5G network slicing could be worth £51bn to mobile operators

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5G network slicing could generate as much as $66 billion (£51bn) for mobile operators thanks to connectivity demands from vertical industries.

The first 5G networks are expected to go live later this year, with further deployments in 2019 and 2020, offering superfast speeds, greater capacity and ultra-low latency.

Network slicing is seen as a key characteristic of 5G networks and will effectively allow operators to section off certain parts of the network for certain applications. For example, one network slice could carry video traffic at a stadium, while another is reserved for safety officials.

5G network slicing

ABI Research claims that being able to offer virtual networks for industrial applications could be a key differentiator for mobile operators and allow them to capture more revenue at a time when traditional income is being squeezed by changing consumer habits, intense competition and regulatory challenges.

"Telcos are increasingly seeking to create services that are more differentiated and tap into the growth engine of the future, intrinsically linked to a superior experience for end consumers, and operational simplicity for enterprises and end verticals," said Don Alusha, senior analyst at ABI Resrarch.

“Network slicing revenues will eventually be on an upward trajectory, driven by digital, cloud, and security requirements of multiple industry verticals, particularly for the trio of manufacturing, logistics, and automotive.”

However, achieving this full benefit will depend on network equipment vendors. Several proof of concepts are active in the market, with BT and Swisscom’s efforts cited as examples, while major manufacturers are upping their efforts – especially in areas like interoperability and harmonisation.

“This is encouraging and lays the foundation for widespread commercial deployments even before 5G diffusion," added Alusha. There are specific vendors in the market who are addressing end-to-end slicing scenarios that pull together a number of technologies, Nokia and Ericsson chief among them.

"[Managed Service Providers] and vendors are pursuing different models of collaboration with vertical markets and growth for each market will be driven by premium services, revenue potential and ability to address existing challenges in the short and medium term. Vendors should aim to eliminate complexity through automation and 'deep' orchestration, a feat that calls for close collaboration with standard bodies to standardize and achieve alignment apt for commercial deployments and ecosystem integration."