The 5G promises
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
The 5G promises
The 5G promises The 5G promises
2
Full speed ahead for 5G!Already, more than 300 operators have announced investments in 5G.It is predicted that, by 2025, 65% of the world’s population will be covered by 5G, while 5G subscriptions are expected to exceed 2.5 billion.
To make those figures, however, operators will have to first address many questions andchallenges:• Which value propositions and services will I promote on 5G?• How quickly will the new 5G terminals come to the market, and at what price?• How will they impact my existing offers and networks?• Will I have to transform my operational processes and develop new areas ofexpertise?• How quickly will I deploy my 5G network, considering what I’ve already invested andthe level of occupancy on my existing networks?• How can I make the best use of 5G with respect to the energy and sustainabledevelopment issues at stake?• Are there any security risks specific to 5G?• What is my competitors’ strategy, whether on the B2C or B2B market?
As to regulators, setting license prices in connection with coverage obligations and potential business will be a particularly tricky undertaking.Governments’ national deployment plans for ultra-fast broadband and digital inclusion will also have repercussions on regulatory frameworks.
Clearly then, there are many challenges around 5G: business, technical, operational,regulatory, security, energy, etc.
The substantive work to analyze the issues and to answer the above questions will prove valuable to developing 5G business plans.As to launch plans, they might vary widely from country to country, or even from operator to operator.
In order to better approach all these issues, regulators and operators will also be able tolaunch pilot operations, before the general deployment phase.For anyone wondering about the 5G adventure, we offer this White Paper, which sheds light on some of the key issues.
Enjoy!Guillaume Boudin
CEO Sofrecom Group
About Sofrecom
Sofrecom, an Orange subsidiary, has developed over 50 years a unique know-how aboutoperator businesses, making it a world leading specialist in telecommunications consultancyand engineering.
Its experience of mature and emerging markets, combined with its deep understanding of thestructuring changes affecting the telecoms market make it a valued partner for operators,governments and international investors.
In recent years, over 200 major players in over 100 countries have entrusted strategic andoperational projects to Sofrecom: transformation and optimization, technological modernization,innovation and development.
Sofrecom assists its customers’ digital transformation, boosting their operational performanceand service differentiation, thanks to a highly innovative approach to customer experience, veryhigh broadband, mobile financial services, e-government, change management...Sofrecom’s strength lies partly in its diversity, with more than 2, 000 consultants and experts of30 nationalities working in 11 agencies around the world.
Sofrecom is above all a network of men and women, a powerful network of know-how andexpertise which ties its personnel to customers, Orange experts and industrial and localpartners.
Sofrecom’s Know-How Network is also the guarantee of a transfer of know-how, skills andexpertise for sustainable transformation based on internationally certified methodologies.For more information, please visit our website : www.sofrecom.com
Sofrecom, The Know-How Network
P.4 The emergence of a new market
P.5 Theexpectedbenefitsof5G
P.8 BusinesscasesandbusinessmodelstodeliverprofitabilityinB2B
P.10 5Gfindsitswayintonationalveryhighbroadbandplans
P.12 Regulatoryactionencouragetheemergenceof5G?
P.15 Monetizing5Gwiththegeneralpublic
P.17 Financing5Ginvestmentsbyderivingvaluefromotherassets
P.19 Orange's5Gexperiments,gainingfootholdforsuccessfulindustrialdeployment
P.21 Keystosuccessfulroll-out:how5Gpilotcitiescanhelp
P.23 Reiningintheincreasedenergycostsof5G
Sommaire
The 5G promises The 5G promises
4 5
The emergence of a new market Theexpectedbenefitsof5GClément Roulleau - Market intelligence consultant, Sofrecom
With many European countries announcing the arrival of 5G in 2020, the question as to what benefits it will actually bring is dividing sector experts. The consumer market appears skeptical as to whether the foreseeable benefits are worth the extra price. On the corporate market, a number of uses on business verticals are said to be prospective revenue streams. As to wholesale operators, they wonder about the offers they will be able to market in 5G and about the potential
for capturing value on this new market. We offer an overview of what makes 5G distinctive and the benefits which each market segment can expect from it.
The B2C market, awaiting figures that tell of decisive gains
Although in 2019, consumer awareness of 5G grew across the countries that had launched the technology, including the US and the UK, few 4G users appear willing to spend more to receive the benefit of 5G services. Is this due to a lack of understanding, or are the benefits of 5G not quite enticing enough? Let’s run through the features specific to 5G to understand where its commercial potential lies.
A real increase in speed but not quite high enough to shift the tide
5G is being touted as enabling a massive increase in throughput. The theoretical throughput will increase by a factor of 10, offering performance levels comparable to those of fiber.The first tangible benefit of 5G thus supposedly lies in the potential to use the mobile network as an alternative to the fiber network. Even though this had already been partially accomplished with 4G, 5G could thus bring rural areas very high broadband similar to fiber in speed and reliability. This would benefit both the consumer and the operator, as well as cut their FTTH connection costs, which are generally high for isolated households.
According to Ericsson, average consumption per user will increase from an average of 6Gb per month to 24Gb by 2025, supported mainly by video. The question nonetheless remains:is there a real chance that greater speed alone will fuel such a surge in consumption? If the changeover from 3G to 4G put a smooth viewing experience
within everyone’s reach, what are the advantages 5G can use to carve out its own space? While an attractive selling point on paper, the ability to view videos in 4K or potentially 8K will only marginally improve the user experience. This is because, while screens are growing larger, mobile devices are not designed for resolutions of that kind. It is thus not easy to convince users.
Then comes the ability to download, via the 5G network, very large videos and/or files usually transferred to the fixed network. This would considerably facilitate downloads on mobile. The benefit is real, but must be communicated on as such, with offers specifically tailored to data volume needs.
Latency: the benefits are real, but need more explanation
The second key benefit of 5G lies in its latency, divided by ten. It would thus theoretically drop from 10 ms to 1 ms. Despite these enthusing figures, though, the B2C market is still having trouble detailing and understanding how this improvement will actually bring added value.The reduced latency will have a crucial impact on the streaming market. It will be the central building block around which the streaming platforms of the future will be built and, more broadly, all streaming-related innovations that incorporate interaction.
Beyond streaming, gaming will also enjoy significantly greater flexibility, as with 5G, developers will be able to host their games in the cloud. The games will thus
Expected benefits
Higher throughput10x higher than 4G
Lower latency10x lower than 4G
Wider coverage10x denser than 4G
Source : Ovum, December 2019
Numerous 5G devices are coming
199devices
are in preparation
Cloud gaming: 8.0 trillion USD in 2024 Connected car: 308 million in 2022
IoT: 5 billion connections in 2025 Industry 4.0: 156.6 trillion USD in 2024
Operators who fully launched 5G Operators who launched 5G(limited availability)
Operators actively deploying 5G
Operators investing in 5G
Source : GSA, 2019
348operators in
119 countries announced 5Ginvestments
5G subscription forecast
13 million2019
20252,6 billion
Thanks to 5G some usages should take off
of which 47 are already available
63 5G compatible smartphones
And laptops, tablets, robots, drones...
Source : Ericsson Mobility report, November 2019
The 5G promises The 5G promises
6 7
be operated partly remotely and displayed in real time, with a minimum response time. As a result, users will be able to play anywhere, on their usual mobile or tablet device.
