Today´s 5G network architectures were designed to take services and solutions to the next level. With capacity that allows a new level of innovation, 5G will fuel the next generation of business models—transforming how we work and play globally.
While 5G is the future, it is not inexpensive. Accenture Strategy estimates that telecom operators will invest as much as $275 billion nationwide over seven years as they build out 5G, with significant returns. In the United States alone, deploying the next generation of high-speed 5G wireless networks could create up to three million jobs and add approximately $500 billion to GDP through direct and indirect benefits.1
The industry standards body (3GPP) is calling out solutions for specific types of 5G-enabled, end-user services. “Slicing,” or creating virtual end-to-end network segments for supporting these service variations, will be native in 5G. These solutions point to areas that CSPs previously did not have to consider, particularly with such scale and sophistication:
- Enhanced mobile broadband for high-throughput, latency-tolerant apps (such as entertainment apps).
- Ultra-reliable low latency communication for sensors in autonomous cars, assembly lines, etc.
- Massive IoT to connect the high number of devices in the Internet of Things that may experience low usage (such as warehouse security sensors).
Cost-efficiently developing, scaling and deploying capabilities is tricky when formulating the 5G business case. CSPs should consider several areas when planning for the cost of 5G to save them multiple headaches down the road.
Balance costs and benefits in the 5G core. The 5G core will be significantly more complex than 4G. Using analytics-based tools to automate various setup and optimization tasks will help shave costs. In addition, the benefits of virtualization and IT data center models should provide additional savings. Getting the right implementation strategy will be key to your bottom line.
Capitalize on shared value. Carriers that fare well in the race to 5G will likely be those capitalizing on shared value via ecosystems. Our experience suggests they can see significant savings in capital and operational expenses with brokerage of network assets that stand-alone networks will not reap.
For instance, in remote areas, carriers can use slicing to build their own virtual network on top of a shared infrastructure. A vertical player such as a utility could provide a portion of the infrastructure for a carrier to manage as its own “slice”—its own network—with a promise to open it to others with a certain level of service and quality. In this model, ports, mines and more could provide infrastructure in remote areas, providing them with a new 5G revenue stream, expanding the reach and capability of carrier networks.
Build capacity in the transport network. In 5G, transport network cost will go up because fiber or equivalent low-latency transport will be a more common requirement to move increased data. Carriers will need to invest heavily in it because of the need to support high bandwidth and low-latency applications, as well as for deploying new sophisticated network architecture (such as cloud-based radio network). These applications will reduce capital and operating costs while improving performance.
Plan the radio network. In the switch to 5G, one thing does not change: The radio network component remains the most expensive—traditionally accounting for 70 to 80 percent of network costs. Promising to support a wide range of capabilities makes the 5G radio network more complex and expensive. And, the addition of higher spectrum bands can add a lot of capacity but with very limited reach. CSP leaders should conduct detailed strategic planning upfront to decide what radio network capabilities should be deployed, where and how.
To make the most innovative, disruptive 5G use cases work, CSPs will require a 5G network built for reach, scale and performance—no easy feat. Operators must further explore models for lowering network cost. Some may investigate neural host networks, which sit in hotspots shared by multiple networks (think commercial buildings, urban hotspots). Remember our utility and port example? As the network boundaries between operators and clients blur, expect to see vertical players and other parties (such as venue owners) provide the network infrastructure in some remote or private locations. With slicing and other sophisticated network management techniques, network operators can loosely integrate to that infrastructure, reselling it to their customers with specific performance assurances and security.
Deploying 5G in a cost-efficient manner can help industry leaders fuel new business models and generate additional sources of revenue over the coming years. Accenture Strategy research found that 84 percent of telecoms companies project growth rates of 5 percent or more by 2020, compared with just 40 percent growing at those rates today.2 Communications industry leaders are looking now to scale 5G deployment in a cost-efficient manner because they recognize its power to drive new services. Those who plan speedily—but wisely—are best equipped to reap first-out-of-the-gate advantages in a race that is shaping up to be intense.
1 Accenture Strategy, “How the U.S. wireless industry can drive future economic value”, 2018
2 Accenture Strategy 2017 Revenue Growth Research