There has been a lot of talk about 5G lately, not only from the tech side but also from the political, security and national strategy side. The telecoms community has spent the last 4 years shaping a technology that can provide massive benefits for society and businesses — and now we ask how do we make this happen?
Who picks up the reality check?
Connectivity is one of the most important drivers in economic growth and has transitioned in the last 20 years to become a utility. The demand has grown exponentially, largely driven by a heterogeneous set of consumers that require more sophisticated services where industries play an important role.
According to Ericsson’s Mobility Report, mobile subscriptions will continue to grow steadily to close to 9 billion worldwide, with data traffic continuing to grow at least 27 per cent yearly until 2025, mainly coming from video traffic. Some reports even predict that the number of sensors and smartphones connected to the mobile network will increase to 25 billion by 2021, from 14.2 billion in 2019, most of these coming from the rise of Smart City deployments and business applications. There are multiple studies that measure the potential economic impact of 5G and all agree that it’s in the order of Trillions of USD by 2025 when combined with all the other technologies it enables: artificial intelligence, Big Data or the Internet of Things.
The reality is that there are clear challenges in the telecommunications ecosystem to build the networks that are able to satisfy the ever-growing demand side. On the one hand, current investment strategies for infrastructure coming from service providers have proven not to be effective in terms of return on investment. Not too long ago, there was a race among all mobile network operators competing to become the first global network. According to the Financial Times, some of the largest investments in infrastructure from one single player have surpassed 7 billion USD in capital expenditure, a figure that does not include the billion dollar acquisitions to increase global presence. Despite the large investments, the value of telcos as of 2019 is 20 per cent across top internet companies and has decreased 50 per cent in 5 years, mainly due to the growth of other digital companies based in cloud.
On the other hand, the new landscape of digital connectivity requires integration of technologies to meet the requirements of the diverse set of use cases. This is known as convergence and it has been discussed for a long time with no consensus in the industry. It is clear now that moving forward a mix of wireless (4G, 5G and WiFi) and fixed solutions are key to meet the target numbers for ultra-dense, reliable and fast connectivity.
There’s a worldwide consensus that in order to maximise the social value created by digital infrastructure, investment should come from a variety of actors:
- Established network operators upgrading current infrastructure.
- Public sector in an attempt to drive economic growth, and possibly via the most discussed Public Private Partnerships financing models.
- Industries shifting investment towards digital connectivity, owning mobile network infrastructure through the use of Private Networks.
- New players driven by market expansion, owning infrastructure to deliver consumer services (likes of Google or Amazon), or contributing with assets that could be exploited by service providers, such as small cell antenna vendors in dense urban areas.
We are approaching a new era in the telecommunications supply chain and we foresee changes in the overall dynamics of the telecommunications market. The demand for connectivity is pushing the supply side to expand the number of organisations that can contribute with infrastructure. This means new strategies for infrastructure investment, where shared ownership of infrastructure and shared revenue models are being discussed as a viable alternative to “business as usual”.
A change in current business thinking
From vertical business models to horizontal foundations or platforms
We see the telecoms delivery stack stepping away from a “command and control” value chain, largely dominated by connectivity service providers and large equipment vendors, to a more open and diverse one.
In the UK a lot of work is being done in policy and strategy to drive this change. The Government has evaluated the risks the current supply chain presents to security and has highlighted the threat posed by National dependency on a small number of suppliers. To go one step further, it promotes high quality innovation and a more diverse and competitive supply chain. This has even influenced their decision to accept Huawei in UK deployments, in an attempt to not reduce the market even more. To address the current challenges in the telecoms ecosystem, the Future Telecoms Infrastructure Review has highlighted the need for infrastructure models that support investment for dense networks and to facilitate the deployment telecommunications infrastructure, thus allowing new players to enter the market.
Business thinking in the telecoms infrastructure market is therefore shifting from pure vertical integration models, to horizontal foundations or platforms. In order to increase competitiveness service providers are actively looking at:
- More convergence in both technology and markets, using network sharing models to cut costs in deployments.
