The impact of 5G and next-generation networks on mobile opex spending
Table of Contents:
About this report
Executive summary
Challenge: no one approach to cost reduction will decrease opex enough
to make 5G profitable
Solution: a multi-faceted strategy is complex, but can transform an MNO’s
cost model
Recommendations
Absolute opex has returned to growth, so some radical thinking will be required for MNOs to achieve their opex reduction targets by 2025
MNOs are apprehensive about the opex savings from the 5G RAN, so are targeting a shared, software-driven strategy for its implementation
MNOs have been wedded to owner economics, but in the 5G era, new tactics will drive a shift towards a higher opex/capex ratio, while reducing both types of cost
NFV/SDN must be regarded as a medium- to long-term opex reduction approach; quicker wins will come from elsewhere
Virtualisation will initially increase opex, but will have more impact on capex and should be planned in tandem with 5G radio efficiencies to maximise savings
The RAN remains the biggest contributor to network opex, but is one of the network elements that is most resistant to ‘software-isation’
Aspects of the network that cannot be converted to software account for a large share of opex, so new approaches are needed
Automation will progress through several phases, with each contributing greater opex efficiencies than the last; SON will be a key early enabler of automation
The next phase of automation is likely to incorporate machine learning to make the self-driving network more intelligent and to maximise cost efficiencies
Software technologies will eventually support fully automated networks with radically different operating costs, but this will take over a decade to achieve
Network sharing must go further and include active equipment and spectrum if the 5G business case is to remain viable
The sharing of active equipment will have a greater impact on opex as networks densify, while new spectrum and standards will support more flexible options
Disruptive new entrants and MVNOs with infrastructure show how the 5G era will demand radical new operating cost models with less reliance on owned assets
Case study: Reliance Jio is a leading disruptor that employs the whole gamut of techniques to keep its network opex lower than its rivals’
About the author
Analysys Mason’s consulting and research are uniquely positioned
Research from Analysys Mason
Consulting from Analysys Mason
List of Figures:
Figure 1: Breakdown of targeted 5G opex savings
Figure 2: The gap between opex targets and reality¹
Figure 3: Changes in cost per site and site numbers, by generation¹
Figure 4: The contribution of different factors to a 33%
reduction in opex
Figure 5: Breakdown of total opex into categories, 2017
Figure 6: MNO network opex and service revenue, 2006–2017
Figure 7: MNOs’ key tactics for reducing network opex by 2025
Figure 8: Factors affecting capex and opex in the telecoms software market
Figure 9: Expected trend in network opex to achieve the 33% reduction target by 2025¹
Figure 10: Typical breakdown of network opex spending, 2018
Figure 11: Ability of SDN/NFV to reduce network opex, by network element, 2018
Figure 12: Top investment priorities for MNOs in years 1–2 of 5G roll-out¹
Figure 13: Top investment priorities for MNOs in years 3–4 of 5G roll-out¹
Figure 14: AT&T trialling a drone for cell site maintenance1
Figure 15: Opex savings rated in terms of the human effort saved in network optimisation1
Figure 16: Functions for which MNOs expect to deploy AI/ML in the network
Figure 17: A fully automated architecture for a programmable, sliceable 5G network platform
Figure 18: Relative cost savings achievable by sharing RAN and spectrum
Figure 19: Forms of network sharing, with increasing levels of sharing and cost savings
Figure 20: Impact of sharing on 5G TCO, especially in the small cells layer
Figure 21: Opex reduction potential varies with MNO profile
Figure 22: Reliance Jio’s SON platform delivers reduced opex
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