2.2 5G NSA must be just the start of a multi-phased monetisation journey

It is natural that the first 1–2 years following the launch of 5G will be characterised by high roll-out costs and a modest transformation of cost or revenue. However, it is essential that more-radical improvements can be delivered after 2 years of commercial services, and for that, operators will need to migrate to a 5G network that is capable of dramatically reducing the total cost of ownership (TCO), while enabling a wide range of options for extending the business model into new sectors and use cases.

This will only be achieved if 5G is deployed not just as a radio network upgrade that is able to harness new spectrum and deliver increased speeds, but as a completely re-architected, cloud-based platform. This platform has the potential to enable a far greater diversity of revenue streams, vertical industry requirements, service providers and supply chains than 4G did.

There are many stages in the complex 5G journey, which most operators will follow over the course of a decade. Every non-greenfield operator that has launched commercial 5G services so far has implemented 5G NR NSA first. What comes next, and the timing for the next phases of the 5G transformation, will determine the success of the business case. Three key changes must be made, each of which must have a clear, measurable impact on the operator’s return on investment and the broader business case. Operators must:

• transform the RAN to support higher capacities and a lower TCO
• introduce a cloud-based network with high levels of automation and re-engineered processes based on IT norms
• deploy a cloud-native core and full services platform on top of those foundations, including slicing.

Ideally, these three major changes would be implemented in parallel, with clear interrelation in terms of the process transformation and return on investment (ROI) stages. In reality, Analysys Mason’s most recent survey of the 5G strategies of Tier-1 and 2 mobile operators indicates that most established operators will adopt a sequential roadmap. In this detailed survey of 78 operators, we found that more than two thirds of respondents expect to implement the key phases of 5G in the sequence shown in Figure 2, although the exact timings will vary according to their specific commercial landscape.

However, this paper will argue that the operators that will achieve the greatest early success with 5G will be those that accelerate the deployment of the cloud-native core, network slicing and a full services platform. Together with early deployment of IT processes such as DevOps, this will also accelerate the realisation of commercial benefits in terms of cost and revenue transformation, and will help operators in competitive markets to gain an advantage over their rivals.

Figure 2: Typical key stages in a 5G deployment journey, and the benefits of an early 5G core deployment. Source: Analysys Mason, 2020

The rest of this paper will examine the three main elements of 5G migration (the RAN, the core and the broader cloud platform) and their impact on the 5G business case. In particular, it will outline how each of these elements alone delivers only some of the hoped-for benefits of 5G. Operators’ commercial gains will be magnified when these elements are planned and deployed in a holistic way, with the early adoption of 5G core capabilities.