The 5G slicing industry will explode over the next six years to reach a value of $24 billion by 2028
Of all the major benefits that end users expect from 5G networks, the ability to control dedicated portions of the spectrum and make personalized use of it has always ranked highest, and companies’ willingness to pay for it should drive a boom in the world. 5G Slicing Market, According to Research by ABI Research.
The report, 5G Network Slicing: Technical and Business Considerationspointed out that, compared to uniform services offered over 3G and 4G networks, regardless of device or user needs, 5G slicing has the potential to offer different levels of connectivity features – such as service level agreements (SLAs), bandwidth and latency – for different devices, use cases and applications.
ABI said companies are expected to pay a premium for 5G slices that guarantee SLAs for various services, as opposed to uniform offerings. He also pointed out that companies have differentiated insulation and security requirements that can be met by cutting. The analyst sees this last facet as particularly important given that for connected devices, such as dumb Internet of Things (IoT) terminals, cost and time to market are usually prioritized over security.
As a result, ABI expects 5G slicing revenues to grow from US$309 million in 2022 to approximately US$24 billion in 2028, at a compound annual growth rate (CAGR) of 106%.
“5G slicing adoption falls into two main categories,” said Don Alusha, principal analyst for 5G core and edge networks at ABI Research. “First, there is no connectivity available. Second, there’s connectivity, but there’s not enough capacity, coverage, performance, or security. For the former, private and public organizations deploy private network slices on a permanent and ad hoc basis. »
The second scenario is today primarily supported by private networks, a market that ABI Research predicts will grow from $3.6 billion to $109 billion by 2023, at a CAGR of 45.8% .
Alusha added, “A significant portion of this market can be converted into 5G wafers. But first, the industry must address the challenges associated with technology and business models. On this last point, the appetite of consumers and businesses to pay premium connectivity prices for deterministic and tailor-made connectivity services remains to be determined.
“Furthermore, discussions are ongoing in the industry about whether the value coming from 5G slicing can outweigh the cost needed to build the underlying slicing ecosystem.”
In addition to these benefits, the report also suggests that 5G slicing could replace much of today’s private networks and dedicated connectivity services. It can also enrich hyperscaler cloud services with guaranteed connectivity offerings while reusing much of the existing cellular assets. This is said to be why the initial driving force behind the adoption of 5G slicing is Fixed Wireless Access (FWA) for the enterprise domain..
In arguing for this last point, ABI observed that there are more than 55 5G slicing proofs of concept and commercial tests from Ericsson, Huawei, Nokia and ZTE. These engagements, the analyst said, give the industry the ability to adapt emerging technology such as 5G slicing to new strategic opportunities and high-value use cases, depending on the market.
In a key use case in the Middle East, Communications Service Providers (CSPs) deploy a separate core network (hardware slices) for critical services. In Europe, FSCs tend to deploy slices for critical services on top of existing consumer networks. In other words, ABI said, there is a mixed market but with a common denominator on how to unlock growth in the enterprise space at scale and based on end-to-end standardization.
“First, it is critical for the industry to promote consistency and uniformity of practice across multiple areas,” Alusha said. “With 5G slicing, the industry should focus on convenience over performance, user experience over feature sets, and flexibility over rigidity. Ultimately, the heart of the 5G cutout “dream” is a business goal, not just a technology goal.
“It involves taking a quantum leap forward in how business is done within the industry and by industry customers. Unlike 3G and 4G, with 5G the industry should focus on the value not of the technology per se, but rather the strategic leap it can enable. Therefore, a cautious approach is needed so that the industry finds in 5G slicing a reasonable basis to take actions that predictably and positively affect provider and CSP revenues.