Great expectations for the Next Generation 5G Core

The single biggest change in the telecoms landscape over the last year was that commercial 5G networks went live around the world. More than 50 networks in over two dozen countries had switched on 5G services by the end of 2019. Subscriber uptake was already faster than the same period when 4G was first introduced, according to data released by the South Korean operators. The research firm Ovum (now part of Omdia) predicted that over 1.3 billion subscribers are expected to sign on 5G by 2023.

(Here we are sharing the opening section of this Telecoms.com Intelligence special briefing to look into why and how the industry should start embracing the next generation 5G core (NG 5GC) and where we are now vs. the expectations.

The full version of the report is available for free to download here.)

Why we should embrace Next Generation 5G Core

5G has come with high promises. The technology was designed from the outset with service scenarios. The plan was for 5G to provide enhanced mobile broadband access (eMBB), ultra-reliable low latency communications (URLLC), and massive machine-type communications (mMTC), to serve both consumers and business customers. So far, although there have been limited tests of URLLC and mMTC, all the 5G commercial networks have primarily been marketing high speed internet access as its key selling point, both on mobile and in the form of fixed-wireless access.

What 5G operators can offer is constrained by the underlying networks that power the service, which in turn are constrained by the specifications process. No company would be happy to invest in a technology, only to discover soon after that it would not be interoperable with the industry standards. The current mode of 5G implementation involves overlaying 5G radio access network (RAN) on top of 4G core networks, the so-called non-standalone (NSA) mode. In order to offer more advanced services, such as end-to-end network slicing, the industry needs end-to-end 5G, or the standalone (SA) mode. 3GPP, the standardisation body, will publish Release 16 (R16) in the first half of this year, which will define the specifications of the Next Generation 5G Core (NG 5GC). Only after the specifications are frozen can the industry start serious investment in the latest technology.

The industry needs NG 5GC for multiple reasons. On the customer side, the excitement from fast internet access can only go so far, and even on this count, the underwhelming experience from today’s patchy coverage and inconsistent speeds have already raised eyebrows. Global Wireless Solutions, an American network benchmarking, analysis and testing firm, conducted a field test of the 5G networks in the centre of London towards the end of last year. The highest download speed of 470 Mbps was recorded on EE network, while the lower speeds of 330 Mbps and 320 Mbps were recorded on O2 and Vodafone networks respectively. These did not only fall far short of the “gigabit speed” promised prior to the commercial launches, but also could be achieved only if the customer stood next to the base stations. Probably more importantly, the Global Wireless Solutions tests have found no meaningful improvement in latency from 4G connectivity. Both failed deliverables, the speed and latency, come primarily down to the fact that the live 5G networks are in NSA mode and are limited by 4G’s Evolved Packet Core (EPC).

On the service provider side, they need to up their game to justify the 5G investment. With the exception of the South Korean operators, which have priced 5G at a considerable premium (entry price of $46 vs. average ARPU of $29), most operators in other markets have not vastly hiked the tariff of 5G packages. This may not hurt them too much, as it cost the operators less to deliver data over 5G networks than over 4G networks, calculated on per GB basis. However, to recoup and to increase return on investment in 5G, operators need to aim to provide higher value services to business customers, including URLLC, edge services, network slicing, among others, which need 5G in SA mode supported by NG 5GC.

Then there is economics. Building a telecom network is not too dissimilar to building a railway network. The investment in radio networks, transport, core, etc. is sunk cost, just like the money spent on laying the rail tracks. No operator would want to go halfway with 5G, with plenty of investment but only limited possibility of return. Therefore, there will be the need from operators to go all the way to SA mode including to deploy NG 5GC to power it.

The following sections of the report will look into the opportunities the era of aggressive SA mode 5G launches will open to telecom operators and adjacent industries, and how telecom operators can capture these new opportunities by embracing NG 5GC. Specifically, the rest of the report will look at:

The full version of the report is available for free to download here.