GSMA forecasts that by 2025, the number of global 5G connections will reach 1.1 billion, with one-third of the world's population connected to 5G networks. As the 5G industry matures, 5G will enable the connectivity and digitalization of everything. As a result, the operator market will extend from individuals and homes to industries, an area that will integrate further with ICT.
The future operator network is oriented towards 5G and supports new services such as enhanced mobile broadband (eMBB), ultra-reliable and low-latency communications (uRLLC), and massive machine-type communications (mMTC). This meets the requirements of different services for bandwidth, latency, and intelligence, allowing 5G networks to develop more and connect everyone to everything.
The B2C domain is set to evolve from mostly video towards making our personal lives digital. The B2H domain will further develop digital entertainment and smart homes through fixed wireless access (FWA), and the B2B domain will gradually penetrate the key vertical industries. Of these, B2H FWA will be the first to put 5G into commercial use.
While the B2C domain allows for quick monetization, it also poses the biggest challenge for operators, which means that the business model may need to change, especially in terms of brand, service model, and charging metrics.
B2B industry applications will become key territory for operators' mid- and long-term success, as business restructuring and innovation in vertical industries takes center stage.
To support a wide range of new 5G services, service diversification is required on a single network. Differentiation and balance are vital, especially in terms of mobility, number of connections, E2E latency, reliability, mobile data volume, service deployment time, and energy efficiency. As the pipe and information highway for 5G networks, transport networks need to be intelligent to meet the special requirements of 5G services. The challenges of high bandwidth, low latency, complex connections, time synchronization, fragmentation, and intelligent O&M faced by 5G transport networks require smooth evolution and quick adaptation to enable intelligence and cloudification.
In general, as 5G services and value chains evolve, traditional operators are gradually building a converged and multi-layered business model based on connections. The concept of multi-layered monetization takes shape in terms of connectivity (connections, mobile edge computing, and slicing), platforms (IaaS and data platforms such as IoV and video surveillance), integration (one-stop industry integration), and operations (E2E operations services such as unmanned aerial vehicles and VR). Given the relationship between solution and device providers and operators, the network construction of 5G transport networks will change as operators' business concepts change.
When it comes to the more flexible evolution of transport networks, functions can now be added and expanded through software DevOps instead of purely adding network hardware. In traffic-driven scenarios, the capacities of transport networks used to be expanded based on pipes only. To adapt to operators' future multi-layered and converged business models, the evolution of transport networks needs to be more flexible. At the same time, software-centric operations are necessary to enable DevOps, connect seamlessly with operators to respond to new requirements, adapt to new scenarios, and enable joint innovation.
So that transport networks can handle service-oriented procurement for new 5G service scenarios, industry applications are evolving. Operators need to perform trial and error tests and joint innovation to find the most cost-efficient methods and generate quick profits. To be able to respond quickly to uncertain requirements, procurement has to shift from one-off transactions to service-based purchases. To adapt to this change, transport networks, which serve as smart pipes, need to optimize and innovate procurement though traffic models, scenario classification, and value sharing. Traditional one-stop purchases may end up being replaced by installments and dispersed purchases, depending on models and service capabilities, including traffic models, scenarios, value packages, Subscription and Support (SnS), and Right to Use (RTU).
When transitioning to a multi-layered and converged business model, operators need to match various services in accordance with connections, platforms, integration, and operations modes. Therefore, the transaction and charging modes will also change considerably. Operators need to provide end users with periodic leases or subscription services to support the operations-oriented business model. And that means the way transport networks suppliers and operators collaborate will change accordingly. In a B2B2C scenario, periodic leases and subscription services may be implemented synchronously. This requires operators and their partners to build a comprehensive and long-term strategic partnership, and requires operators to recognize the value of their partners' long-term services.
The business model for multi-service bearing needs to adapt slowly to be compatible with 5G application scenarios and the extension of operators' value chains. Essentially, a new multi-layered business model needs to be built.
Business models emphasize that customer value, resource capability, and profit model must match. Unlike traditional transport networks, multi-service 5G transport networks are changing profoundly in terms of customer selection, value proposition, internal and external resources, cost, and profitability. Underpinning the business model, multi-service 5G transport networks will evolve in terms of transaction models, delivery content, and delivery methods.
For networks to be cloud-based, intelligent, and elastic, multi-service transport networks have to make network features and scenario classifications both software-based and perceivable by decoupling software and hardware. To make users aware of the value of network slicing, multi-service bearing, low latency, and intelligence, transport networks may have to sell resources and capabilities. For example, with the Internet of Vehicles, the value proposition of intelligence, low latency, and high reliability is packaged into a network slice, and an independent profit structure is designed to maximize that value proposition.
Transaction modes are also becoming more diverse. RTU, permanent license and SnS, subscriptions, and SaaS can be implemented between device providers and operators to share benefits, costs, and risks. Furthermore, new B2B2C models can be developed to allow everyone to benefit from opportunities in the 5G industry.
RTU is an authorization mode used to sell hardware capabilities in installments, such as capacities, ports, and frequencies. Operators can purchase ports and capacities on demand to reduce initial investment and achieve the goal of environmental protection.
License/SnS and subscription modes convert operators' OPEX into smooth annual expenses. They can promptly receive software upgrades and upgrade services provided by vendors, reducing network risks, improving service quality, and resolving routine problems with network O&M.
5G features require that transport networks be in place before 5G can be deployed commercially. 5G also requires the presence of multi-service bearing, scenario-specific applications, elasticity, and separate purchasing. On transport networks, operators will be able to carry multiple services, including wireless services, B2B private lines, and fixed network services. Scenario-specific slicing support can also be provided. The bearer channel must be elastic enough to implement on-demand resource allocation for performance, latency, and reliability. Delivery content can also be quickly corrected based on annual fees, and new features and requirements can be imported. Service modes and delivery content will extend to more comprehensive and specialized service fields to integrate with operators' platforms, data, and industry integration, providing more accurate management, control, and data analysis services.
To provide specialized services, transport networks need to be simple and more intelligent. This requires a core brain engine driven by business intent. The engine can match changes in the delivery content and mode based on transport networks. The engine, together with business intent and network infrastructure, forms a closed-loop system, or in other words, an Intent-Driven Network. The engine must be equipped with management, control, and analysis capabilities. Specifically, the engine must be programmable, model-driven, and capable of implementation control, open APIs, cloud-based architecture, data analysis, and AI.
The continuous evolution of various elements of the new business model can guide investment by operators. Moreover, through joint service innovation with operators, transport networks providers can achieve rapid service deployment in the 5G market.