Friday, October 6, 2023

How Much Service Provider Revenue from Network Slicing?

Rarely in the networking or computing businesses is there but one solution for any given problem. And that almost certainly applies to 5G network slicing as well. There are many other alternatives offering functionality that is comparable or better, with costs that might also be lower. 


The issue is whether there are use cases where a 5G slice is the best-performing or only solution for a particular application and use case. 


One of the unknowns about 5G network slicing is the number of slices that can be created at any single base station. The number might be far more restrictive than some might suspect. 


Depending on the amount of bandwidth used by each virtual private network, as few as 10 or as many as 100 network slices might be supported at any single base station. 


The 3GPP (3rd Generation Partnership Project) standard does not formally limit the  number of slices that can be supported at any base station. However, capacity is limited in practice by the hardware and software resources available, and the need to respect a few requirements including::


  • Each slice must be isolated from other slices to prevent interference.

  • Each slice must have its own dedicated resources, such as bandwidth and processing power.

  • Each slice must be able to be scaled up or down independently of other slices.


In addition,  the number of slices that can be supported is affected by


  • Some slices, such as those used for mission-critical applications, may require more resources than other slices.

  • The more isolated the slices are, the more resources may be required.

  • The heavier the traffic load on a slice, the more resources it may require.


For such reasons, it is possible--and perhaps likely--that many enterprise customers would choose some other method of assuring features touted for 5G network slicing. 


Feature

Network slicing

Dedicated circuits

VPNs

QoS

Traffic shaping

Edge computing

Low latency

Yes

Yes

Yes

Yes

Yes

Yes

Guaranteed bandwidth

Yes

Yes

Yes

Yes

Yes

No

Reliability

In development

Good

Good

Good

Good

Good

Cost

High

High

Medium

Low

Low

Medium

Availability

In development

Fair

Good

Good

Good

Fair, growing


Just how much revenue mobile and other service providers could earn supplying network slicing is somewhat hard to forecast at the moment, since most enterprises still do not have the option to buy it. But most forecasts seem reasonable, putting network slicing revenue somewhere between three percent and 5.5 percent of total mobile service provider revenue by 2026 to 2030 or so. 


At least in principle, those sums should not include infrastructure revenues earned by the likes of Nokia, Ericsson and others selling gear to enterprises to run their own private networks, or revenues earned by system integrators operating such networks on behalf of enterprises. 


Forecaster

5G network slicing revenue forecast (USD billions)

Global mobile service provider revenue expected (USD billions)

Network slicing revenue as a percentage of total mobile revenues

ABI Research

30 by 2026

1,200 by 2026

2.5%

Ericsson

100 by 2030

1,800 by 2030

5.5%

Gartner

20 by 2025

1,000 by 2025

2.0%

IDC

50 by 2027

1,400 by 2027

3.6%

McKinsey & Company

100 by 2025

900 by 2025

11.1%

Nokia

100 by 2030

1,800 by 2030

5.5%

Omdia

40 by 2026

1,200 by 2026

3.3%

Ovum

30 by 2025

900 by 2025

3.3%

STL Partners

50 by 2027

1,400 by 2027

3.6%

UBS

100 by 2030

1,800 by 2030

5.5%


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