This thought leadership byline originally appeared in RCR Wireless
Globally, telecoms spent over $8 billion in 5G infrastructure last year, while in the U.S. alone operators spent more than $80 billion on 5G spectrum. The key to unlocking a return on investment will depend on how effectively telecom service providers can monetize those investments with new services. Those services will require a 5G packet core, cloud-native principles, and the ability to interact in new ways with network elements and external entities alike. In this new world, the old ways of thinking about policy and charging must change if the business models of tomorrow are to succeed in this emerging ecosystem.
Much of what makes 5G so different from its predecessors involves new thoughts on revenue generation. Until now, telecoms have approached revenue creation much like a utility: charging based on consumption in a cost-plus model. Consumption has varied from minutes to texts to gigabytes, but most pricing strategies have been constrained in this way. Telecoms, however, won’t recover billions in investment through data overage charges. New capabilities of 5G provide the ability to deliver entirely new revenue-generating services to enterprises and consumers through connected devices, applications, online entertainment services, and a plethora of new use cases.
Policy and charging are critical to enabling this variety of revenue-generating applications in the 5G ecosystem, and their respective network functions have evolved dramatically. In 4G networks, policy and charging functions were often simple, serving a handful of use cases and easily managed through coordinated functions that often blurred together. Either policy or charging could perform simple quota management like a utility meter, collecting usage data and triggering policy actions based on alerts and thresholds.
In 5G, the roles of these functions are very clearly distinguished from one another. Indeed, for 5G to succeed, their roles must differ greatly, as the exploding number of nuanced use cases demand it. An online gamer expecting ultra-low latencies and ultra-high bandwidth, for example, requires a very different experience than a manufacturing company that needs mobile network connectivity for its smart home appliances. Similarly, a sports stadium delivering in-stadium augmented reality experiences will make very different demands on a mobile network than an autonomous driving system for a cross-country trucking company.
Policy and Charging are the link that bridges the two worlds: evolved network capabilities and evolved business operations. 5G policy involves entirely new interactions to coordinate network resources in new ways – directly or indirectly – across the radio, core network, and user devices. And 5G charging is dramatically different as well, with entirely new interactions across network and enterprise systems to derive new methods of monetizing services. A one-size-fits-all policy and charging solution becomes a liability in a world where emerging use cases demand new and unique requirements of both the policy and charging functions. We must look to a modern service-based architecture (SBA) whereby these functions can perform their distinct roles in optimal ways, scaling each function to the needs of dynamic resources involved. Modern systems decouple these functions for exactly this reason, with commensurate cost advantages.
Find out how to maximize these advantages, read the rest of the article on RCR Wireless