How Telcos are Discovering New Revenue Streams with Network Slicing for 5G

The rollout of 5G promises telcos many new opportunities, not least that they will be able to improve efficiency and tap into new revenue streams. To take full advantage of the power of 5G, though, it is crucial for telecom operators to rethink they way they are delivering services on their networks. This is where network slicing comes into its own.

Network slicing - a new 5G business model?

Network slicing is a means of delivering many standalone virtual networks on a single physical infrastructure. Each of these virtual networks is effectively quarantined, ensuring that different mobile virtual network operators have full access to and control over services from the same physical architecture, without compromising security.

What about the technology?

There are different approaches to network slicing, but all bear similarities in terms of architecture. On the one hand, there is the infrastructure layer (radio access network, transport network and core network), the network function layer (operations) and the service layer (for MVNOs and third-party service providers); on the other, is the network slice controller, which is responsible for orchestrating and coordinating the functionalities of the infrastructure, network and service layers.

What are the benefits?

The simple answer is that there is a huge potential to make money with network slicing. According to GSMA, network slicing could generate $300 billion worth of new revenue streams for telecom companies within the next six years. For telcos seeking to differentiate themselves on a crowded and cut-throat market, that figure alone should give pause for thought. In this context, it’s also worth remembering that the virtual nature of network slicing means it comes with none of the costs associated with vast physical networks.

Flexibility is another big plus of network slicing, which is of particular importance now that telcos are almost universally adopting customer-centric 5G new business models. While the physical network itself remains unchanged, operators can allow MVNOs to deliver almost any type of service, with any kind of service level agreement. And, thanks to software-defined networking and network function virtualization, each network slice will be not only flexible, but also scalable. Network slicing facilitates rapid reactions to changes in market conditions, and helps get services out there and earning money quickly.

Who wins?

Thanks to advances in artificial intelligence and machine learning, network slicing has already proved to be invaluable for the Internet of Things. This is an extremely broad category, so, to be more specific, we can give the example of production-line monitoring. There may be many manufacturers who are seeking to automate production processes, and each of them will probably have slightly different, unique needs – depending, perhaps on their sector. Network slicing means that the same “production control module” on one physical network can be served up in customized form to each of these manufacturers. Elsewhere in the IoT, network slicing can find similar applications for smart cars, entertainment services, and even telemedicine.

Whatever the sector, the basic presumption remains the same: a single set of functionalities is served up to the client via their secure network slice, adapted so that it delivers precisely what they require of it. This enhances operators’ ability to implement ever more sophisticated customer-focused 5G new business models, giving network slicing a natural synergy with 5G, AI, the cloud and so on – all of which optimize the efficiency of the others in this exciting age of digital transformation.