For the Virtual Reality and Augmented Reality market, latency will offer similar benefits.
However, when it comes to the use cases and the terminals using these technologies on the move for B2C, many details remain to be filled in.
Greater network reliability to enable continuous performance
Although little has been communicated regarding the B2C market, the benefit of “guaranteed service” is the one that could make the greatest mark on consumers.
Looking beyond throughput and latency, then, 5G will greatly improve the reliability of mobile connections. It is believed that consumers will be able to sense the difference in everyday use.
The B2B market will benefit from all the features that make 5G different
None of the uses specific to 5G for the B2B segment have yet been designed. Although theyhave been described in broad lines (the connected car, industry 4.0, etc.), their developmentremains in its infancy. Nevertheless, one thing is already certain: operators must continue toinvest. Above all, they must collaborate and create partnerships with industry players to refine their use cases and develop end-user services that take maximal advantage of 5G while remaining closely in step with manufacturers’ needs.
Here, we will focus on the two main benefits of the mobile network's move upmarket: terminaldensity and latency.
“Massive IoT” as the driving force behind the cities of tomorrow
The term “massive IoT” refers to the multitudes of sensors and devices that will be in communication with one another through 5G. The new IMT-2020 standard associated with 5G requires a minimum connection density of 1 million devices per km² (as compared to 60,680 for 4G).It is indeed “massive IoT” that will enable the Smart City concept to fulfill its potential:resource and operation management in large cities
will not be viable unless automated. It relies on data captured via this swarm of sensors.However, there will also need to be guarantees on the reliability of the underlying connectivity, thanks to high data throughput and low latency that enable rapid and real-time transfer of information.
Latency fitted to the key issues at stake for “critical IoT”
On the existing mobile networks, the average latency is neither reliable nor regular enough to be applied to critical industrial control systems. It could do costly damage and, in worst-case scenarios, cause accidents.
The alternative offered by wire is expensive and impractical.
5G, in contrast, is perfectly suited to the task. The most widely discussed use case is that of the self-driving car. While it does not require massive data speed, the autonomous vehicle does rely on real-time communication with other vehicles, the road infrastructure (road sensors, lights, bad weather, etc.) and the network that connects them all up. At stake is the safety of passengers. The self-driving car will not reach the mass market until there is a mobile network that meets the latency criteria promised by 5G.
Maintenance and emergency services will also be able to enjoy optimized efficiency thanks to this technology. For instance, a worker equipped with a virtual reality headset will be able to benefit from expert advice or control machines remotely, almost in real time.
The same benefits will be available in the health sector, where it will become possible to carry out medical procedures remotely.
New opportunities on the wholesale market
As for wholesale operators, the arrival of 5G gives them many opportunities to diversify their
offers, in particular by incorporating IT services into them.
First of all, they will be able to market access to miniaturized 5G smart antennas, known assmall cells -- or even manage the said small cells. This is because the millimetric frequencies (in 26 GHz) involved imply a very low range, and thus require a very fine mesh of “small cells” across the territory.
Secondly, the virtualization of the 5G network, with network slicing, will provide it with previously impossible flexibility in the way network
infrastructures and connectivity are managed and marketed. This feature will enable operators to divide their infrastructure into virtual network slices, and provide each customer with a turnkey network tailored, via Cloud properties, to its specific capacity, latency and reliability needs. It clearly addresses the two problems currently emerging for companies:
• a growing need for services based on the Cloud, edge computing, CDNs, and platforms;
• the expectation that there will be strong integration between connectivity and IT services,securing end-to-end performance in their industrial facilities.
New customer types could emerge. For instance, an electricity supplier having decided to operate its own meter reading network could turn to a wholesaler to rent just the amount of 5G connectivity it needs, that segment ultimately becoming a slice of the network.
While feasibility and potential revenue levels are still uncertain, the opportunities offered by this transformation of the network are clear, and will need to be planned for by wholesale operators.
5G is being described as a major improvement to the very high-speed mobile network.
However, this improvement will be felt differently from segment to segment: while the increase in throughput, terminal density and decrease in latency seem to be the perfect fit for the B2B market, these same benefits do not appear to hold the same potential for innovation in B2C. As to wholesale operators, they will enjoy significantly greater flexibility in the way they manage and market their network infrastructures and connectivity, thanks to the network virtualization enabled by 5G in SA mode.
It is now up to the operators to find, in particular by continuing to iterate on use cases via solid partnerships with players in each ecosystem, the right business models to turn these opportunities into offers in step with the needs of each segment.
The 5G promises The 5G promises
8 9
solutions can be 5 times as much, depending on the chosen technical design.
The B2B2X business model in IoT
The other opportunity lies in an intensification of the Internet of Things (IoT).
5G will ease de development of critical IoT requirements thanks to Low Latency capabilities.Health / Telemedicine and autonomous vehicles are the most advertised uses cases especially when coupled with very high broadband. For some of these offers, new ways of selling might be implemented. For example, a car user will most likely not buy the embedded infotainment systems directly from a network operator. Hospital patients will not be the direct customer of the network operator either.
These business models are called B2B2X: monetization of the solution is indirect. The operator sells B2B services to a company, for the benefit of its regular end customers (B2X).
For example, an operator may sell augmented reality services capabilities to a company that will in turn provide them to its clients in a specific context (for example when the consumer enters a shop, a stadium, etc.) or in a situation determined through a more complex combination of analytical information (customer profile, localization, customer action).
In massive IoT, there might even be schemes where the value of the data collected is higher than the one of the mobile subscription. In that case, the operator derives its revenues from the data and proposes subscriptions for free. This can be deployed in Smart City environments with the deployment of sensors supporting diverse use cases: metering, smartlightning, traffic management, waste management…IoT in this B2B2X market is a real opportunity for operator to get even with OTT, as far as data monetization is concerned. However, making sense of IoT data requires looking beyond the object itself (camera, smart lamp, temperature sensor …) to the business process. The key to the value is therefore to combine customer data with object data in thecontext of a given business process. In some cases, for example with autonomous vehicles, these processes will only involve objects (cars, roads, etc.).
Each business process is intricately linked to the company (for instance a utility, a factory) orto the public authority (a city) that uses it. In essence, the prerequisite to understanding IoT data is for operators to build a close B2B relationship with this “business owner”.
Monetization of these opportunities is not only a matter of mastering the technology but also of transforming the mindset. Succeeding and achieving profitability will require a transformation of operators’ go-to-market, as well as of their margin scheme, where skills will matter more than Capex. This is the typical business model of an ICT service player.
The transformation is already underway and many operators have developed more and more capabilities to integrate additional ICT services beyond connectivity: these “service” revenuesalready represent up to 30% of the B2B revenues of many Telcos.
BusinesscasesandbusinessmodelstodeliverprofitabilityinB2BDavid Erlich - Consulting director, Sofrecom
The 5G should benefit many new uses (connected objects, connected cars, …) but some observers question its monetization model. Indeed, the introduction of the 5G is looking as promising as the previous one. How then can a premium price be imposed when all competitors are deploying simultaneously, thereby sterilising any competitive advantage?
While 5G is expected to benefit numerous B2B usages (IoT, connected cars, etc.), many observers challenge the room for monetization, as the introduction of 5G bears many similarities to the previous generation (4G). It appears very difficult for mobile operators to sustain a price premium in an environment where all operators deploy at the same time and none is able to hold a competitive advantage.
