5G Core Platforms Set to Generate US$8 Billion as MSPs Transition to More Software-Centric Networks

25 Jul 2019

Telecoms vendors and Mobile Service Providers (MSPs) are probing new revenue opportunities and business models that look beyond where the money is in the value chain, to where it will be in the years to come. An increased emphasis on software-centric networks like 5G, which favor services, is expected to usher in the next wave of growth in telecoms, finds global tech market advisory firm ABI Research. But the industry will only reap the benefits of advanced use cases such as ultra-reliable low-latency communications (uRLLC) and massive machine-type communications (mMTC) when they migrate wholesale to full 5G networks.

“The industry must realize that 5G is not just about radio and core network evolution,” says Don Alusha, Senior Analyst at ABI Research. “The introduction of 5G is almost certainly going to require investment in other parts of the ecosystem, like transport networks and cloud-based platforms. The supply side of telecoms, therefore, must accompany its 5G offering with a clear understanding of how 5G-specific use cases fit into the wider connectivity-centric telecoms ecosystem to unlock new commercial opportunities for the industry at large.”

At present, vendors are providing a converged solution where 4G functions can combine with 5G capability in the same product, but standalone 5G commercial offerings are bound to hit the market soon. Incumbent vendors (ZTE, Ericsson, Huawei, and Nokia) are expected to play a vital role in migrating the large number of existing 3G and 4G networks into 5G environments. Other vendors like Mavenir, Parallel Wireless, and Affirmed Networks will also offer complementary capabilities around virtualization and cloud technologies. Initial ABI Research estimates point to a market that is projected to start at a modest US$29 million in 2020, growing to US$8.4 billion in 2024, at a Compound Annual Growth Rate (CAGR) of 313%.  

MSPs are pursuing different strategies to embrace 5G mainly focused on radio enhancements, but eventually, they must face the prospect of upgrading to full 5G functionality. The sentiment in the operator community varies. Some assert that they intend to wait for the ecosystem to reach a high degree of maturity, while some others are already pursuing trials aimed at a full-fledged 5G network. The transition to a 5G network is not a quick endeavor, but that should not preclude MSPs, and the industry at large, from taking a step now and accelerating investment down the line for a wholesale migration. Orange Spain and Telefonica, in collaboration with ZTE, are two telcos that have begun that migration with ‘full’ 5G trials.

“A utopian vision of a perfect migration path is just that: utopian. Pursuing the perfect 5G deployment path may not be the optimal way to realize the full benefits of 5G. MSPs’ adoption of 5G will vary in line with where they currently are from a technology perspective and business potential, and priorities from a commercial perspective. While each MSP will chart its own course, it is essential that they have a clear plan in place that captures some benefits now, but - and this is important - does not drift away from the goal of ultimately creating a large-scale commercial upswing,” Alusha concludes.

These findings are from ABI Research’s 5G Next-Generation Core and Service-Based Architecture technology analysis report. This report is part of the company’s 5G Core & Edge Networks research service, which includes research, data, and analyst insights. Based on extensive primary interviews, Technology Analysis reports present in-depth analysis on key market trends and factors for a specific technology.


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