Why is 5G a big problem for big vendors?

Medium-term, big vendors face a big challenge as operators incorporate 5G into their systems. For decades, the inflexibility of big vendor solutions and the limitations of 3G and 4G have forced Mobile Network Operators (MNOs) into low-cost strategies. The resulting commoditisation has shrunk margins, and MNOs should rightly be annoyed. However, all of that could soon change.

Thanks to 5G, for the first time in decades, if MNOs and Mobile Virtual Network Operators (MVNOs) reduce their reliance on big vendors, they can adopt real diversification strategies. Otherwise, if they continue to rely on inflexible, high-cost, one-size-fits-all solutions from big vendors they risk sustained commoditisation, low-cost strategies, and tight margins.

In a Telecoms.com article about the challenges of 5G, the Head of UKTIN, Nick Johnson, pointed out that a lack of high-value 5G monetisation use cases is pushing MNOs to cut costs, saying: “…my view is that we need to be focusing on things that reduce the cost.”

This sector-wide issue is a huge problem for big vendors like Nokia, Ericsson, and Huawei, which have high prices and are inflexible. These are counteractive traits in 5G, which is extremely versatile and expensive to roll out.

Consolidate and extend end-of-life of existing infrastructure to reduce costs and increase revenue.

Due to large capex investments in 5G rollouts, MNOs need to extract the highest possible returns from 5G rollouts and reduce operating costs where possible. Until the elusive 5G ‘Killer app’ emerges, reducing operating costs will be fundamental to MNO strategies.

One of the quickest and easiest ways to do this is to streamline and extend the life of existing network infrastructure components. This method contrasts with the costly network overhaul methods of big vendors.

The monolithic behaviour of big vendors is unsuited to current agile core network infrastructure needs. The refusal of big vendors to adapt their solutions to work with existing multi-generation network configurations forces operators to make unnecessary network overhauls. Cash-strapped MNOs are unlikely to appreciate these tactics in future.

Flexibility is essential for 5G network success.

Diversification will be central to 5G strategies, and MNOs will need flexible solutions and agile vendors to support those strategies. Each generation of mobile networks has delivered something new, but until 5G, all of them have concentrated on the functionality of mobile devices for subscribers. The Internet on our phones was 3G’s main accomplishment, and 4G allowed us to use our phones to download content faster and live stream.

5G is different. Its utility goes far beyond mobile phones. Private networks, network slicing, ultra-reliable low latency communications (URLLC), and Fixed Wireless Access (FWA) through enhanced mobile broadband (eMBB) are just some of the emerging technologies, services, and applications.

In the past, the limited applicability of 3G and 4G networks supported the inflexibility of big vendor solutions. MNOs could also achieve some efficiency by utilising big vendor solutions to run entire networks due to having fewer vendor standards to adhere to. However, this limits their ability to adapt to market changes and costs a lot.

In fluid markets, where consumer trends change frequently, the one-size-fits-all solutions of big vendors won’t deliver the flexibility MNOs require to leverage the versatility of 5G. Therefore, MNOs need agile vendors with the capability to integrate 5G technologies into existing networks rapidly.

What can operators do?

Replacing existing network components isn’t always necessary. By utilising flexible solutions with forward and backward compatibility, operators can extend the life of their systems while introducing new revenue-generating channels. This approach is vital if operators want to make the most out of 5G rollouts.

MNOs and MVNOs must reduce their reliance on big vendors and adopt agile vendor solutions. Squire Technologies’ Sigla platform unifies all mediation, routing and interworking, security, and measurement between multi-generation networks, reducing network complexity and operating costs.

Learn more about Squire Technologies’ Sigla platform and its agile core network solutions by visiting www.squire-technologies.co.uk/sigla.

Douglas Bryce, Marketing Communications Specialist at Squire Technologies.

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