A delicate business case for Fixed Wireless Access The new paradigm comes with the possibility to replace fixed infrastructure, both for Wide Area Networks (WAN) and Local Area Networks (LAN).
On the WAN end, the opportunity for Fixed Wireless Access (FWA) is coming under scrutiny. This will be a key technology for digital inclusion, increasing both the number of connected customers and the available data rate. However, this will not necessarily introduce new usages in itself. FWA and Fiber may be offered through identical packages, targetingprimarily B2C and Small Businesses.
This will translate into new revenue streams, through the extension of the broadband customer base, and opportunities for mobile players to enter the fixed telecommunications business. The business case will depend on a variety of characteristics. The band used will determine how close the antenna will need to be installed to reach the customers. For 26 Ghz, line of sight might be required which imposes tight constraints, as opposed to lower bands such 3,5Ghz which have better building penetration capabilities. Secondly, bringing antennas close to customers requires fiber deployment to backhaul the traffic. This means deploying fixed infrastructure already close to the customer. In this case, there might be
competition between wireless and wireline to build the last mile. The last point to take into account is the impact within customer premises. Wireless solutions may require site surveying and installation of outdoor wireless equipment; to be balanced against the layout of fiber that can require civil works. The FWA opportunity thus results from a very delicate economical fine tuning.
With private mobile networks, operators may combine integration with traditionalservice provision
Campus coverage solutions (including Private Mobile Networks) will at first compete against established wifi solutions, defined as Wireless LAN. However, 5G opens up new possibilities, for example, guaranteeing SLA on some critical processes for Industry 4.0 or operating in large areas. These solutions will target large customers including port authorities, airports, owners of industrial assets such as plants, mines, refineries.
The approach and the value proposition are not based on connectivity, but on Cost of Ownership or improvement of business processes. The business models depend on the level of dedication of the infrastructure. In some countries, private companies will be able to build a fully private mobile network from scratch. If the operator integrates such a solution it will be an integrator model, where the capex is fully supported by the customer. However, this type of services can also be delivered through mixed solutions, where the operator will allocatesome shared resources to the customer such as spectrum or core network elements. The result will be a mixed business model between fully shared resources and fully dedicated resources, and the difference in Customer Cost of Ownership between
The 5G promises The 5G promises
10 11
5GfindsitswayintonationalveryhighbroadbandplansMaria Gabriela Macra - Director of government projects, Sofrecom
For the past 3 years, the national plans drawn up by most developed countries have included 5G. In the emerging countries, too, the deployment of 5G is starting to be integrated as the ultimate facilitator of their connectivity. It would appear that the promise of giga wireless connectivity is seen as a miracle solution for countries where the costs and risks of building networks are very high. Whatever the case, the regulatory framework remains essential for a
coherent development of 5G.
Giga Connectivity: the new frontier
5G can fulfill the needs of connectivity
Demand for capacity on fixed networks has far outstripped the forecasts made 10 years ago,largely due to OTT's multi-screen uses.
Similarly, capacity demand has exploded on mobile networks, with an average increase in traffic of 100% in emerging countries and 50% in developed countries. The cause is the advent of applications and the terminals able to support them.
Concurrently, in developed countries, the density of connected objects is expected to increase from 1,000 to 100,000 per km² over the next 10 years.
Against this background, the deployment of 5G satisfies two demands: that of the general public, wishing to extend its fixed uses over the mobile network; and that of industry, which wants to ensure that the new network is able to leverage all the IoT potential.
…However, operators need to ensure its profitability
All the advances stemming from 5G and new applications carry significant direct and indirectcosts for operators.
Already, ITU and BEREC [ 1 ] have warned about the potential effects of 5G launches on thedigital divide on the residential market. In order to achieve reasonable returns on investment,most operators are considering initial deployments
either in high-density areas (cities) or in highly demarcated industrial areas to serve businesses. The risk of an increase in the digital divide is thus significant both within a single country and between emerging and developed countries.
How should 5G fit into a national very high broadband plan?
With 5G launches under way, the role of public policy is structuring to organize the market, facilitate investment and create the conditions for growth.
5G’s integration into the roadmap of national plans will have to take into account four important and non-exclusive elements.
1 Body of European Regulators for Electronic Communications
Identifying the demand
A successful 5G launch must build on existing or latent and potentially significant demand.
5G addresses the demand for capacity, but also for symmetry in applications and very low latency. If a country’s industry is not prepared to make massive use of connected objects or to kick off services based on the said technology, or if the residential market cannot afford the applications that might be addressed to it, it is more appropriate at this stage to focus on creating the conditions for growth and uses under 4G networks.
The considerable difference between countries with high fixed penetration and countries focused on mobile will also need to be taken into account. In the former, fixed/mobile continuity will be the foundation for the massive development of applications, while in the latter, the aim will be to increment “wireless-centric” and OTT-type application uses.
From an industrial point of view, public players will need to find the right timing. It is important that time requirements not be set too early, before the launch of applications and devices, as this would generate frustration. However, they should not be set too late either, as this would slow down development. No one wants to end up in a situation where customers with next- generation connected cars, the capabilities of which were probably a decisive factor in their decision to purchase, would not be able to use them.
Assess the maturity of the networks
The promise of very high-speed wireless connectivity must be backed up by a coherent end-to-end
network and in particular by backhauls and backbone networks of sufficient capacity.
Otherwise, the services will not be functional.
Consequently, it would be premature and probably counterproductive to imagine the launch of 5G licenses in an ecosystem unable to support applications stemming from this technology.Depending on the country and the related situation, the public authorities’ requirements of the telecoms ecosystem may come in different areas:• bringing lower-quality sections of the network “up to standard",• guaranteeing the security of the networks,
• extending network coverage,• establishing new rules for the wholesale market to regulate relations between application and network providers.
Consider migration
The tunnel effect experienced with the complete replacement of fixed networks made obsolete by digital networks in Latin America, or the implementation of 4G in countries that were behind on mobile 3G (South-East Asia), will not be possible, at least not in the same proportions, with 5G solutions. This is because the need for a general upgrade of the backbone and backhaul cannot be omitted. Thus, it would be unrealistic, apart from certain specific cases (very large cities in China, or Latin America), to assume that countries lagging behind in 4G deployments will be able to integrate 5G seamlessly.
Avoid an increase in the digital divide
Lastly, it is important not to lose sight of the importance of public regulatory frameworks inreducing the digital divide. Thus, although less profitable in the short term, 5G would enablevery high-capacity coverage of areas currently poorly covered by high-quality broadband networks.
The implementation of specific plans, allowing, for example, exclusive usage time for the operators having made the investments, would be one possible avenue to promote both technological deployment and the growth of the associated services.
Although the integration of 5G into the 5-year plans of developed countries is not contentious, emerging countries have to consider the path necessary to successfully implement this new technological environment by aiming first and foremost to harmonize their broadband network, and to establish public-private partnerships consistent with industrial objectives in the broad sense of the term.
The 5G promises The 5G promises
12 13
Regulatoryactionencouragetheemergenceof5G?Arnaud Comerzan - Senior regulatory consultant, Sofrecom
Regulators play a key part in the advent of 5G. Their work on a number of subjects is decisive in the deployment and commercial success of the new mobile technology, starting with their efforts to harmonize frequency bands, at the global level, and the work around freeing up the said bands, at the national level. In addition to this come trade-offs on the definition of the regulatory framework and the valuation and definition of coverage
obligations. The earlier regulators are positioned, the more quickly 5G services will be launched.
