What is Network Economics?


What is Network Economics?

5G, the fifth generation of cellular network technology, is attracting global attention in the mobile industry with its capability to cater to new use cases in addition to the traditional mobile broadband use case. The deployment of the new 5G network is expected to require significant resources. There are also challenges above and beyond this, for example in urban settings, it is becoming ever more difficult to acquire/secure sites for new base stations due to the costs of real estate and aesthetics concerns. Furthermore, the new features of 5G, intending to address diverse requirements from numerous applications, will increase the complexity of operations leading to additional costs. With ARPU (Average Revenue Per User) stagnating in many markets, how will operators offset the substantial investment required in their networks?

To quickly bring the 5G network into reality, mobile network operators will need to devise mechanisms to improve the capital intensity at which they operate. The long-term goal of Future Networks programme is to boost population coverage of high-speed broadband while optimising capital intensity* (e.g. <15%) by unlocking additional value from networks in a cost-efficient manner.

Over the last 12 months, the Future Networks programme has developed a Network Economic Model which first baselines existing network topology, and then iteratively overlays and profiles new disruptive technologies or network management strategies that can deliver efficiencies or new revenues. The modelling is then ratified via operator review to evaluate their potential impact, and the goal is to showcase the “best of the best”, and identify collaborative actions to support operators.

Ultimately, the economics will drive the deployment of MNO (Mobile Network Operator) networks and services in the future and the case studies we cover later are a reflection of the emerging picture. To date, we have considered Infrastructure Sharing (present-day applications i.e. active and passive), 2G/3G rationalisation and innovation in Radio and Wireless Network Transport.

For 2018/19, the Future Networks Programme will consider disruption and innovation in three key areas; Energy Efficiency, Infrastructure Sharing and Backhaul Relief. If you would like to be involved please contact futurenetworks@gsma.com.

*Capital Intensity defined as the CAPEX divided by the revenue

NOTE: Companies profiled, case studies and outputs from network economic model are provided for information purposes only and do not constitute an endorsement or recommendation