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5G to witness private net explosion

While momentum will build slowly and not pick up speed until after 2023, by 2026 $187 billion will have been cumulative spent on building native 5G cores, and in 2026 the run-rate of spending per year will have accelerated to $28 billion.

That momentum builds because MNOs will increasingly be looking for new forms of service revenues from 2023 onwards, with network slicing and ultra-low latency high on their agenda and impossible to deliver using a purely 4G core. MNOs will have an increasing need to find new areas of profit, and will wish to cut their high capex budgets.

To achieve ‘true 5G’ performance and to enable many services that look beyond just mobile broadband, operators will need to migrate to the 5G core, and most are envisaging this as a stage in their adoption of fully cloud-native architectures. This transition is necessary to develop new revenue streams, rather than just bolstering or defending existing ones.

Agile service delivery, full multilayer convergence with wireline and critical communications take a back seat to existing services until 2023, when real change begins to happen.

Rethink Technology Research explains all of this in its’ latest report, entitled, ‘Patterns of migration to the 5G core’. The report is based 78 Tier 1 and 2 MNOs discussing their buying plans with Rethink and it includes extensive stakeholder interviews with operators, vendors, infrastructure service providers and cloud companies.

The slow start is because migrating the core is a significant and complex process, which only a few “pioneers” have embarked upon so far, including Japan’s Rakuten, with its cloud-native 4G/5G network and its co-development of a 5G core with NEC and China Mobile whose 5G core roll-out has already reached hundreds of cities. T-Mobile USA also has a 5G core rollout in progress.

MNOs will face a rising need to support new profit models, and have a strong desire to manage and reduce capex. While some MNOs will wait for several years before embarking on a 5G core, and some had vague plans, perhaps waiting for a cloud-native technologies and standards to stabilize, the majority of MNOs are showing momentum in their plans to migrate to a 5G core after 2023.

By 2026, capex spending on the core network (products, services and cloud platforms) will reach $28bn worldwide, and a cumulative $187bn will have been spent in the period from 2019 to 2026 – a rising percentage of that on cloud-native 5G and on cores to support converged networks and services.

There are, of course, many drivers to invest in the 5G core and take on the pain of the migration. The survey found that, in the short term (first two years of a commercial 5G SA deployment), the focus is on flexibility and scalability, to support improved user experiences and to make more efficient use of expensive 5G network resources. At a later stage, the priorities shift to enabling brand new experiences quickly and to full automation and dynamic slicing with edge compute.


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