5G slicing will generate $20 billion in revenue

5G slicing is a crucial enabler of new business models and a key concept to empower the potential of 5G. Communications Service Providers (CSPs) can slice their network assets using different criteria such as mobility, security, or traffic types.

Using network slicing, CSPs can offer varied service levels of network availability, throughput, latency, level of security, and several other performance indicators. This lays the groundwork for a more controllable and flexible connection environment without modifying the underlying infrastructure’s properties that provide the raw network capabilities.

A full slicing mechanism is expected by 2024, at which point 5G slicing will generate $20 billion in revenue, finds global tech market advisory firm ABI Research.

“There are three business drivers for 5G slicing. One, new services can be deployed with little or no disruption to existing services. Service agility is a challenge with today’s networks because the introduction of new services necessitates reconfiguration of underlying networks. Two, verticals can optimize network efficiency with a potentially lower cost. Shared network infrastructure is used across multiple 5G slices, promoting better resource utilization and can, in theory, reduce integration scope and complexity. Three, 5G slicing enables vertical partners to bring to market a wider range of business services based on network slices that are customized in line with required service-level agreements (SLAs) and network key performance indications (KPIs),” says Don Alusha, Senior Analyst at ABI Research.

The extensive scope that characterizes the deployment of a 5G slice requires the wider ecosystem’s maturity. In that regard, vendors are already investing in propelling ecosystem cohesion and bulking up their 5G slicing capabilities. ZTE, for instance, has a comprehensive portfolio that spans slicing management for core network, transport, and access.

Similarly, Amdocs, Ericsson, Huawei, and Nokia are some vendors, among many others, that are designing 5G slice-specific packages that offer synergies with existing systems and networks. A full 5G slicing mechanism will involve interworking with a plethora of existing systems and interconnection among multiple vendors.

Ultimately, widespread deployment of 5G slicing requires that the industry realign traditional ways of doing business to include knowledge of the enterprise environment. This domain inherently constitutes a foreign land for CSPs, and there is a risk attached. To that end, CSPs should overhaul their internal structures. They should depart from the silo service model of today, an organizational arrangement that creates redundancies and inefficiencies.

Further, the industry should build relationships with vertical partners to address their pain points better and eventually transition from existing PoCs to commercial deployments. On the commercial front, work remains to be done for the industry to collectively identify 5G slicing business models to be adopted.

“5G slicing is a journey for the industry. The foundation for basic use cases has already been established. For example, same vendor 5G slicing and campus/LAN deployments are expected to be commercialized in the next couple of years. Multi-vendor implementations and WAN type deployments are more challenging. These capabilities will potentially be brought to market starting in 2023 and beyond, with a proliferation of 5G standalone core deployments, investment in edge computing to develop low-latency use cases, and further industry consensus on how terminals can support network slicing,” Alusha concludes.