Network slicing may represent a revenue opportunity for communications service providers (CSPs) that amounts to $200 billion, according to research done by Ericsson in partnership with management consultant Arthur D. Little. More than 400 5G use cases were analyzed for network slicing-enabled revenue possibilities. CSPs need to move beyond their comfort zone as network providers to take advantage of networks slicing revenues, but they should stick with customers and industries they are familiar with, at least initially, the report said.
“Network slicing provides an enormous amount of flexibility and potential for customization,” the report said. “As a consequence, there are many different opportunities and possible go-to-market roles for CSPs.”
Industrial digital revenues have a potential of 12 percent CAGR growth, and mobile-enabled revenues could increase to 20 percent CAGR as IoT and connected objects become more relevant for industries. The total digital revenue potential comes to about $3.8 trillion for all information and communications technologies companies.
The report analyzed 5G use cases and estimated that 25-30 percent of them will need network slicing, including mobile cloud gaming, mission-critical push-to-talk, remote broadcast, software over-the-air updates, and predictive maintenance of rail tracks and powerlines.
The report discusses three ways that network slicing can drive CSP revenues, such as bringing in new customers who may be interested in 5G. Second, new services made possible by network slicing can enable CSPs to capture more of the value chain. Finally, additional revenue can be driven by enabling premium pricing and new business models.
“Demanding use cases require tailored services, which can command a larger fee,” the report said. “A network slice to a logistics company might provide additional bandwidth and network isolation to enable high-quality, secure monitoring for valuable goods.”
CSPs should move beyond their traditional role in the network connectivity, management and operations to address more of the whole value chain as a service creator through network slicing, according to the report. The area with the most possible value chain expansion is network deployment and connectivity provisioning. “The core services for CSPs would typically be in the network connectivity, deployment and management parts of the value chain, where they are likely able to capture a large share of the revenues,” the report said.
The report advised carriers to stick with targeted use cases with network slicing and to work closely with current enterprise customers and partners to get a better understanding of their business. “It’s far easier to make that initial sale of a network slice to customers in an industry with which you already have some familiarity and with whom you have already built at least some degree of trust,” the report said.
By J. Sharpe Smith, Inside Towers Technology Editor
Reader Interactions