A flexible regulatory framework to foster innovation
Setting a flexible regulatory framework is an opportunity for the regulator to facilitate theemergence of new-generation networks. By allocating the necessary frequencies sufficientlyearly on, it gives operators and equipment manufacturers the opportunity to carry out anumber of experiments. In so doing, it fosters the rapid emergence of new differentiating uses such as network slicing, edge computing, IoT, autonomous cars, fixed 5G and services for professionals.
A “pro-innovation” regulatory policy could involve:
• temporary permits for experiments exempted from part of the regulatory framework,• streamlined administrative procedures,• support offers to start-ups so that they can stimulate the emergence of new uses.
Such provisions would enable the entire ecosystem (operators, manufacturers, start-ups...) to better anticipate the arrival of 5G.
A number of key trade-offs
Even if they are not stakeholders in the design and deployment of communication networks, like the equipment manufacturers and operators, regulators are becoming, in their own way, architects of communication networks.
They increasingly influence the way in which networks are deployed by inserting a certain number of objectives and obligations in the operators’ frequency usage permits.
Defining how and to whom licenses should be granted
In allocating 5G frequencies, regulators will be faced with multiple strategic questions and be required to make trade-offs: should any range of the spectrum be reserved for vertical players? How can the right balance be struck in allocating frequencies to the consumer market and the corporate market respectively? What is the best compromise between latency and quantity of spectrum allocated: should the players be synchronized or should guardbands be introduced?
How band frequency is allocated is another important issue. The regulator will have two options between which to choose:
• allocation by exclusive license: bands are allocated solely to mobile operators for a defined period.• allocation by general authorization: the bands are said to be “free”, e.g. the 2.4 GHz and 5 GHz bands used by Wi-Fi and Bluetooth.
While the vast majority of allocations will be made under a system of individual exclusive permissions, some players believe 5G will also need to use frequencies under general authorization.
Achieving the right balance between license prices and coverage obligations
Furthermore, some regulators, in agreement with Governments, will want to limit the cost of frequency allocations to preserve the operators’ investment capacity and enable them to deploy 5G on a massive scale. In France, for instance, after successively allocating 3G and 4G frequencies at high prices, the Government and ARCEP decided, via the “Mobile New Deal” in 2018, that frequencies would be allocated without additional cost, provided that operators agreed to make extremely significant efforts on coverage and deployment. In contrast, the 5G auctions organized in Italy have caused prices (stated in MHz perinhabitant) to soar to exceedingly high levels and will consequently limit the country’s 5G capacity for deployment.
Anticipating the uses of 5G
Fostering the rapid and mass uptake of 5G is a fundamental concern for regulators and governments not to curb the potential for the emergence of an app or national player willingto take advantage of the announced technological breakthrough.
Readers will recall that, despite all the efforts made by operators in the mid-2000s to findnew uses for 3G to on-board the general public (video conferencing, live television), the technology remained in search of its purpose for quite some time. It was not until the advent of smartphones, crystallized by the release of the iPhone in 2007 (which ironically offered only a 2G modem at the time of its launch) that 3G was really used to its full potential.
As for 4G, it was conceived and designed at a time when smartphones had already been massively adopted by users. It is likely that Sweden’s lead in 4G deployment and uptake facilitated the emergence of Spotify in the music streaming market.
As far as 5G is concerned, it is difficult to envision with any certainty or precision how the actual use cases look and how much success they will enjoy. What's more, the current allocations are enabling the emergence of non-standard 5G networks (Non StandAlone) in the short term, when their functionalities remain to be completed. It is only at a later stage, probably from 2022 on, that truly innovative networks and uses will be able to be deployed with 5G standalone (SA).Given the uncertainties about future professional
uses, regulators are taking different approaches. Some, such as the BNetzA in Germany, have chosen to reserve part of the spectrum, from the allocation of the 3.5 GHz band, for “vertical” industrial players.
Conversely, other regulators such as ARCEP in France have chosen not to reserve frequencies for those players and instead wait until other frequency bands such 26 GHz are allocated.
To ensure the regulatory framework for 5G is adjusted to realities, regulators must have an ear to the ecosystem, while also trying to anticipate which uses will develop.
Their challenge will consist in developing a framework of obligations that enables these innovative uses to develop (self-driving cars, verticals, fixed 5G, etc.), but is also based on the understanding that they may not materialize. Indeed, there are currently no indications that self-driving cars will definitely need 5G to function.
The 5G promises The 5G promises
14 15
Monetizing5GwiththegeneralpublicFlorian Jozefowicz - Senior strategic marketing consultant, Sofrecom
Whenever a new mobile network technology is deployed, it gives operators theopportunity to rethink their product ranges and the price of their packages, as well as potentially monetize new uses. 5G is no exception to this rule. However, in a context where the consumer market appears to be satisfied with 4G, how can operators draw value from the new technology? The deployment of 5G is thus not only a technical challenge but also a test for
operators’ business models.
A variety of “premium” pricing models potentially suited to the consumer market
Price increases are often the easiest way for operators to monetize a new technology. The first commercial launches of 5G on the mass market world-wide confirm this. Three main models have been used to implement this increase:
A new 5G range, replacing the existing 4G:the operator gradually phases out its 4G plans, replacing them with plans built for 5G, understandably beginning with high- end plans. The new packages are offered at a higher price, possibly justified by a higher level of data. This scenario offers the advantage of presenting the 5G range ina simple and easily understandable light.
However, it is hampered by low coverage levels and an under-equipped target population, as network deployment and 5G phone penetration remain fairly limited. As 4G plans are phased out, consumers are encouraged to migrate to 5G. However, a lack of customer enthusiasm to switch to this new technology could end up creating a boomerang effect: customers will instead feel prompted to look to other operators, offering high-end 4G packages. A new 5G range offered alongside the existing 4G range:the operator rolls out a new 5G range that coexists with the 4G. Predictably, the latter is offered at a lower price. This model enables the operator to maintain attractive 4G price levels in areas not covered by 5G. However, there are dangers for operators marketing the two ranges in parallel, particularly when it comes to managing their digital subscription pathways.
Furthermore, this model does not encourage the customer to subscribe to 5G, in contrast to the previous scenario..
5G as an option in existing packages:the current range remains the same, but customers can choose to benefit from 5G by paying for an add-on. This model offers the advantage of being very flexible: the add-on can be made available with all packages or only some. Its price can vary depending on the package. A free trial offer can even be used to boost customer interest. However, the operator must make sure that this option is appropriately showcased by the sellers in-store and given enough visibility on digital channels. Moreover, reducing all the promises of 5G into a mere option could diminish the new technology’s value and thus its benefits in the minds of prospective consumers.
It should be noted that increasing price remains a dangerous undertaking. It is all the more so for 5G as consumer interest has not yet been established. According to a study[1] by PwC, only 1/3 of customers today would be willing to pay more for 5G. Some of the features that are of most interest to customers include: speed, unlimited data usage and networkreliability.
Moreover, to offer any kind of premium package, the operator must demonstrate that its technology is reliable and available in a reasonable number of areas. In April 2019, Verizon became the first operator to launch a consumer mobile 5G offering in the United States for an additional $10 -- but had to backtrack almost immediately. Its network coverage and overall performance were simply not strong enough to make such a price increase acceptable.
