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Does 5G technology make financial sense? Yes, if you do it right.

An interesting article appearing on Business Insider on July 20, 2017 quotes Richard Dineen of UBS states that “the range and strength of 5G technology just don't make financial sense.” While this article focuses on the presumed use of millimeter wave radio for 5G, he does raise a good question – does it make financial sense to implement 5G radio everywhere, right away? This is a straight forward return on invest (ROI) question. The answer is no, it does not make sense. Having said that, it should be noted that 5G, the fifth generation of mobile wireless network technology, will be different from the previous generations (1G through 4G). Previously, the new “G” was intended to replace the old “G”. The intension of 5G is to augment other forms of access to the network, including both licensed (i.e. 4G/LTE) and unlicensed (i.e. Wi-Fi and Wi-Gig).

But the question “does 5G technology make sense” compels us to look at the entire network. The short answer is Yes, it does make financial sense – if you implement this is a strategic and pragmatic manner that directly addresses real world business opportunities and challenges, and if implemented strategically so as not to waste investment.

The impetus to the development of 5G was to address technology challenges desired by various industries that were not being supported with the current technologies. This includes reliability, latency, connectivity, user experience, easy and efficiencies of operation, etc. When closely examined, many of these 5G requirements will be supported by the network architecture and not relying on a new radio technology. Additionally, not every service requires the “ultra” functionalities of a purely 5G network. Often what is holding back a service provider from implementing a new service is a lack of efficiency to make it cost effective.

The first thing to understand is that 5G is greater than just a new radio. 5G is what enables the digital transformation.

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Indeed, back in 2015 the GSMA issued a report that stated that up to 85% of services designated as “5G Services” could be delivered over existing radio access technologies (LTE, Wi-Fi) if only the right network foundation was in place.

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This past February at Mobile World Congress in Barcelona Cisco unveiled a pragmatic 3-Phase approach to 5G business success by building on the right network foundation. In short the Cisco-way to 5G is (1) Assess what you really need based upon where you are today and where you want be, (2) implement the 5G ready network foundation with your existing radio technology. This provides immediate cost and operational efficiencies. Now you can roll out most of the “5G services” to your customers. (3) when the 5G radio standards are ratified and the radio ship, you then decide where you really need to implement new radio technology to address those other 15% services.

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What is the right network? A 5G ready network includes an IP transport infrastructure that is able to quickly scale to support the billions of IoT connections that are coming along with the massive video consumption that we will see by the year 2020 (up to 78% mobile IP traffic will be video – Cisco VNI forecast). This IP Transport network will be fully programmable, automated and will leverage analytics and telemetry along with segment routing to assure quality of experience and reliability while operating at Cloud Scale.

This 5G ready network will also have a fully virtualized and distributed mobile core that acts as a services platform. By distributing functions like the User Plane and the Service Functions closer to the end user you create Mini Data Centers or Edge Computing. This reduces latency which can increase quality of experience especially for services like video, virtual reality and robotics.

But perhaps the most important aspect of creating a cost efficient 5G network is advanced automation. Today’s networks operate as many individual domains (radio access, transport, core, data centers, etc.) An advanced orchestration and automation system can make the entire network operate as a single unified network fabric. This was introduced by Cisco at Mobile World Congress this year as well.

The 5G ready Unified Enable Platform is based upon the Cisco Open Network Architecture for Service Providers. Our advanced orchestration and automation works end-to-end for multi-vendor environments and across a mix of virtualized and purpose-built devices and functions. This enable the service provider to immediately enjoy the operational efficiencies to enter new markets. The ability to place service functions where and when you need them (over network slices if required) also enable the service provider to offer up to 85% of those services labeled “5G services”.

As a result, a service provider, working with Cisco, can take a pragmatic approach of delivering new services today while preparing their network for the future. Then, once 5G standards are ratified and the new radios are shipped, the service provider can sit back and more strategically place those radios only where they are absolutely required to meet as yet unfilled requirements. In this way, 5G can be implemented in a manner that does make financial sense.

So, does it make financial sense to implement a 5G network? You can make 5G a success for your business if you take a pragmatic path that include a full and honest assessment of the business and network and implementing what you need, where you need it. Leveraging Cisco’s knowledge and experience you can have your own unified enablement platform and being reaping the promise of 5G today. Then, when 5G radio comes out the SP can look at where they really need it rather than rushing to implement everywhere. Terrific cost savings while delivering on success.