now undertaking: a shift from basic connectivity to monetization of high value mobile services.

5G monetization will be more profound than 2G, 3G and even 4G network monetization. The introduction of the cloud-native 5G core (5GC) will have a major impact on mobile service delivery through the support of disaggregated API-based cloud services.

It is still relatively early days in terms of 5GC adoption. But we are already seeing some progressive companies such as SK Telecom starting to reap the monetization rewards that 5G services will deliver.

One factor why 5G monetization is on the rise is that it enables service providers to extract greater value from the service layer stack and hence greater profitability. It also provides tangible benefits to their enterprise customers that can utilize 5G to address business connectivity- and service-related issues of the past, including support for private network implementations. Since 5G is the first generation of mobile networks designed explicitly to support private network services, it opens new market opportunities for both service providers and enterprises.

Automation adoption

Mobile service providers have always focused on leveraging automation in their networks to reduce costs and enhance customer experience. However, 5G takes this to the next level. Due to 5GC and service-based architectures (SBA), automation is no longer a nice to have; it is now considered a fundamental attribute of the 5G services stack. This is noteworthy since this 5G service stack will also need to continue to evolve to support mass adoption of AI-based virtual reality services.

In addition, automation is vital to enable zero-touch service provisioning to drive service agility, support resources for slice-based services, and enable advanced security service monitoring and policy enforcement. Automation also reduces the number of resources necessary to scale and monitor the network, which has positive monetization impacts.

Ecosystem expansion

Meanwhile, 5G has ushered in a new age of ecosystem expansion. Since 5G is based on an API exposure architecture, APIs can be exposed anywhere in the network (central cloud and edge cloud) without restriction. To meet these requirements, the days of single vendor developed APIs are no longer sustainable.

Consequently, communications service providers (CSPs) must expand their vendor ecosystems to gain access to the most innovative third-party API-based services. These are the services that provide the greatest value and thus the greatest opportunity to monetize.

The other consideration is that ecosystem expansion reduces vendor lock-in. This benefit is critical as we start to see service providers deploying API-based services in public clouds to gain access to low cost compute and proven third-party enterprise software.

Fulfilling the promise of programmability

In addition to automation adoption and ecosystem expansion, embracing programmability will also positively enhance 5G monetization.

Although today's mobile networks are programmable, the concept of programmability is also shifting. It is no longer limited to programming specific parts of the networks such as the core; rather, it is shifting to a holistic end-to-end network programmability strategy.

This includes the ability to program the network seamlessly from the software-defined WAN (SD-WAN)-based access network, cloud RAN and core to operations/business support and service assurance systems. Such a programmability model will serve to achieve the full promise of unrestricted service availability in any network (fixed – mobile – Wi-Fi) in any access configuration. The outcome is the creation of a seamless converged fixed/mobile network that thrives in a hybrid environment (hybrid cloud, on-premises, indoor/outdoor, private/public).

Therefore, since programmability – like automation and ecosystem expansion – reduces network operational costs, it also has a synergistic impact on 5G revenue growth. But more importantly, 5G ties all these attributes together to create an adaptable, software-defined, programmable and end-to-end architecture that is capable of elegantly meeting the service velocity and agility requirements to compete in the future.

In summary, while mobile connectivity remains an important component of today's service landscape, the future of 5G is not simply about enhanced connectivity. The real and monetizable value of 5G is that it fuels the adoption of a multi-vendor, end-to-end programmable and automated service delivery model that will indelibly transform how CSPs deliver high value services to their customers.

— Jim Hodges, Chief Analyst, Cloud and Security, Heavy Reading

This blog is sponsored by Cisco Systems Inc. (Nasdaq: CSCO)

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About the Author(s)

Jim Hodges

Chief Analyst - Cloud and Security, Heavy Reading

Jim leads Heavy Reading's research on the impact of NFV on the control plane and application layers at the core and edge. This includes the evolution path of SIP applications, unified communications (UC), IP Multimedia Subsystem (IMS), session border controllers (SBCs), Diameter signaling controllers (DSCs), policy controllers and WebRTC. Jim is also focused on the network and subscriber impact of Big Data and Analytics. He authors Heavy Reading's NFV and SDN Market Trackers. Other areas of research coverage include Subscriber Data Management (SDM) and fixed-line TDM replacement. Jim joined Heavy Reading from Nortel Networks, where he tracked the VoIP and application server market landscape and was a key contributor to the development of Wireless Intelligent Network (WIN) standards. Additional technical experience was gained with Bell Canada, where he performed IN and SS7 network planning, numbering administration, technical model forecast creation and definition of regulatory-based interconnection models. Jim is based in Ottawa, Canada.

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