The launch of a new mobile generation is always a challenge for operators. The 5G is particularly destabilizing: it is a breakthrough technology that will arrive in two stages. This launch poses unprecedented challenges: technical challenges, financial challenges, environmental challenges, marketing and sales challenges, yet there are no standard answers.
Solutions, such as the future 5G services, are based on new models that need to be invented and that will have to prove to be structuring in the long term. However, the first experiments carried out by the Orange operator and the analyses carried out by the Group's experts are already providing operators with guidance on various issues: new methods of financing investments in the 5G network, the interest of 5G pilot cities in the industrial deployment of the network and in the design of future services for businesses and individuals, methods for monetising offers, control of energy OPEX...
Challengesfortelcos
The 5G promises The 5G promises
16 17
New range segmentation possibilities for the operator
In a context where unlimited offerings are on the rise, data is becoming less and less a segmentation criterion in operators’ product ranges. The solution could thus be to segment their offers by level of speed. Some operators are already doing this on fiber, in particular SFR in France and BT in England, or on 4G, as exemplified by Elisa in Finland.
However, this segmentation principle also gives rise to a certain number of problems. For example, it will be difficult for the operator to consistently guarantee the speed promised to the customer, as it depends not only on the device, but also on the coverage of the network being used. Furthermore, the regulatory authorities keep a close watch over promises on speed. Lastly, customers must be convinced that higher throughputs will benefit them, otherwise there will be very little increase in value and customer ARPU will remain low.
Improved latency can also serve as a new driver for range segmentation. It makes it possible to deliver a promise of flawless, end-to-end mobility with a quality of mobile experience very similar to that of broadband. However, this customer benefit is much more difficult to market than increased speed, as it is less perceptible to customers in their everyday experience, except in a few use cases such as cloud or on-line gaming.
New video uses are also potential drivers for monetization and differentiation. Thanks to itscharacteristics, 5G will pave the way for the consumption of higher-resolution video formats:4K, 8K, even 16K and 32K, but also :
• virtual reality (VR)• augmented reality (AR)• and mixed reality (MR)
Operators can take advantage of these types of content in two main ways:
• by building bundles: by forming partnerships with reference third-party players to enhance their offers
• by developing their own 5G OTT services, through which they will
be able to secure the customer within a proprietary ecosystem.
This new content will justify the higher price
and enhance the operator’s marketing promise.
For example, South Korean operator SK Telecom has developed its own dedicated platform “5GX” with several thousand VR, AR and UHD/4K titles offered to showcase this type of content to its customers.
After mobile, Fixed Wireless Access (FWA) has become the main revenue opportunity arising from 5G.
5G also makes it possible to offer mass market customers an experience comparable to that of fiber, at a competitive price, in areas where broadband is either little deployed or already dominated by a player. Operators relying on 5G to replace the fixed connection of homes will be able to bring convergence offers to customers not yet reachable up to that point. The 5G Broadband + Mobile bundles will also make it possible to develop new marketing promises around a fail-proof network, offering a high-quality, continuous experience. Operators will also be able to combine this with the content strategy described above to bring out the advantages of this new mobile network.
However, it is important to see the penetration of this technology in perspective: even on the markets most conducive to its deployment, the volume of customers in 5G FWA is not expected to exceed 10% of total broadband customers. However, Ovum estimates that this fixed 5G market is expected to be worth $10 billion by 2024.
Virtual reality (VR) : A fully immersive technology. It creates a 3-dimensional artificial universe, generated by a computer, in which the user can interact, move around and evolve. The latter uses a headset on which virtual images are projected.
Augmented reality (AR) : A live view of a physical environment, the components of which are “augmented” by computer-generated elements, for instance, a virtual fitting room designed according to the preferences which a user has voiced on social media.
Mixed reality (MR) : Mixed reality combines the real world with digital elements on which the user can take action using next-generation image and detection technologies.
Financing5GinvestmentsbyderivingvaluefromotherassetsArnaud Comerzan - Senior regulatory consultant, Sofrecom
For many years, mobile operators have built their marketing primarily around network related statements: coverage, performance and quality of service. Owning and being the exclusive users of their infrastructures was thus enough to protect them to a large extent from competition, as such assets were then considered to be highly strategic. However, that postulate is now changing and operators are starting to see that their “high points”, in other words, the sites where their antenna are deployed, are non- strategic but indeed highly valued assets that can become new sources of revenue.
Originally, competition through infrastructures
When it comes to roads and highways, gas or electricity, the local authorities have always been accustomed to dealing with them as network infrastructures operating as monopolies, which they build and establish, directly or by delegation. With electronic communications, in contrast, it was the central government that long held the monopoly. Today, the telecommunications sector is largely open to competition, and two major models coexist.First, competition on infrastructures for the local copper loop held by the country’s historical operator and secondly, competition through infrastructures as regards mobile and fiber, where operators each deploy their own network. This strategy of owning all their equipment has been facilitated by the general
dogma advocated by European regulators, i.e., “competition through infrastructure”.
In mobile, site rental is expanding complementary to ownership
In mobile, the two key differentiating factors for networks are frequencies, which are allocated by regulators in return for financial compensation and/or coverage, and the sites that host operators’ antennas. These sites can be masts, roof terraces or other types of supports such as water towers or religious buildings. To create a mobile network, operators have two options: owning their masts or renting locations from other operators or specialized companies, called Tower Companies (or “TowerCos”).
The 5G promises The 5G promises
18 19
TowerCo investments are intensifying
Strategic shifts have been taking place around TowerCos in recent years. With interest rates now extremely low, investment funds see these infrastructure assets as an opportunity to diversify and enjoy a good return. First of all, rent levels are comfortable and sustainable: it is almost certain that the operators and networks of the future will need high points on which to position their antennas, for the foreseeable future. At the same time, operators are coming up against the ”tide of investments" resulting from the concurrent deployment of fiber and 5G, and are trying, every which way, to secure the financing needed to makesuch investments.
These investment challenges have encouraged the emergence of “super TowerCos” on a continental scale. In Europe, it is Cellnex that is buying many operator sites at very high valuations (around 300k
euro per site). It has expanded its ownings from 7,000 sites in 2014 to nearly 54,000 sites as at end 2019. Cellnex's valuation of 14 billion euro at the end of 2019 is close to half the market value of major operators such as Orange, Telefonica and Vodafone. This situation reflects investor confidence in the sustainability of TowerCos’ profitability versus that of operators.It is in this context that the first shifts in mobile site assets came, first in the United States with AT&T and Verizon.
The development of operators sites via full or partial sales to third parties or the promotion ofassets through the creation of “TowerCo of operators” have important implications in a context where 5G is on the way. Such transactions enable
operators to improve their balance sheets and reduce their debts, making it easier for them to fund 5G. Ultimately, the objective of TowerCos or operators is to increase the number of tenants per site and thus improve the rate of return on assets. The arrival of 5G promises a significant increase in the number of sites, but also makes it likely that the active pooling agreements often sought by regulators will develop, with a negative impact on the number of tenants per site.
The objective of TowerCos or operators is to increase the number of tenants per site to improve the rate of return on assets.
Orange's5Gexperiments,gainingfootholdforsuccessfulindustrialdeployment
What kinds of questions go through the mind of an operator like Orange as it prepares to roll out its 5G network in France?
