What’s the Real Business Value of 5G?

Meeting the cost of 5G is major talking point at the Mobile World Congress (MWC) this year.

According to a major German operator, the cost of supplying Europe with 5G connections could be anything between €300 billion and €500 billion .

This is a major challenge. Because 5G technology is going to massively increase bandwidth demands, as well as requiring more agile and intelligent network services. And if service providers try to meet these requirements using their current approaches, their costs will soon become uncontrollable.

It’s the latest chapter in an ongoing story for service providers. While their customers always expect more, they don’t want to pay more. The industry moved from 3G to 4G without significantly increasing costs for customers. And so while customer expectations of 5G connections will increase over the next few years, it’s going to be difficult to ask for much more money for them.

Calling for greater collaboration to drive 5G costs down, he said: “This will change the landscape and some vendors will disappear and some new ones will come into the game – it is going to be a disruptive moment in time,” he said.

If service providers want to be among the companies that will use 5G as a springboard for success, rather than disappearing in the upheaval, they’ll need to think hard about how they can make their network infrastructure work harder.

Cost savings through new Cisco technology

Cisco has developed a new solution which allows service providers to massively increase their aggregation network’s capacity and agility, while keeping costs at a manageable level.

The key to the technology is that it enables the use of coherent 200G Dense Wavelength Division Multiplexing (DWDM). With DWDM, instead of passing just one wavelength along a fibre, you can pass almost 100 along it.

Before, if service providers wanted to introduce coherent DWDM deeper into their aggregation networks, they had to buy different pieces of expensive equipment and build connections between them.

But that’s now changed. We’ve created a streamlined IP router with integrated 200G optical uplinks, that’s small enough to fit in your laptop bag. It converges the network’s optical and IP layers, taking the cost, power and space demands to an affordable level.

Cisco research has found that investing in this technology brings major cost savings compared to a non-converged approach. Over six years, our solution leads to capital expenditure savings of 49% and operational expenditure savings of 36% – meaning a saving of 45% on the total cost of ownership.

More capacity. More programmability. More innovation

Deploying DWDM affordably doesn’t just mean more bandwidth. It also makes it a realistic possibility to extend segment routing and programmability beyond the core of the network. And that means more of the simplicity, automation, and agility that these technologies deliver.

So the cost-effectiveness of investing in Cisco’s new solution is two-fold. It leads to savings in the short term by boosting capacity in an efficient way. And it lays the foundations for success over the next decade and beyond, by enabling more innovation and efficiency.

Cisco has always been a pioneer in networking technology. So it’s no surprise that we’re now leading the way in helping service providers succeed in a world of 5G networking – and come up with answers to the 500 billion Euro question.

Learn more about how our convergence solution can help you meet the cost of 5G networking.