Telecom Network Innovation: XaaS and New Business Models in the 5G Era

Telecom Network Innovation: XaaS and New Business Models in the 5G Era

The 17th Annual Canadian Telecom Summit (CTS2018) must have set the “innovation skeptic's" expectations high by centering on the fifth-generation (5G) network theme and related developments. For example, the “Network Innovation: Transforming networks & applications for nexgen services” panel’s discussion touched on automation, network virtualization, data monetization, and Internet of Things (IoT) commercialization. However, despite the different versions of innovation the panelists put forward, they all conceded the fact that 5G opens the door to different business models, with a strong consensus on the necessity for a Public Private Partnership (3P) to bootstrap the 5G initiative.

The 5G network

The Next Generation Mobile Networks (NGMN) White Paper describes 5G as “an end-to-end ecosystem” that is expected to “enable a fully mobile and connected society”. The most prominent 5G use cases include fixed-wireless access, ultra-reliable low-latency (high volume of data messages with minimal delay) communications, enhanced mobile broadband and massive IoT communications. The effective implementation of the 5G vision could translate into driverless cars, virtual or augmented reality experiences, smart utilities, robotics and industrial automation. However, the proposed 5G use cases rely on contradicting requirements, pertaining notably to latency, throughput, reliability and transmission character.

To address all of these use cases, networks need to become more flexible. This is achieved through network slicing, a form of virtual network architecture built on common shared physical infrastructure. Each network slice consists of an independent set of logical (software-based) network functions that support the requirements of the specific use case. For instance, the driverless car will rely on vehicle-to-anything (V2X) communication, which requires low latency but not necessarily a high throughput, while a streaming service being watched while the car is in motion will require a high throughput and is susceptible to latency. Virtual network slices are thus employed to optimise the use of the physical network. This can also enhance security, by isolating attacks on the network slice, given that security poses the biggest challenge as these networks evolve, according to Ray Lahoud, Chief Operating Officer at Allstream.

Network slicing relies on Software Defined Networking (SDN) and Network Functions Virtualisation (NFV). SDN decouples the data and control planes, which, along with the management plane, constitute the three basic components of a telecommunications architecture. By removing the control plane from network hardware and implementing it in software, SDN enables programmatic access, making network administration much more flexible. While SDN enables network slicing, the NFV architecture is employed to manage the life cycle of network slices and its constituent resources, and orchestrating their allocation to realize the virtual network functions (VNFs) and network service.  In a nutshell, NFV provides the ‘what’ (virtualization architecture) and SDN provides the ‘how’ (Application Programming Interfaces and control protocols) to enable service providers to embrace network virtualization.

SDNs can be deployed today leveraging existing Application Programming Interfaces (APIs).  APIs constitute a point of interaction between a number of systems. From the users’ point of view, APIs allow them to complete the action without leaving a website. APIs speed up the communication between apps and platforms, allowing service providers to deploy innovative high-quality services faster by bypassing one-on-one, costly and time-consuming proprietary integration. As Ibrahim Gedeon, Chief Technology Officer at Telus, described it, before embarking on any technological transformation journey we need to “speak the same language to talk about innovation”, which in turn translates to the need for a standardized API design.

Network softwarization is paving the way towards X-as-a-Service (XaaS). XaaS refers to the concept that anything can be purchased on an “as needed” basis, including the functions that control a telecom network, notably Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). With these resources made available by cloud service providers, telecom service providers maintain a major influence over the services they buy, while offloading the costs of Research and Development (R&D), security and optimization. XaaS extends beyond cloud computing, with Transportation-as-a-Service offered by Uber and Lyft, Grocery-as-a-Service by Safeway and Whole Foods, and Accommodation-as-a-Service by Airbnb.


New Business Models

According to the NGMN White Paper, 5G is expected to “empower value creation towards customers and partners, through existing and emerging use cases, delivered with consistent experience, and enabled by sustainable business models.” Essentially, this means that telcos will start shifting from their traditional Business-to-Customer (B2C) to a Business-to-Business (B2B) business model, by opening their networks to other stakeholders and allowing the latter to reuse their capabilities in order to deliver new services to customers.

Communication Service Providers (CSPs) can monetize new data-intensive Over-the-Top (OTT) services through partnerships with OTT providers or by charging them for access to their networks. In fact, operators have already started to leverage partnerships with OTT players to deliver packaged services to end users. OTT players are expected to deliver more applications that require higher quality, lower latency, and other service enhancing capabilities, namely proximity, location, quality of service (QoS), authentication, on demand and in a highly flexible and programmable way.

In addition, as James Buchanan, Senior VP & General Manager of Ensemble ADVA Optical Networking, framed it, monetization of data is key to proving that it is worth investing in 5G. While telcos are now relying only on data to improve customer experience and QoS, with 5G network services combined with IoT and AI, new business models of monetization will arise, namely intelligent enterprise application services. New business opportunities will thus emerge for telcos not only through data monetization but also from the value delivered to enterprises via application and network intelligence layers.


IPR, RnD and Investment in 5G

The realization of the 5G vision, especially in terms of IoT-related applications, will require extensive R&D and investment. Robust intellectual property protection is an essential ingredient to this end.  Based on the NGMN White Paper, the IP based business objective is to make 5G access affordable for all types of devices. The proposed NGMN recommendations include improving 5G Standard Essential Patent (SEP) Declarations, establishing Independent 5G SEPAssessments, and exploring and establishing Patent Pool licensing for 5G. All industry partners are expected to develop implementation plans for each of these recommendations.

Overall, this panel’s speakers strongly agreed on the fact that the 5G endeavor cannot be taken exclusively on by the private sector. This was consequently addressed by the Honourable Navdeep Bains, PC, MP, Minister of Innovation, Science and Economic Development in his keynote address, during which he announced the launch of ENCQOR, , the Evolution of Networked Services through a Corridor in Québec and Ontario for Research and Innovation, which is a 3P between the governments of Ontario and Quebec and private sector partners. Minster Bains described ENCQOR as “a 5G test bed that will advance the development of 5G networking solutions and next-generation technologies and applications”. In addition, he proclaimed the launch of two consultations regarding 5G deployment, one of which pertains to the 3500 MHz spectrum auction. Based on the aforementioned, the plan toward the 5G seems clearly drafted and in line with the telecom industry’s mantra of “flexibility, scalability and cost”, as epitomized by Mr. Lahoud.


Yonida Koukio is an IPilogue Editor and an LL.M. Candidate at Osgoode Hall Law School.