The operator is, of course, faced with industrial questions, 5G being a technology that is more disruptive than previous generations of mobile. It also wonders about strategic and financial choices:
• Should it deploy 5G more or less all over, to quickly signal to a broad population that coverage is on the way? Or, would it do better to focus the promise of 5G on a few areas where it will offer a truly different experience than with 4G?
• How many frequency blocks should it acquire to be sure it can meet capacity demands in 10 years, considering that, in some countries, the cost of frequencies is very high?
Given that the future uses of 5G are precisely in the future, all of these decisions will have to be made on assumptions alone regarding the services ultimately developed, speed of development, amount of data consumed by new uses, capacity to develop new services in the B2C and B2B markets...
While we try to envision the new 5G environment, however, we cannot let ourselves lose sight of our customers’ no. 1 expectation: quality high-speed mobile broadband coverage, all over the country.
5G will not be the only way to meet that demand. Yes, it will help decongest the 4G network in urban areas and support the growth of data. However, parallel to its deployment, we will need to continue to increase the density of our 4G network, particularly in rural areas.
What stages can we expect to see in the deployment of Orange’s 5G network in France?
Like other countries, Orange France has chosen to launch 5G in NSA (Non StandAlone) mode, in the 3.5 GHz band, keeping to the pathway chosen by a large number of operators. In 2020, we will deploy 5G antennae systems on a 4G network core, after a substantial phase of full-scale tests initiated in 2019. 5G SA will come onto the scene two or three years later, with all its promises for latency and slicing aimed at the B2B market.
What objectives has Orange set for the experiments initiated in several pilot citiessince autumn 2019?
We’re not looking to see whether 5G technology works. That has been confirmed in the laboratory. The large-scale tests that we are carrying out now in 6 pilot cities have two objectives.
• First of all, we want to pave the way for the industrial roll-out of 5G on thousands of sites.
Since autumn 2019, Orange France has been conducting full-scale 5G experiments in multiple pilot cities. The teams that will be mobilized to deploy the new technology are participating in the process. The tests involve equipment manufacturers, Orange customers, the Government and the local authorities. What are their goals, and what lessons have they learned? We hear from Marc Blanchet.
Marc Blanchet - Technical and IS director, Orange France
The 5G promises The 5G promises
20 21
This way, the teams at our 5 Regional Network Management Units will be able to gain an operational understanding
of their everyday work once the roll-out has been
completed: they will assess its impact on our processes,
operating modes and physical reality of each of our sites. The tests
focus on very concrete aspects: territorial coverage, continuity of service in different types of configuration, integration of equipment on roof terraces, which type of configuration to choose, power supply and energy consumption studies...
•Secondly, we want to raise awareness about this new technology among Orange employees, the general public and companies, by showcasing its first innovative uses. Our experiments will enable these future users to experience things they never imagined. At the same time, they will position Orange as a leading operator on 5G...
What types of tests are you conducting, and what were your criteria for choosing your pilot cities and sites?
We are running two types of experiments, mainly in the 3.5 GHz band, though a few sites are covered by 26 GHz:
• There is small-scale testing at specific sites: one of our largest company site in the south of Paris, the Linas-Montlhéry motor circuit, the Rennes rail station...
• Full-scale experiments in the peri-urban areas of 6 pilot cities (the Opera district in Paris, Lille and Douai) covering the 5 Orange regional intervention zones: (North and North- East), Nantes (West), Marseille (South) and Montpellier (South-West). We have equipped each of these cities with a mesh of 50 to 80 5G radio sites.
What other players are you involving in these experiments?
We are working with our historical partners: the equipment manufacturers Nokia and Ericsson which is leading the way in 5G, as well as Samsung and ZTE at Group level. We have also brought in Orange customers, the local authorities concerned and the government and government agencies –
ARCEP and the French National Frequencies Agency (ANFR) – the latter having voiced their curiosity about the new technology.
Having run the tests for one quarter now, what have you learned?
The experiments have clearly shown that rolling out 5G will not be a mere matter of picking up where 4G left off. We will need to rework all of our processes, and thus also retrain all of our teams so that they have the necessary skills sets.
They have prompted us to do a lot of work on specific technical aspects that will become key cost-reduction enablers in the deployment process: the sizing and power of the antennas we install, as well as optimized energy consumption at the sites.
Will rolling out the 5G network require more substantial investments, compared to the 4G network? Will the return on investment time be longer?
The cost of deploying 5G will probably be higher than that of deploying 4G. We are only at the beginning of this adventure though, and expect it to be a long one. The investments we make, like the value we gain, will therefore be spread over time. Yes, the business models are tricky. The services involved have yet to be invented. We will need to work on themethods for monetizing the features specific to 5G, which will be the keys to ROI. However, if we are able, today, to gain greater value from Internet access on fiber compared to ADSL, there is no reason why, on a market as developed and competitive as France, we should not be able to do the same with 5G innovations.
The continuing growth in data consumption on mobile, the need for coverage and the potential of future 5G uses all confirm that investing, not only in the new network but also in very high speed in all its facets : 4G/5G/fiber is the right way to go. The keycriterion that should guide the operator in every investment decision is: serving the customer’s need for connectivity everywhere. Seen from that perspective, 5G is just one component of a far broader promise.
Keystosuccessfulroll-out:how5GpilotcitiescanhelpHervé Tchoffo - RAN 4G/5G architect, SofrecomGrégory Casas - Software roadmap and supplier relationship manage, Sofrecom
In early 2019, ARCEP opened a “5G pilot” window in France enabling future operators of the new mobile generation to open 5G experimental radio sites that would transmit on the 3.5 GHz and 26 GHz frequencies. While the new technology has not yet been fully standardized, Orange and its competitors have embarked on full-scale tests in some thirty pilot cities. This approach, in which a new mobile network is in effect given a commercial pre-launch, is unprecedented in its scale. What are the benefits for operators and governments?
A promising but complex technology
The aim of ultra-high-speed 5G mobile is to concurrently respond, via a unified technology, to avery wide variety of needs, the respective requirements of which in terms of speed, latency,coverage and energy efficiency could provemutually-exclusive: the connected car, industrialautomation, IoT, remote surgery... It will be made of new technological building blocks (radio interface, network architecture) currently being optimized or designed. The latest specifications, which will be determined by releases 16 and 17 of the 3GPP standards agency, are expected in June 2020and September 2021. 5G will also rely on new frequency bands (3.5 GHz, 1.5 GHz and 26 GHz).Its arrival will be gradual, as the technology is not mature and the 26 GHz frequencies will notbe allocated until 2022.
Experiments to anticipate the gradual shift towards revolutionary uses
The pilot cities, which operators have equipped with a mesh of 50 to 80 radio sites emitting mainly on 3.5 GHz frequencies, give them perspective to anticipate large-scale deployment.
They will also help set the stage, gradually, for the disruptive services which they intend to offer to individual customers and to vertical markets in the three major categories of 5G uses defined by the International Telecommunication Union (ITU): eMBB, mMTC, and URLLC.
The advent of 5G is expected to unfold in three stages:
1. Arrival of enhanced mobile broadband (eMBB).
Since 2019, the first deployments of 5G NR (New Radio) have been carried out in compliance with the 3GPP Release 15 standard known as NSA, or “non-standalone”. The new 5G radio equipment is connected to the 4G LTE network, the core of which remains 4G.
