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.
Taking a cloud-native approach to policy and charging
In support of innovation and service differentiation, 5G relies on the replacement of traditional virtual network functions (VNFs) with cloud-native network functions (CNFs), involving microservices that can be individually scaled and managed. These CNFs avail themselves of centralized data sources and API-driven interactions with a completely new host of network services.
Within the framework of SBA, network resources can be scaled effectively, dynamically, to meet a wide range of differentiated use cases. These resources are now provisioned through network slices: policy-driven experiences that dictate speeds, quality of service (QoS), available services, security, and (importantly) price. In 5G, policy and pricing become highly granulated and play a key role in service differentiation. An online gaming user might pay for a “platinum gamer” service that assures ultra-high bandwidth and ultra-low latency at peak usage hours at a per-hour price. But imagine if the gamer had the option, in mid-game, of switching to a cheaper monthly usage plan? These are the types of coordinated policy and charging decisions that 5G networks need to support.
Service differentiation is even more interesting when we consider the wealth of new data sources that will be delivered by 5G’s new network functions and the rich interactions supported by APIs between those functions. Instead of making pricing and policy decisions based on a few generic data points, telecom service providers will now be able to use much more detailed data on subscriber patterns and network traffic to create customized offerings on the fly and generate additional revenue through new services.
Moving policy and charging to the front line
The role of policy and charging is much more visible in 5G and far more critical to revenue generation than ever before. Yes, it is possible to roll out a 5G network with legacy PCRF and OCS solutions in place. But it would be akin to building a hyperloop and placing a 25-cent toll in the middle of it. It is for this reason that 5G standalone networks are emerging, with distinctly different and decoupled solutions for the policy control function (PCF) and charging function (CHF).
While legacy companies may still couple these two functions, modern service providers are seeking advantages from their distinctly evolved capabilities and architectural differences. For a modern operator, there are major benefits to independent network functions that are cloud native and support open APIs that can take advantage of 5G’s improved operability, analytics, and automation capabilities. In a modern operator’s environment, these elements should scale independently, be able to be deployed individually and cost effectively within and across slices, and handle the diversity of use cases emerging for the modern age.
To effectively monetize 5G and create differentiated services, operators must look to deploy solutions that are independent, free from vendor-locks ins and have a best-of-breed approach to policy and charging. Now that’s real value for the new 5G ecosystem.
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