Of all the key end-user benefits expected from 5G networks, the ability to control dedicated portions of spectrum and make customised use of it has always been ranked highly, and enterprises’ willingness to pay for it is set to drive a boom in the global 5G slicing market, says a study from ABI Research.
The report, 5G network slicing: technical and commercial considerations, emphasised that, compared with the uniform services offered over 3G and 4G networks regardless of device or user needs, slicing of 5G has the potential to offer varying levels of connectivity characteristics – such as service-level agreements (SLAs), bandwidth and latency – for different devices, use cases and applications.
ABI said there is an expectation that enterprises will pay a premium for 5G slices that guarantee SLAs for diverse services, as opposed to uniform offerings. It also stressed that enterprises have differentiated requirements for isolation and security that can be satisfied by slicing. The analyst regards this last facet as especially important given that for connected devices, such as dumb internet of things (IoT) terminals, cost and time to market are typically prioritised over security.
As a result, ABI expects 5G slicing revenue to grow from US$309m in 2022 to about U$24bn in 2028, at a compound annual growth rate (CAGR) of 106%.
“5G slicing adoption falls into two main categories,” said Don Alusha, 5G core and edge networks senior analyst at ABI Research. “One, there is no connectivity available. Two, there is connectivity, but there is not sufficient capacity, coverage, performance or security. For the former, both private and public organisations are deploying private network slices on a permanent and ad-hoc basis.”
The second scenario is today mostly catered for by private networks, a market that ABI Research believes will grow from $3.6bn to $109bn by 2023, at a CAGR of 45.8%.
Alusha added: “A sizable part of this market can be converted to 5G slicing. But first, the industry should address challenges associated with technology and commercial models. On the latter, consumers’ and enterprises’ appetite to pay premium connectivity prices for deterministic and tailored connectivity services remains to be determined.
“Furthermore, there are ongoing industry discussions on whether the value that comes from 5G slicing can exceed the cost required to put together the underlying slicing ecosystem.”
In addition to these benefits, the report also suggested that 5G slicing could replace a large part of current private networks and dedicated connectivity services. It can also enrich hyperscaler cloud services with guaranteed connectivity offers while reusing a large part of existing cellular assets. This is said to be why the initial driving force behind 5G slicing uptake is fixed wireless access (FWA) for the enterprise domain.
In making its case for the latter point, ABI observed that there are more than 55 5G slicing proofs of concept and commercial tests from Ericsson, Huawei, Nokia and ZTE. These engagements, said the analyst, give the industry the insight to match up an emerging technology such as 5G slicing to new strategic opportunities and high-value use cases, depending on the market.
In a key use case in the Middle East, communications service providers (CSPs) are deploying a separate core network (hardware-based slices) for mission-critical services. In Europe, the tendency has been for CSPs to deploy slices for mission-critical services on top of existing consumer networks. In other words, said ABI, there is a mixed market but with a common denominator in how to unlock growth in the enterprise domain at scale and based on end-to-end standardisation.
“First, it is key for the industry to push for consistency and uniform practices across multiple domains,” said Alusha. “With 5G slicing, the industry should focus on convenience rather than performance, user experience rather than feature sets, and flexibility rather than rigidity. Ultimately, the core of the 5G slicing ‘dream’ is a business goal, not just a technology goal.
“It involves taking a quantum leap forward in how business is conducted within the industry and by the industry’s customers. In contrast to 3G and 4G, with 5G, the industry should focus on value not from technology per se, but rather from the strategic leap forward it can enable. Consequently, a cautious approach is required so that the industry finds in 5G slicing a reasonable basis for taking actions that predictably and positively affect vendors’ and CSPs’ revenues.”