Smarter 5G Networks Still Will Face "Commoditization" Pressures

Among the expected upsides of new virtualized core networks is support for virtual networks that can be optimized by customer. The virtualized feature known as network slicing allows virtual private networks to be created across the core, and through the 5G radio network, to support different mobile virtual network operator customers, for example.

Network slicing also can be used to support enterprise customer service level agreements that are differentiated by application, device or location.

Of course, there always are problems with new technology platforms, in a business case sense. All the technology will be available to all the providers. Sure, an order of magnitude increase in bandwidth, customized virtual network features and near-zero latency are useful, but will be available to all the providers, retail or wholesale.

So, in the end, though feature competition will occur at new levels, price competition still will be the result.  

In other words, price differentiation still will be a driving feature. Ironically, the danger is that, in creating networks that are much less “dumb,” the commodity nature of the access and transport service does not change.

 

5G - Tech to business case from 3G4G

“Lots of moving parts” is an accurate way to describe the range of 5G building blocks. In the past, mobile network generations mostly have been about new air interfaces. But 5G is the first new platform that requires core network changes, is built to support both human and machine users at scale, use cases of varying bandwidths and core requirements, and the first to use frequencies that have historically been unusable commercially.

A presentation by Dan Warren, Samsung head of 5G research, aptly illustrates those issues. The coming 5G networks will require new radio access network architectures and rely on a virtualized core network.

Among the biggest uncertainties is whether 5G will lead to significant incremental growth of revenue sources from non-human use cases. The higher capital investment also is an issue, if upside from human use cases is rather limited and new revenues from internet of things is uncertain.  

Moving up the stack is a universally-acknowledged way to capture more value, more revenue and profit from the internet and mobile ecosystems. But that is not easy.