- Use of open source and industry-led collaborative frameworks that reduce vendor lock-in and opens the market to new innovative solutions (Open Networking Foundation, Telco Infra Project, OpenRAN).
- Use of softwarised platforms for horizontal integration and interoperability.
The technology shift
Towards creating a marketplace of connectivity
The value chain shift requires technical innovations that allows horizontal integration through open standards and interoperability protocols. All this, across elements of the mobile network and across different technologies.
In an attempt to combine different suppliers, service providers have joined forces in the O-RAN alliance, an operator-led group developing interfaces to build radio networks from multiple vendors. This initiative has gained quite a bit of interest from the industry all across the globe to reduce dependency on single supplier networks, reduce deployment costs and open up the market to new innovative solutions. This is the first attempt in telecoms to build inter-operable networks with the use of APIs, something the Cloud industry has been doing already for years.
This is a good start, however the challenge to the value chain shift is much bigger, and requires an holistic approach to infrastructure. The technology shift must provide open standards and interfaces to communicate not only across multiple vendor equipment, but to integrate multiple assets of the communications chain seamlessly. From a service provider perspective, a horizontal platform of connectivity should provide:
- Simplicity to configure end to end services regardless of the infrastructure supplier or the underlying technology.
- Openness for new suppliers to join the platform, and integrate new connectivity assets to the network.
- Mechanisms for exchange of resources or assets, where network management and charging plays an important role.
- Ability to scale horizontally and organically with minimum interaction of the network service provider.
A Decentralised Network Approach
Openness and diversity in the supply chain is needed, and the fundamental shift is towards a marketplace of connectivity that sits between the supply and demand side. Creating a pool of connectivity assets, or treating the entire supply chain as such, allows to:
- Distribution of the investment on asset deployments across a larger network of participants in the supply chain.
- Creation of new business models to capitalise existing assets and create a viable return on investment in new infrastructure for connectivity. This includes the public sector, which is hesitant to invest large sums of money in infrastructure because they must release the ownership of its infrastructure to service providers.
- From a service perspective, it enables networks to scale horizontally, addressing convergence of infrastructure assets and technologies. This integration allows the network to meet the requirements for user broadband as well as private networks in cities and across industries.
The opportunity for telecoms lies in the implementation of the platform model using decentralised principles, removing a central actor from coordinating the assets and providing a viable technical solution to:
- Access existing infrastructure assets for connectivity, and incentivise new assets to be deployed and onboarded.
- Support an ecosystem with shared ownership and shared revenue models.
- Create agility and flexibility for accessing connectivity and deployment of new and innovative managed services.
Decentralisation and tokenised economies are a solution to complex cross-actor engagements with mechanisms to reward network participants in exchange for contributions. Leveraging innovative P2P and Blockchain technology, we’re developing a software and protocol stack to create a marketplace of connectivity assets that manages real-time communications traffic across the network.
Weaver is a P2P network, equipped with a new Messaging System (WireMQ) designed to orchestrate network services and act as a decentralised virtual infrastructure manager. It builds on the horizontal integration model by adding a software layer on top that enables interoperability and convergence.
Our key design principles are:
- P2P Network Architecture that allows to aggregate assets and fulfil all operations across different access technologies and addresses convergence in the infrastructure.
- P2P messaging system that is designed to create control and data plane channels across the decentralised network, allowing for full interoperability across assets in the network.
- P2P protocols designed to support functions such as: session establishment, session management and stateless data plane transmission through P2P routing.
- Network operations and management layer designed to be self-configurable and create end-to-end communication paths using the resources available in the P2P network.
Following the Application transformation driven by Cloud, the Network transformation is coming driven by virtualisation and softwarisation. It is a great moment to innovate in an industry that hasn’t changed since the creation of Mobile phones — How are you contributing to this?
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