5G toB: The next battle between operators and OTT?

In the 5G era, will the battle between operators and OTT continue?

Inevitable accidental discharge of guns

In order to achieve the transition from toC to toB, 5G is the first G designed for private networks. 5G core network functions can be flexibly deployed and combined with edge computing, network slicing, etc., to deploy 5G private networks for vertical industries, so that network latency and reliability can be guaranteed, thereby enabling a large number of industry applications and enabling the digitalization of all industries.

In order to open up the toB blue ocean, on the one hand, telecom operators are making full use of their network advantages, promoting cloud-network integration, and actively cooperating with vertical industries to deploy 5G private networks; on the other hand, public cloud players are also taking advantage of their cloud advantages, extending from the central cloud to the edge, and further penetrating cloud capabilities into the "last mile" of the enterprise.

The development of ToC has almost reached its end. In the 5G era, operators must expand to toB to increase their revenue sources, and OTT cloud vendors must certainly not miss the edge cloud era. Therefore, in the field of 5G private networks, especially at edge nodes, it is inevitable that operators and OTT cloud vendors will have conflicts in the future.

Friend or rival?

In fact, public cloud players such as AWS, Microsoft, Google, and Alibaba have all launched edge computing or core network solutions, and are gradually diving into the 5G cloud network under the slogan of cooperating with telecom operators.

This kind of cooperation seems to be a win-win situation, but it also reminds people of the story of the "Trojan Horse".

Depending on the degree of sharing with the public network and the deployment location of MEC, there are three main ways to deploy 5G private networks: full sharing with the public network, partial sharing with the public network, and independent deployment.

Full sharing with the public network means that the 5G private network fully shares the end-to-end resources of the 5G public network, and provides enterprise customers with an end-to-end "virtual private network" with deterministic SLA guarantees through slicing technology. Partial sharing with the public network means that the 5G private network and the 5G public network share gNB, or share gNB and the core network control plane (CP), and the core network user plane (UPF) and MEC are deployed within the enterprise private network. Independent deployment means that the enterprise independently deploys a 5G private network including all network elements such as the core network CP, UPF, MEC, gNB, etc.

From the perspective of the architecture of 5G private networks, it is essentially a combination of connectivity and computing (edge ​​computing), or the integration of cloud and network. Operators have absolute network advantages, especially in the "last mile" of the network, but OTT cloud vendors have cloud capability advantages.

As a result, OTT cloud providers have launched edge cloud solutions, such as Microsoft Azure Edge Zone and Amazon AWS Outposts, hoping to cooperate with operators to deploy 5G private networks.

OTT cloud providers can extend their cloud infrastructure, cloud applications, APIs and tools to operators' edge data centers, thereby helping operators quickly deploy 5G private networks, enrich applications and strengthen the ecosystem.

In this cooperation process, although operators have network advantages, if their edge cloud capabilities are too weak, they may be gradually "occupied" by OTT cloud vendors and once again fall into the embarrassing situation of being piped by OTT.

The biggest variable is the independent deployment mode.

In the independent deployment mode, enterprises do not need to rely on the operator's 5G public network. They can purchase network equipment themselves and directly cooperate with OTT cloud vendors to deploy independent 5G private networks.

Especially for some countries that have allocated 5G private network spectrum for vertical industries (such as Germany, Japan, and the United Kingdom), and the trend of introducing unlicensed spectrum for 5G NR in the future, enterprises do not even need to rely on operators' spectrum resources, but can completely skip operators and cooperate with OTT cloud providers to deploy 5G independent private networks.

Not long ago, an ABI Research report pointed out that in the future, spending on 5G private networks using private frequency bands and unlicensed spectrum will continue to rise, and in 2036 will exceed the operators' licensed spectrum 5G private networks for the first time.

At the same time, OTT cloud vendors are not only gradually infiltrating their edge cloud capabilities into operator networks, but some OTT giants also provide 5G core network solutions. For example, Microsoft has acquired Affirmed Networks and Metaswitch Networks, two core network suppliers. Alibaba is cooperating with operators to deploy 5G lightweight core networks, which will further enhance the cloud network competitiveness of OTT cloud vendors and increase the possibility of them competing with operators in the future.

In this way, a cooperation that originally seemed to be a "win-win" situation may evolve into a "Trojan Horse".

One more partner means more strength, but it also means one more mouth. Unless the operator has a strong enough advantage in this "cooperation", it is possible that it will be eroded bit by bit by OTT like in the 4G era.

So how can operators avoid this "Trojan Horse Massacre"?

Win the next competition

To put it simply, it’s the old saying: build on your strengths and make up for your weaknesses.

First of all, operators have the advantage of spectrum resources, and the public network is large in scale and coverage, with a large number of edge site resources and decades of professional network design, planning, construction, operation and maintenance, and optimization experience. These capabilities are not possessed by any OTT cloud vendor. Therefore, operators can make full use of these network advantages to quickly tailor 5G private networks for enterprises according to the specific needs of different industries and businesses, and seize corporate users.

For enterprises, they can choose the most appropriate 5G private network deployment method based on their different demands for security isolation and cost, as well as different business requirements for network latency. For example, in industries such as smart cities, Internet of Vehicles, and media entertainment, users are spread all over the network, and the cost of independent deployment is very high. They need to rely on the wide coverage advantage of the 5G public network, and can adopt a deployment method that is fully shared with the 5G public network; for scenarios such as ports, docks, and industrial parks, data must not leave the park, and the network must have low latency, so a method of partially sharing with the 5G public network can be adopted; for scenarios such as high-precision manufacturing, prisons, and the military, data security and autonomous management are very demanding, so independent deployment can be adopted.

However, except for some special industries, operators should build on their own advantages and adhere to the 5G private network deployment mode shared with the public network, that is, the "5G public network dedicated" mode, for three main reasons:

• 1. Industry users can make full use of the resources and professional capabilities of operators to significantly save deployment costs, improve deployment efficiency and quality, and avoid repeated investment and waste.
• Second, it can avoid the formation of information islands by scattered independent private networks, and fully rely on the operator's wide coverage, large-scale and global roaming public network connection advantages to ensure service continuity for industry users.
• Let’s take a look at the development history of PBX. In the early days, companies deployed them independently. However, with the development of technologies such as VoIP and converged communications, this approach has become increasingly costly, lacking flexibility and scalability, and information islands are becoming increasingly difficult to connect. Eventually, it has gradually converged to a large network and centralization.
• Third, it can prevent vertical industries from fighting alone, which would lead to fragmented industry competition. On the contrary, the "public network dedicated" model can pool the strength of the entire industry chain to jointly explore universal solutions, which is conducive to the large-scale replication of 5G industry applications.

Secondly, the shortcomings of edge cloud capabilities should be quickly made up. Operators should cooperate with vertical industries and industrial chains to build an open edge platform, so that developers can easily call on 5G network capabilities and IT capabilities, so that developers can more conveniently develop applications, so that applications can be easily integrated into the platform and quickly launched, thereby enriching edge applications, and achieving scalable replication of innovative applications, promoting the prosperity of the 5G toB ecosystem.

5G toB: Operators and OTT cloud vendors are both friends and rivals. How will they get along in the future?