New Reality – New Requirements
The global pandemic has transformed how people work and live. The recent Microsoft Work Trend Index indicated that “73% of employees and 78% of business decision-makers say they need a better reason to go in [the office] than just company expectations.” This is generally aligned with the finding of the Becker Friedman Institute that 76% of employees whose jobs can be done at least partially from home want to work remotely at least once a week after the pandemic is over.
In daily lives, people more and more rely on Internet platforms to get entertainment, shopping, education, healthcare, etc. In South Korea, the percentage of video traffic in overall mobile data traffic grew from 57.1% in December 2019 to 61.7% in December 2021. In 1H 2022, Chinese online goods retail sales reached 5.45 trillion RMB, accounting for 25.9% of total retail sales of consumer goods in the same period. By June 2022, around 300 million Chinese people have experienced online healthcare services, according to the China Internet Network Information Center.
All the trends will raise new requirements for telecom network designs, from wide area networks to enterprise networks and even home networks. The performance and service reliability of wide area networks, including both fixed and mobile networks, are becoming increasingly critical for the new reality. As pointed out by my recent blog, a reliable network is the lifeblood of the connected world. CSPs should take all means, in terms of technology, organization, process, etc., to improve the network performance and reliability.
From an enterprise perspective, flexibility and security are essential requirements for the network infrastructure. Industrial players have broadly adopted the multi-cloud approach to flexibly manage their software and applications across multiple public cloud platforms According to Flexera 2022 State of the Cloud Report, multi-cloud is already a de facto standard. 89% of surveyed enterprises reported having a multi-cloud strategy; 80% are taking a hybrid approach, combining the use of both public and private clouds.
As data has become one of the most valuable business assets in modern industry, ensuring data security is an important task of ICT infrastructure. For telecom networks and services, security should be considered from a full lifecycle perspective, i.e., covering technology standardization, product development, network deployment, and operation.
Remote work, online entertainment, platform economy, etc., have generated high requirements for home networking. According to China Telecom’s Digital Home Index Report, the average number of smart devices per home increased significantly in past years. The Gbps Wi-Fi router has become the mainstream in Chinese homes to support the increasing number of smart devices, while the indoor radio coverage at the 5 GHz band is becoming an obstacle to improving user experience.
The new reality of post-COVID also pushes the development of new types of devices and applications. Enterprises are expected to accelerate the adoption of IoT devices and applications. This week, China’s MIIT reported the number of cellular IoT connections surpassed the number of human users. According to Strategy Analytics’ latest forecast, the global IoT cellular connections will reach a double-digit compound annual growth rate (CAGR) of 14% during 2022-2030. Meanwhile, the increasing demands for premium entertainment experience and efficient working collaboration will lead to a metaverse momentum. Strategy Analytics predicts that the installed base of metaverse devices will be doubled from 2022 to 2024 and the CAGR in shipments of metaverse devices will be up to 39% over 2022 - 2027.
These developments require CSPs to enhance their network infrastructure in various dimensions further. For example, a fully immersive metaverse experience will need at least 2.35 Gbps of bandwidth, while IoT devices may require more than ten years of battery life. At the same time, network energy efficiency has become a priority of both CSPs and enterprise customers, considering the net-zero emission target and surging energy costs.
New Generation Networks Coming
Industry standard bodies have realized the requirements. 3GPP kicked off Release 18 – the first standard release of the 5G-Advanced system – in December 2021. ETSI also launched the discussion about the further evolution of fixed telecom networks – F5G Advanced – with a white paper “F5G advanced and beyond”.
Both 5G-Advanced and F5G Advanced represent the latest technology developments. They target to improve user experiences significantly. The 5G-Advanced system will be able to provide a 10 Gbps downlink peak rate and 1 Gbps uplink peak rate and shorten the network latency to 5 ms. The system will also support more diversified mobile IoT access capabilities. The F5G Advanced system should be able to support 10 Gbps everywhere experience in the home environment through FTTR solutions. The home network should be fully upgraded to Wi-Fi 7 to implement intelligent QOS management of home access. All the PON, metropolitan area networks, and backbone networks need to be upgraded correspondingly, e.g., to 50G-PON, 800G+ OTN, etc.
In addition to the enhanced user experience, either 5G-Advanced or F5G Advanced is committed to improving network automation and energy efficiency. Artificial Intelligence (AI) and automation have been recognized as powerful tools for CSPs to manage their networks and enhance user experience. CSPs can also open their AI capabilities to support enterprise customers' digital transformation, such as assisting in vital decision-making, problem-solving, and automating processes. This could open new avenues for CSPs to monetize their networks and platforms.
As discussed in our recent report What Are Operators' Priorities for 5G-Advanced RAN Standardization?, energy efficiency has become one of the top priorities of 5G-Advanced standardization in 3GPP RAN. ETSI F5G Advanced also targets optimizing the energy efficiency of fixed networks from three perspectives: network level, equipment level, and high-level design.
The growing demand for digital transformation and multi-cloud services requires CSPs to accelerate the progress of cloud-network synergy. CSPs can fully leverage computing (public cloud, edge cloud, private cloud, etc.) and connectivity resources to develop a resource-orchestrated solution to serve enterprise customers. We expect to see further enhancement for backbone networks, data center networks, campus networks, etc. Similar to wireless network and fiber network, if datacom network evolves generationally, they will be more conducive to the orderly evolution of the connectivity industry and enable the seamless integration of network connectivity and computing resources.
Collaboration Essential for the New Stage
Technology developments are pushing the telecom industry into a new stage. As David Wang - Huawei's Executive Director of the Board - pointed out in the recent “Striding Towards the Intelligent World Summit” at Huawei Connect event, the “5.5G” is a key milestone toward an “Intelligent World.” Meanwhile, we must recognize that a broad collaboration between various players becomes increasingly critical when the telecom sector moves to a new stage.
First, the win-win partnership between telecom operators and telecom equipment vendors must be strengthened to advance technology innovation. Technology innovation should target the expansion and success of telecom operators’ businesses rather than innovation for innovation’s sake.
Cross-industry collaboration between CSPs and vertical industry players is crucial for CSPs to understand the requirements of vertical industries and accelerate the integration of network solutions with industrial applications. Industrial alliances, open labs, or other types of collaboration platforms will be helpful for CSPs and vertical players to work together for industrial digital solutions.
As cloud services have become an essential element of digital services, CSPs must leverage their own resources and/or collaborate with hyperscalers to build the cloud services portfolio. As pointed out in my previous blog, CSPs can leverage their local or regional resources, such as connectivity, edge, and regional data centers, sales channels, local service centers, etc., to strengthen their positions in collaboration with hyperscalers and add more value to their B2B service offerings.
Finally, the collaboration between industry players, government authorities, and regulators is one of the decisive factors for the healthy development of the telecom sector. CSPs must communicate and collaborate with authorities and regulators in various aspects, such as spectrum allocation, infrastructure sharing, data privacy and security, M&A strategies, etc. This is crucial for CSPs to gain a friendly policy environment in the new stage.
In summary, the telecom industry must evolve to be aligned with the new market reality in the post-COVID era. The technology developments such as 5G-Advanced and F5G Advanced are building technical foundations for the evolution. CSPs need to upgrade their networks, services, and business strategies to meet the changing requirements in the new reality. The broad collaboration with vendors, vertical players, hyperscalers, regulators, etc., will be critical for CSPs entering the new stage.