The critical role of the sliceable platform in 5G monetisation

July 2020
Caroline Gabriel

1. Executive summary

Many operators in developed mobile markets have started to deploy 5G networks commercially. However, the second phase of roll-outs will represent a critical juncture for operators’ 5G business models. This phase includes the migration to 5G New Radio standalone (NR SA) networks, which will enable a far wider range of services, user experiences and pricing options than the current non-standalone (NSA) networks, which rely on the 4G core.

In contrast with previous mobile generations, the most critical element will not be the RAN itself, but a fully virtualised, sliceable 5G core, which can support a host of applications and industries in an agile way, thereby revolutionising an operator’s 5G business opportunity. This will be the keystone of a 5G platform strategy and will recast the network as a set of configurable, programmable functions running on cloud infrastructure. This, together with a common, open framework of developer tools, services and application programming interfaces (APIs) will enable an endless variety of services to be launched as the market requires.

This core is so important that some operators are deploying it even before they upgrade the NSA network, and these early movers have the chance to make significant competitive gains. However, like any major architectural change, the migration also comes with significant risks.

These risks are technical, as operators migrate to radically different cloud-based architecture, but also organisational, since this architecture comes with new processes and skills requirements. They are commercial too, and this is particularly important. It will not be sufficient for 5G to support the enhancement of existing consumer services, though that does bring some incremental benefits. Instead, to justify the considerable investment in 5G deployment, operators in developed markets need to generate additional revenue from familiar user bases by offering new services or better experiences, and they need to expand into entirely new customer bases, mainly in the enterprise, industrial and IoT segments.

To achieve the optimal business outcomes, operators need to firm up several key strategies in parallel, and must decide on the timelines and partnerships to:

• maximise the ability of the first phase of 5G to improve familiar KPIs such as market share and average revenue per user
• lay the foundations for a fully cloud-based network by rethinking organisation, processes, skills, supply chains and partnerships
• harness existing channels and partnerships in specific vertical industries to identify low-hanging fruit for 5G enterprise services
• prepare the groundwork as soon as possible for a cloud-native 5G core, with support for advanced functionality such as slicing, and the flexibility to be a platform for services for a very wide range of customers, industries and use cases.

Putting pragmatic, step-by-step roadmaps in place now, while identifying the strongest use case priorities, will help operators to succeed during the challenging but critical second phase of 5G deployment.