What is the Business Value of a Network Slice?

What is the business value of a network slice, the ability to create an end-to-end virtual network with features optimized to fit particular use cases on a number of dimensions?  Network slicing is the logical partitioning of a physical network into independent virtual mobile networks.

So the issue is what value various mobile operators will see to creating a multi-tenant capability. Should that extend only to the operator’s enterprise customers, or should multi-tenancy also extend to enabling rivals (as traditionally is the case for network operators selling capacity to third party competitors who want to operate mobile virtual network businesses?

The easiest case, for a network operator, is using network slicing to better support its own retail customers.

For starters, network slicing implies the ability to tune the core network features to match different use cases.

An automated vehicle control network might emphasize ultra-low latency. An industrial internet of things network might emphasize low-bandwidth and infrequent communications.

A high-end consumer internet access use case might focus most on bandwidth. Health applications might value reliability and predictability above all else.

Existing consumer mobile and fixed network services are “one-size-fits-all.” That has operating and capital cost implications since most use cases arguably result in network resources being underused (stranded).

On the other hand, some use cases might require either high-bandwidth or low-latency, but not both. Some use cases benefit from higher levels of security; others are less stringent.

So network slicing offers the hope of more efficient networks that also can be customized, to an extent, to fit specific use cases.

Each network slice can be optimized to provide the required resources and class or service or quality of service to meet the diverse set of requirements for different use cases.

Source: CableLabs

There could be other far-reaching implications, however. What network slicing could mean is “multi-tenant” use of a fixed network access facility. In other words, it should be possible for multiple independent users (enterprises, app provider or service provider) to manage their own networks over the one physical access link.

Think of the ways mobile virtual network operators now provision network resources. To be sure, capacity will be sold wholesale in some way that relates to network usage (bandwidth, for the most part). Today, MVNOs pay their suppliers based on consumption (volume).  

With network slicing, other possibilities can be envisioned. Perhaps an MVNO buys a fixed slice of capacity and use (fixed or flat fee) and then is able to tweak functionality to match its expected use cases. This might be particularly useful for a specialized MVNO serving customers with special requirements (health apps and services emphasizing class of service protections).

Perhaps an autonomous vehicle network really wants ultra-low latency, above all, and builds that into its own slice.

Also, at least in principle, some entities could consider co-investment in fiber to home facilities that share one physical link but are partitioned into multiple virtual connections. That could be a substitute for today’s practice of buying standard capacity, with charging based on usage, and a new way to share infrastructure costs without sacrificing “control and differentiation” of network features.

Put another way, could network slicing be a new way of allowing multiple service providers to share the cost of access infrastructure? Traditionally, service providers have shared physical elements such as towers, radios, metro transport or access facilities. Sharing of towers and radios has been somewhat common, in some markets, and will be a feature of South Korea mobile 5G infrastructure, for example.

Nations with a wholesale approach to facilities have had one physical network supplier and then multiple retailers using that common infrastructure.

But network slicing in the 5G era could bring substantial changes. Perhaps network slicing creates a new way for mobile operators and others to share the costs of building networks, perhaps most obviously for the half of radio sites that typically carry only about 10 percent of traffic.

Since executives are likely to want to maintain full control over any elements of their business that provide customer-facing strategic advantages, one possible driver of network slicing is to use that technique to reduce the cost of coverage for up to half of sites that carry very little traffic, and then maintaining full control over the half of radio assets that represent those portions of the network carrying 90 percent of traffic.

As always, such practices might appeal most to non-dominant or smaller service providers, since the capex savings could be significant over the approach of building an entirely-owned network. Network slicing would save the costs of negotiating site leases, not simply the cost of facilities, for example.

While useful for traditional MVNOs, the advantages are even clearer for specialized vertical-oriented MVNOs operated by non-traditional providers, who might see network slicing as a way to source a full network, instead of acquiring capacity the traditional way.

Major app or service providers whose main business is not “general purpose communications might well see many advantages to doing so.

Different actors will have differing views of the value of such arrangements. Dominant providers with leading market share might continue to favor retail operations of their own, and favor network slices for enterprise customers running their own private networks, over enabling competitors in the retail general mobile service markets.

But in some markets, new entrants might envision market entry as resource brokers, with what is essentially a “wholesale-only” model, something quite rare in the mobile business so far. In the U.S. market, that might fit some suppliers such as the proposed network being built by Dish Network.

Were that network to become a sustainable operation (if the assets are not sold), it is conceivable the network could adopt a “wholesale only” platform, using network slicing or traditional methods to support retail customers.