In Business Model, Internet Access, Mobile, Spectrum

There is no way to describe 5G without reference to the importance of “virtualization.” The biggest changes are that 5G requires virtualization at the edge and in the core of the network. In other words, 5G will build directly on network functions virtualization and software defined networks in the core, but also will operate with a high degree of virtualization in the radio access network at the edge, as well. 

In the network core, 5G will build on a new capability called “network slicing,” which uses network virtualization to support creation of multiple virtual networks over a common physical network.

Such virtual networks–which might feature different sets of network features–also will be used with virtual partitioning of the mobile radio access network (RAN). In other words, it will be possible to create different end-to-end services that are tailored or customized for different use cases.

So it will be possible to create virtual networks with different combinations of capacity, latency, security, duration, reliability and geographic coverage.

Though for generations the goal of every next generation network has been a greater ability to supply bandwidth on demand, 5G is the first mobile network to build on virtualized networks as a core requirement.

Virtualization will take many forms. Core networks will operate at lower cost, and gain ability to create on-demand bandwidth and specialized network features by “network slicing.” In other words, it will be possible to create custom networks that have distinct sets of capabilities.

Consider networks supporting “autonomous car” services. For safety reasons, the systems reporting in real time on road conditions, hazards, and incidents will require a very reliable, secure connection, with very low latency and high availability so it can make decisions in milliseconds.

That might also be a “value-added” network, sold at a relatively higher price than a best-effort consumer internet application that delivers content to such vehicles.

Another slice of the network could be collecting other measurements from different devices inside the car that do not require constant supervision, such as servicing parameters that need to be transmitted back to the service center by the car’s service date, perhaps once a year.

Such features might even use overlay networks optimized for very low cost, very low bandwidth and long battery life.

In other words, core networks might be configured with different attributes to match different use cases and price points.

Other forms of virtualization will be key, as well. 5G might be the first mobile network that fully integrates use of unlicensed spectrum and shared spectrum, beyond switching between mobile and Wi-Fi networks. Whole mobile networks might also operate solely in unlicensed spectrum.

Since 5G also will be built on use of small cells, backhaul assets will be quite valuable, boosting prospects for integrated providers owning both fixed and mobile assets.

Also, 5G might be the first mobile network whose revenue streams are substantially driven by services provided to machines, servers and sensors, not human beings.

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