May/June 19 - ChannelVision Magazine

Mobile & Wireless most respondents that 5G will usher in rising costs. A massive densification of networks, just for starters, could potentially require operators to double the number of radio access locations around the globe in the next 10 to 15 years. Compound this with new spectrum acquisition and other poten- tial spectrum-related costs such as “refarming,” and more than two-thirds of operators surveyed by McKinsey expect the capital-expense-to-sales ratio to go up. Only 11 percent see 5G reducing industry capital expense. On the operating side of the ledger, most respondents also see an increase in expenses. Operators worry about site costs (65 percent) and mainte- nance costs (50 percent), and four in 10 expect IT costs to increase (though 22 percent see an opportunity to re- duce IT costs). 5G also is expected to be signifi- cantly more energy-intensive than previous generations of wireless connectivity, and in turn, nearly all (94 percent) of telcos surveyed by 451 indicated that 5G will raise over- all energy costs. Given the promi- nence of energy as an overall per- centage of operational expenditures, mitigation strategies will be critical to maintain 5G business case viabil- ity, said 451 researchers. Among the top energy-reducing efforts to be utilized will be deploying methods to reduce AC to DC conver- sion, which will remain the most com- monly used energy-saving method, suggest 451 surveys; along with new cooling techniques, which are expected to see the biggest jump in adoption during the next five years, and battery upgrades, such as from VRLA to Li-ion. “If energy saving is crucial for profitability now, it will be even more mission-critical in five years when 5G is reaching mass deployment levels,” said 451 researchers. “The market for energy-saving products and services will clearly rise with 5G maturity.” All told, about two-thirds of the operators responding to the McKin- sey survey admit that they still have questions around the financing of 5G systems, and roughly 60 percent of respondents indicate they struggle with the business case. Although it should be noted that wireless pro- viders in North America might be furthest along in terms of business case clarity. Just 11 percent of North American operators cited business case as the biggest challenge of their 5G strategy. That compares to 60 percent of all global respondents and 67 percent of multi-country operators who said the same. This could be due to North American providers (namely Verizon and AT&T) being among the furthest along in terms of service deployment as well as the necessary upgrading of networks. Even so, McKinsey believes the challenging economics surrounding 5G are forcing telcos to consider some alternative business models. So far, at least in public, most operators have been reluctant, said McKinsey & Company, to take a stand on whether or not they expect to work more with other providers to share network infrastructure or if they in- tend to use third-party “neutral hosts” that have their own, or shared, 5G infrastructure and run things for the What are the components to be taken into account to obtain realistic indicators of ROI for your cloud service? Source: Av Connectivity challenges for 5G Source: 451 Research Upgrading access and aggregation layer network resilience to enable 5G for more critical commercial services Adding backhaul bandwidth or new links to 5G base stations Performing network security tests for compliance and risk mitigation Adding fronthaul capacity to 5G radio towers 64% 52% 52% 50% Role neutral hosts/ etworks will play, % of respondents Source: McKinsey & Co. 51 24 13 10 Specific regions No role Industrial sites Indoor commercial properties 84% 94% 2% GB DE FR NL SW SP IT CH 5G* EXPECTED Source: Avant; Q: Does e devices w cloud – co it did last Source: Busi Source: Avant; Edge Strate Current status of 5G strategy development, % of respondents Source: McKinsey & Company Complete and approved strategy First- raft strategy No strategy/ early thoughts 22 57 22 24 54 22 37 39 30 26 43 39 17 43 5G pilot strategy Technology strategy Business case Operations and maintenance strategy Commercial strategy 24 Connectivity challenges for 5G Source: 451 Research Upgrading acces and aggregation layer network resilience to enable 5G for more critical commerci l services Adding backhaul bandwidth or new links to 5G base stations Performing network security tests for compliance and risk mitigation Adding fronthaul capacity to 5G radio towers 64% 52% 52% 50% Role neutral hosts/networks will play, % of respondents Source: McKinsey & Co. 51 24 13 10 Specific regions No role Industrial sites Indoor commercial properties Data Connectivity SERVICE RANK C FROM - + - - + - + - - N/ N/ UCaaS/CCaaS Voice SD-WAN Offi e Productivity Colocation SaaS laaS SECaaS M naged loT* 5G* UCaaS/ Manag S S Data conn Col Office prod SE More often than last year About as often as last year It doesn’t come up Less than last year 14 Channel Vision | May - June, 2019