Enhanced mobile broadband gives users access to better and faster connectivity for video streaming, on-line games, virtual reality and augmented reality applications. But it stops there. Operators can also better manage capacity in congested areas, improving the quality of service and thus driving customer retention.
2. Arrival of massive Machine Type Communications (mMTC) after the allocationof frequencies in 26 GHz.
Massive IoT takes up the challenge of accommodating massive amounts of connected objects on a limited amount of space, and with differing service level requirements. The standard requires a connection density of 1 million objects per km² to be supported, when the 4G LPWA standard supports 60,680 objects per km². This stage will take emerging technologies such as big data, AI and blockchain to the next level.
3. Arrival of communications with ultra-reliable low
5G tests and deployments on frequency bands above 6GHz across the world
- 348 operators are rolling out or testing 5G.
- 61 operators in 34 countries have marketed a 5G service, including: AT&T and Verizon in the United States, LG Uplus, KT and SK Telecom SouthKorea, Elisa Finland and Estonia, Orange in Romania, Vodacom Lesotho(Source: GSA)
The 5G promises The 5G promises
22 23
latency communications (URLLC) enabled by the implementation of a 5G network core.
Ultra-reliable low latency communications will open up access to network slicing, throughwhich the operator will be able to break its network down into slices of virtual networks offering services differentiated on the basis of customers’ critical uses, and therefore their specific needs in terms of capacity, latency and reliability.
To foster experimentation in both these categories of uses, 3GPP defined and published in June 2018 the specifications for the SA (StandAlone) version of the 3GPP Release 15 5G NR standard, based on a 100% 5G architecture.
Many benefits before large-scale deployment
The innovative model of 5G pilot cities and experimental platforms will prove a driver for the commercial and economic success of future roll-outs. They enable operators to explore the challenges found in an innovative technology and to validate technical, organizational and human issues ahead of a launch carrying multiple unknowns.
The information gathered fromone year of experiments has enabled them to progress on several fronts:
Validating technical equipment and suppliers
The full-scale tests make it possible to experience the performance levels – speed, energy consumption, security, etc. – of the 5G equipment offered by major suppliers (Ericsson, Nokia, Samsung, Huawei...), in real-life conditions, to compare them with the promised specifications and
prepare calls for tender for future partners. To limit operator CAPEX generated by the gradual and sometimes parallel deployment of equipment in NSA and, subsequently, SA mode, the lower layers of 5G NR must be designed to operate on both a 4G and 5G network core.
Supporting upskilling in the deployment teams
In France, the engineering behind 5G will require new and more sophisticated skills of the teams involved in deploying the equipment, both on the operational aspects and the facilities’ configuration and settings. Why? Because the frequency spectrum management mechanisms, whether for uplink or downlink, will be different from those historically implemented. More complex, they will require, first of all, tighter coordination between operators so as to prevent interference, and secondly, synchronization between all theinfrastructure equipment, which will need to be set to the same time. While GPS makes these changes feasible, the physical adjustments required will entail costs and are not always possible in outdoor environments.
Uniting and mobilizing a 5G ecosystem to pave the way for service launches
The laboratory cities have also served as an opportunity for operators to form partnershipswith start-ups, companies, professional federations, research
centers... to coconstruct new 5G use cases as well as new business models centered around vertical markets: connected mobility, IoT, smart cities, virtual reality, telemedicine, the industry of the future, UHD video, and video games. They are also helping them grow into their new role asoperator-integrator, part-Telco/part-IT, able to develop, integrate and operate end-to-end thesolutions and applications of the future...
Demonstrating its capacity for innovation to future customers
Pilot cities are showcases for innovation on which operators rely to build their credibility, whether with individuals or companies, in the emerging field of ultra-high speed mobile.
For governments, contributing to the country’s digital inclusion challenges
By facilitating the transition to 5G and the identification of the most promising use cases, the French Government is bringing the nation closer to its goal of digital inclusion and economic competitiveness. 5G will put certain digital uses within reach of the general public. It will speed up the digital transformation of public services. It will enable the emergence of new applications in all industrial sectors. It is therefore in the interest of governments to encourage these large-scale tests.
Pilot cities are a key lever for the successful deployment of 5G
Reiningintheincreasedenergycostsof5GRany Awad - Green radio access network manager, Sofrecom Grégory Casas - Software roadmap and supplier relationship manager, Sofrecom
As far as uses and services are concerned, the deployment of 5G is stirring a great deal of enthusiasm. However, one subject continues to worry operators: how to keep their networks’ energy consumption under control. The exponential growth expected in data traffic will likely impact their carbon footprint as much as their operating costs. There are ways of improving the energy efficiency of 5G communications and reducing the consumption of other networks. The objective is clear: to offset additional consumption due to the roll-out of 5G.
The telecoms sector consumes electricity. That energy consumption emits CO2 and costs operators a great deal of money. The largest of them, cognizant of the need for urgent action on the climate, have already gone green. To reduce their carbon footprint, they have built into their CSR commitments a number of targets to lower the electricity consumption in their facilities (networks, data centers) and improve their overall energy efficiency. Some have even turned these efforts into a marketing weapon.
The arrival of 5G will require a new wave of efforts and investments to meet the responsible goals set by 5G standards organizations and control the overall cost of owning a 5G network.
5G: a technology that will need to pass theenergy-efficiency test
Average data consumption per smartphone issignificantly on the rise: Ericsson expects it togrow from 5.6GB/month in 2018 to 24GB/month in 2025 [1] worldwide.
In France, ARCEP announced, in its 2019 report, that average consumption had reached 6.6 GB per month.
In theory, 5G was designed to support a 1,000-fold increase in mobile data traffic over the next 10 years. Although it is difficult to assess its environmental impact today, the exponential growth in traffic will mathematically increase the total energy consumption of operator networks.In light of these forecasts, the 5G standardization bodies have set ambitious energy efficiency targets:
• The International Telecommunication Union (ITU), for instance, will require 5G operators to improve their energy consumption by a factor of 100 compared to 4G (equipment on the 5G network will need to be up to 100 times less energy-intensive than 4G for the same volume of traffic delivered).
•Meanwhile, Next Generation Mobile Networks (NGMN) says in its 5G White Paper that the new technology must halve the average consumption of current networks.
This target, relative to the 1,000-fold increase in traffic, would imply a 2,000 fold increase in the energy efficiency of the 5G network over the next 10 years!
Native energy efficiency solutions
The energy consumption of 5G stated in kbit therefore promises to significantly improve. Thisimprovement will rest on several factors:
1 https://www.ericsson.com/en/trends-and-insights/consumerlab/consumer-insights/reports/5g-consumer-potential
The 5G promises The 5G promises
24 25
Improve 5G energy consumption will be based on mMIMO technology and the introduction of energy saving features in power stations.
•The use, as far as hardware is concerned, of massive MIMO technology (mMIMO) which will be the foundation for the advanced performance of 5G. It is distinguished by the use of a high number of smart micro-antennae located on the same panel and considerablyimproves spectral efficiency. It also benefits from more energy-efficient power amplifiers and processing circuits.
• The introduction of energy saving features in base stations (multi-level standby mode) will make it possible to adapt the capacity and performance of the network according to demand and traffic, while maintaining a constant level of service quality. Such “Advanced Sleep Modes” features, already deployed on existing networks, will take on greater importance in a 5G world, having been designed and introduced by the 3GPP 5G standardization.
