Is There a Business Case for Network Slicing?

By | December 13, 2016

Network slicingNetwork slicing is a focal feature of 5G networks – a savior for service providers that will enable greater control of the quality of service delivered to clients, especially the enterprise market.  But while the discussion address the technical aspects of network slicing, there are many business and financial issues that remain mysterious!

What is Network Slicing

Network Slicing aims to provide dedicated logical networks that meet customer specific functionality and service level. It is both customization and optimization of the network to meet market demand for specific end-to-end requirements. Therefore, a Network Slice includes all the network functions that are required to provide the required services and network capabilities, and the resources to run these network functions.

Network Slicing Framework.

Network Slicing Framework. [Source: NGMN]

Types of Slices

Consider some of the ways network slicing could be implemented – i.e. how the network could be customized:

  • By vertical market, such as automotive, finance, health, education, etc.
  • By the the type of user (premium, gold, silver).
  • Per user service, such as voice, messaging, IoT, AR/VR, video, gaming, etc.
  • By application or data type such as voice, real time video, real time data , best efforts
  • Per QoS type such as application-centric, service-centric, or user-specified
  • By device types, such as static IoT devices, smartphones, vehicles, or high mobility devices
  • By location and geography

Challenges in Network Slicing

Implementing network slicing is complex. It is predicated on virtualized networks that can be configured by software to provide different profiles. Through this, Network Slicing has to deliver its mandate without losing the economies of scale of a common infrastructure.

The key challenges in network slicing:

  • How to customize: little one knows about how to slice a network to start with and whether clients will pay for the benefits.
  • What to optimize: network slicing represent a complex optimization problem due to the multiplicity of variables involved. While this is a technology issue, it has significant impact on economics.

The two above challenges lead to an important question: to what level is virtualization and slicing needed?

While virtualization of the core network is ongoing, it is the radio access where the challenge lies. True network slicing requires virtualized RAN which is not a simple proposition. It also raises interesting questions: should network slicing include a programmable scheduler? Should it allow dynamic partitioning of scheduler resource according to different application requirements? Where does slicing end? These are not only technical questions, but economic ones as well where cost/benefits traded offs are yet to be understood.

It’s All About Money

Network slicing is a tool that enables wireless service providers to better penetrate the enterprise segment. This brings new growth opportunities since their business is pinned largely on the consumer market.

Therefore, the question becomes one of finances: are the benefits of network slicing worth the cost, and can service providers charge more in exchange for these benefits?

Think about this!  Today, service provider revenues and profits come primarily from the mass post-paid consumer segment. Will the carriers be able to attract the enterprise segment with highly differentiated services? Will they be able to charge their customer base, who incidentally love free WiFi, more for these differentiated services? These are the difficult questions that perhaps only time will answer!