This blog post is the fourth in a series covering:
- Network impacts and operator actions resulting from COVID-19
- The long-term impacts on networks as our work-from-home culture grows
- Operators’ financial health and need to focus on network resiliency
- The advantages of network sharing as operators adapt to these changes
- New techniques in network sharing to better address challenges
This blog has three parts. Today’s post covers 5G cost optimizers. The following two post will delve into network sharing and competition and collaboration in the 5G era.
In our previous blog post, we covered the pandemic-related drivers and new techniques available to MNOs to reduce costs in order to keep up with the economic slowdown and downward revenue pressures. Though the global crisis may delay some 5G spectrum auctions and deployments, the industry has squarely commenced the 5G era with almost daily press coverage on vendor contracts, deployment milestones and standards revisions. This despite the fact that LTE will continue receiving investment attention for a while, and the killer 5G use cases are not yet crystallized. The push towards standalone 5G will create a “trillion-dollar challenge” over the next five years.
Globally, MNOs will invest on average about $200B in capex per year (existing and incremental opex not included) for both LTE and 5G networks. Realizing the magnitude of this endeavor and uncertainty of the payback, as expected, there will be wide range of initiatives to improve the ROI of 5G. Among them will be the opportunity to partner and collaborate with other MNOs or industry players. As the health and economic crisis deepens and 5G deployments continue, we believe that further innovations in network sharing will be a necessary consideration.
5G Cost Optimizers
According to GSMA Future Networks research titled 5G-era Mobile Cost Evolution, in mature markets there has been a subtle shift in the industry from initial planning and timing of market launch towards fine tuning 5G deployments and optimizing 5G costs. The GSMA Future Networks analysis, lays out different total cost of ownership (TCO) implications for the RAN, core network, backhaul, energy and other components for three different 5G network deployment strategies.
Some of the 5G features and TCO elements will accelerate costs (red bubbles in the figure) compared to the LTE reference case. Deploying the cost optimizer (green bubbles in the figure) can add efficiencies and remove some of the costs of the baseline 5G case. Furthermore, as Boston Consulting Group (BCG) points out in A Playbook for Accelerating 5G in Europe, 5G will also bring significant network cost optimizations to “more cost effectively increasing capacity as network traffic grows.”
The bubble graph plots 5G TCO accelerators and optimizers across three dimensions. The x-axis shows the potential cost delta, the y-axis assesses the discrepancy in current versus needed MNO assets and capabilities, and the size of the bubbles shows the percentage contribution to 5G-era TCO. Network ownership sharing is advantageously shown because MNOs capabilities show smaller/no gaps to deploy it, and it shows a prominent magnitude of savings. According to the GSMA, “network sharing will remain one of the most significant cost mitigators in the 5G-era. It can potentially deliver TCO savings of up to 40% in instances where operators share spectrum, active and passive infrastructure across the site, radio, transport and core network domains.”
In the next post we will dive deeper in to the opportunities and challenges of network sharing.