A predictable increase in consumption in the transition phase
However, 5G tests conducted so far by some operators with the technology currently available have shown that in absolute terms, 5G can consume up to 3 times more energy than 4G.
•The commercial implementation of the mMIMO hardware architecture is very recent. The technology is still immature in terms of energy efficiency. Experiments show a marked increase in consumption at two levels: in 5G radio modules (transmission and reception components, power amplifiers); and in baseband equipment, as the higher capacities and speeds of 5G also require greater power for processing and data management.
•Furthermore, as highlighted byequipment manufacturer Huawei,the deployment of multi-band siteswill lead operators to resize thepower supply to the sites and theenergy backup solutions in place
to absorb peaks in electricity consumption[2]. Existing solutions may therefore need to be improved, ortheir architecture significantly modified with the use of the latest generationpower supply systems.
How can this energy expenditure be kept under control?
In this transitional phase, there exist a variety of solutions to control CAPEX and OPEX.
Estimating the benefits of replacing 2G/3G/4G equipment in advance
While equipment replacement does increase CAPEX, energy OPEX will increase if no investments are made. And in the current context, this is a weakness of which OEMs are aware. Each new equipment version brought to the market is synonymous with furtherimprovement.
Companies thus need to weigh their options in a business case to determine whether it is best that they proceed with immediate replacement, or defer that investment.
The equipment maturity level will definitely influence their decision. Entities using hardware and software that have reached the end of their life cycle will fare better by taking immediate action.
Deploy energy saving features
5G's Advanced Sleep Modes will provide operators with a considerable source of leverage for controlling their energy OPEX.
While not all of them have yet been deployed, their functionalities will eventually operate on several levels, promising a 30 to 40% reduction in a site’s total consumption. They will form the foundation for an intelligent and dynamic network capable of maximizing its energy
2 https://www.arcep.fr/fileadmin/cru-1570120300/reprise/dossiers/collectivites/ateliers-TC-2019/atelier-TC-5G-part01-260619.pdf
consumption according to the traffic and services it offers.
Carry out tests in pilot cities
Real-world measurements in pilot cities are an ideal way to find out how equipment behaves on the energy expenditure front. Such tests make it possible before massive deployment to check all the parameters that influence consumption and build a comparative model of the different configurations. This is a key prerequisite for choosing the most energy-efficient response to the network’sperformance needs.
Impose energy savings criteria in calls for tender
These tests also make it possible to incorporate energy consumption criteria into calls fortender, alongside KPIs and related penalties in the event of non-compliance.
Adapt the configuration of radio sites to the needs
In this new environment, the minimum service levels of sites will need to be determined taking into account the number of potential customers, the type of services provided and the level of criticality of those services. This will enable the best possible fit in terms of configuration (64TR, 32TR), power (80W, 100W, 120W...), back-up solutions and quality ofservice once the switch to standalone mode (SA) opens up access to slicing, so as to serve demand
and changes therein without over-equipping or over-consuming.
Despite the injunctions from the standards bodies and the efforts of equipment manufacturers, 5G operators will see their networks’ energy expenditure increase – however, they will also have the cards in hand to deal with this situation. Radio site configuration will have to take into account a 3rd criterion, in addition to the coverage and
capacity of the site: energy consumption.
The keys to controlling CAPEX and OPEX will be: thorough planning of equipment replacement, implementation of advanced sleep modes, due “pressure” on equipment manufacturers, and above all, the ability to anticipate the services required and quality demanded of the network.
The 5G promises
26
Claire Khoury Head of communication, marketing and CSR
Sofrecom Group
The improved performance levels of the 5G network promise to be a key driver in industry digitalization. They are shaking up many
existing economic and business models. They create both opportunities and threats, not only for telecom operators but also for players in a wide variety of sectors, anywhere from video games to automotive and healthcare.
Furthermore, and against a backdrop that has the telecoms industry endeavoring to significantly reduce its carbon footprint, the
issue of the impact of 5G on the environment is becoming central. Though opinions differ on the matter, operators and manufacturers can no longer elude the topic. They will have to consider the impact of 5G and meet the specifications of the 5G standard, which requires much higher energy efficiency levels than 4G. They will need to adequately demonstrate that 5G applications will make a powerful contribution to a better environment and its benefits.
Consequently, to meet a wide range of demands, telecommunications industry operators and equipment manufacturers will need to adapt to this new environment and work with new players from different industries.
As 5G grows, the success of players will depend on their ability to endure in ecosystems thatare increasingly complex to manage. For example, to take advantage of the benefits of industry digitalization, operators will need to establish market release partnerships withindustry specialists, developers of applications, and system integrators. Innovativeapproaches to managing investments will also be needed, which will require exploring thenotion of sharing 5G networks.
To take advantage of the anticipated benefits of industry digitalization, operators will need to channel their investments effectively, and be able to work in complex environments to access their choice of market segments.
As with all disruptive new technologies, there will be winners and losers, and the key success factors will be agility, innovation, and cooperation.
Ourlocaloffices
The 5G promises published by :
Sofrecom24, avenue du Petit Parc94307 Vincennes cedex, FranceCapital social : 7 120 000, RCS Créteil
Publication manager:Claire Khoury
Chief editor & coordinator:Aurore Guichard, Fanny Millet
Contributors:Marc Blanchet, Rany Awad, Grégory Casas, Arnaud Comerzan, Frédéric Doucet, David Erlich, Florian Jozefowicz, Maria Macra, Clément Roulleau, Hervé Tchoffo
Graphic design:Assia Derni, Aurore Guichard
Printing: Printed in France on siteImprim'Vert - PEFC FSC Papier Creator Silk Blanc 135g et 250g
SOFRECOM S.A France24 avenue du Petit Parc94307 Vincennes CedexFrance+33 1 57 36 45 00
SOFRECOM Algeria19, rue de Cirta - Hydra AlgerAlgeria+213 21 60 70 67
SOFRECOM ArgentinaReconquista 609C1003ABM Buenos AiresArgentina+5411 45 15 90 00
SOFRECOM BeninQuartier Saint Jean 01 BP 5650CotounouBenin
SOFRECOM Ivory Coast7, Avenue Noguès ImmeubleBSIC, 5th floorBP5754 AbidjanIvory coast+225 47 32 77 87
SOFRECOM Georgia34 Chavchavadze Ave., PixelBuilding, 7th floor, TbilisiGeorgia
SOFRECOM IndonesiaGraha Aktiva, 4th floor JI. HR. Ra-suna Said Blok X-I Kav.3 Jakarta12950Indonesia+ 62 21 52 92 03 50
SOFRECOM Middle Eastsite of DubaïDubai Silicon Oasis Authority-Techno Hub 2 - Ground FloorDubaï – United Arab Emirates+971 4307 5588
site of Riyadh2920 al amir faisal ibn turki ibn abdul azizAl Murabaa districtUnit number 2927Riyadh 12626 – 6070
SOFRECOM Services Moroccosite of RabatTechnopolis Batiment B0,2nd floor11100, Sala AljadidaMorocco+212 5 37 27 99 00
site of CasablancaCasanearshore ParkShore 221100 bd AL QodsSidi Maarouf,CasablancaMorocco+ 212 5 22 86 11 19
SOFRECOM TunisiaImmeuble Matrix Rue du LacConstance Les Berges du LacTunisTunisia+216 71 162 800
Discover our news on our websitewww.sofrecom.com
Related Documents
