5G, IoT, NFV, SDN and dynamic networks are on the cards for mobile in 2016, according to industry experts and operators
In the UK at least, 2015 has been an interesting year for the mobile telecoms industry. BT and EE received approval for their merger to be completed next year, while O2 and Three are hoping their union will be able to go ahead as well.
The rise of quad-play services and a once-in-a-decade review of the communications market are trends likely to continue into the New Year, while the industry across the globe will continue to face ongoing challenges.
These include the rise of over the top services (OTT), falling revenues and the opportunities and pitfalls of the Internet of Things (IoT), but what will actually happen in 2016? Here are five predictions made by the experts.
5G Development steps up
It is believed that 2016 will be the year that the still-to-be-determined standard for 5G is finalised, allowing operators, network equipment manufacturers and device makers prepare for the launch of commercial networks, which could launch in many countries by 2020.
The final details of 5G are still up for debate, but there is a general consensus that next generation networks will offer faster speeds, low latency, more efficient energy use and higher capacity – characteristics that can help support the expected growth in IoT applications.
Various efforts around the world, including the 5G Innovation Centre (5GIC) at the University of Surrey are working to make the technology a reality. The industry believes there will be significant demand for next generation networks, with Ericsson predicting 150 million subscriptions by 2021.
“KPN, Ericsson, Huawei and the research institute TNO are planning to test a 5G network in the Netherlands later this year,” said experts at Juniper Research. “Ericsson and Softbank have teamed up for tests in Tokyo; ZTE teamed has partnered with Korean operator KT to launch a 5G test bed in Seoul; Verizon Wireless is to field test 5G next year and has set itself the ambitious target of launching commercial services in 2017. With Intel and Nokia (among others) working to define 5G system specifications, expect a significant stepping up of activity as Tier 1 players firm up their plans in this area.”
Read More: What exactly is 5G?
IoT network standards gain traction… but not until 2017
Last month, Vodafone voiced its frustration at the lack of progress in standardising Narrowband IoT (NB-IoT), a Low Power Wide Area (LPWA) network technology that can support devices with long battery life in remote areas.
It is seen as essential by the mobile industry that a common standard is adopted if mobile operators aren’t going to lose out to rival connectivity technologies such as Wi-Fi, Bluetooth and SIGFOX. Researchers believe progress will be made next year but perhaps not as quickly as the likes of Vodafone want.
“The mobile industry is working furiously to create third generation partnership projects (3GPP) connectivity standards optimised for Internet of Things (IoT) applications even as competing proprietary LPWA specifications rush to gain traction in the market,” according to researchers at IHS. “While LTE-M will be standardised on schedule in 2016, NB-IoT will be delayed to the later half of the year and neither technology will be commercialised until 2017.”
Telcos will increase IT spend in search of dynamism
One of the topics of conversation at the Huawei Ultra Broadband Forum (UBBF) in Madrid earlier this year was how mobile operators need to become more agile and dynamic so they can introduce and discontinue services as quickly as possible. This they claim, will allow them to keep up with OTT players, changing customer demand and become more efficient.
This is having a knock-on effect on IT spend, according to Ovum, which says 65 percent of telcos plan to increase IT spend in 2016, with 32 percent boosting budgets by six percent or more. This will go on analytics tools, efficiency projects, network performance optimisation and on the search for effective delivery models.
“The telecoms industry’s shift toward the digital delivery of services has created a need for agile operating models and is driving telco IT trends over the next year, particularly transformation projects aimed at improving the BSS stack to enable restructuring of tariff systems, adding billing convergence and real-time charging capabilities, and integrating billing systems with customer management systems,” explained Chantel Cary, analyst at Ovum.
“We also expect to see telcos shift away from the on-premise deployments of IT systems in favour of cloud delivery models. In fact, 59 percent of the telcos we spoke to said that they plan to adopt cloud delivery for at least one of their IT systems in 2016.”
Read More: How operators can compete with OTTs
Mobile operators will embrace NFV and SDN
Operators will invest in networks too. Network Function Virtualisation (NFV) and Software Defined Networks (SDN) are seen as key components in the drive toward efficiency and dynamism. Both technologies make it easier and quicker to roll out innovations and reduce hardware spend.
The vision of the future network outlined at UBBF is a simplified structure, one that removes the layers of legacy networks, places the data centre at the core and allows for simplified management and updates using SDN and NFV. In short, telcos need to decouple the network from services.
EE believes SDN and NFV have both matured to a point where they must be seriously considered by all operators.
“If anyone still harboured doubts whether Software Defined Networking and Network Functions Virtualisation would re-shape the telecommunications industry, 2015 should have put them to rest,” said Philip Bridge, EE Senior Network Architect. “Established vendors have committed their business to long-term SDN/NFV strategies and are now delivering a real product. New entrants have gained traction and a slew of partnerships, mergers and acquisitions have created a new vendor landscape. Many operators, including EE, are conducting various proof-of-concepts or trials.
“Looking to 2016, we expect these trends to accelerate and to see deployments moving from the proof-of-concept stage to incorporation into live networks. At the same time, key players will start to better understand the scale of the transformation underway and focus on the practicalities of making the promise real – 2016 could be the year when realistic business cases are constructed.
“While the promise of lower costs gave initial impetus to NFV in particular, there is an understanding that this will not be realised quickly. We expect operators who implement these technologies in 2016 to do so because it lets them deliver new services much faster, enabling them to operate at the ‘internet speed’ of players such as Google. We also anticipate early benefits from automation and software control of networks delivering higher availability and a better customer experience.”
Read More: What Is SDN?
4G demand will grow but LTE network spend will slow
One piece of good news for mobile operators is the rising use of mobile data and increased demand for LTE subscriptions. However network equipment manufacturers will be worried about slowing demand for 4G infrastructure from operators as deployments near completion.
The Global mobile Suppliers Association (GSA) says one in eight mobile connections are now LTE and claims there will be 460 4G networks by the end of the year. Many operators are now turning their attention to upgrading infrastructure to LTE-A and boosting speeds with carrier aggregation, but analysts think the equipment market has reached its peak.
“LTE network equipment revenue will start to decline in 2016 because the three Chinese mobile operators completed their massive rollout in 2015 which created a market peak,” said IHS. “The strong momentum in India won’t be enough to offset declines in the Chinese market, which is by far and away the world’s largest LTE network gear market.”
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