Quantifying the economic impact of 5G
Julie Bradford is a lead analyst for Real-Wireless independent wireless experts. Real-Wireless were involved in analysing the impact of the 5G-MONARCH trial.
Author: Julie Bradford
Published: 20 November 2019
5G is frequently qualitatively promoted as an enabler of smarter working, leading to significant operational benefits and hence productivity gains. Less recognised, but nevertheless as important, are the potential socio-economic benefits for industrial and public sector users of mobile services. These potential benefits could credibly inform elements of an Environmental, Social and Governance (ESG) driven growth strategy. However, the opportunity to benefit through successful delivery requires strategic target setting based on quantifiable measures of benefits and costs.
As part of the 2-year EU Horizon 2020 5G-MoNArch project, Real Wireless has developed reliable techno-economic cost benefit methods to quantify costs and benefits of 5G deployments, which are then applied to the setting of Hamburg Port. In a recently published Real Wireless led report from the project, we set out to answer the following questions:
What operational value (in Euros) would a 5G network deliver to the users of Hamburg port such as container terminal operators and the port authority?
What is the cost of and business case for delivering such high reliability services from 5G public mobile networks?
What is the socio-economic value (again in Euros) of extending a 5G network serving Hamburg port to the city centre to deliver smart city services?
Are the commercial drivers enough for smart city services to be deployed or are partnerships required?
How will 5G networks be deployed and is there an opportunity for industrial and public users of 5G to reuse their existing infrastructure?
Key findings from the study were:
Reliable wireless services in ports can have very tangible and significant operational benefits. For example, we estimate, for the scenario analysed, that by 2030 automation of container terminals could generate undiscounted operational benefits per year of €140m (due to protection of market share via increased capacity and improvements in operational costs).
For the range of port services examined the extra cost of providing these reliable services via network slicing from the existing wide area public mobile network ranged up to 10%, when assessed from 2020 to 2030 in terms of capital and operational costs.
Translating the above operational benefits of port services to potential revenues for mobile service providers and combining these with the extra costs of delivering these services gave a positive business case for all port services analysed with ROI improvements of up to 20% (when all port services were offered in combination).
Reliable wireless services can be a key enabler for smart port and smart city services such as intelligent transport systems. These services deliver high socio-economic benefits via reductions in wasted driver time, lower CO2 emissions etc. However, historic spend in these areas by city councils indicate that any potential revenues to mobile service providers from these services would struggle to cover the additional costs of supporting them. This implies that these services may need public private partnerships to be realised as the commercial drivers are challenging.
The flexibility of virtualised 5G network architectures means that network resources can be used more efficiently and over dimensioning in the network reduced. Our analysis of serving passengers at one of Hamburg’s cruise ship terminals showed that the costs of providing a dedicated small cell network to serve this temporary hotspot of demand could be reduced by between 38% and 68% due to this flexibility.
The full 5G-MoNArch verification and validation final report can be found here.
What Real Wireless did
The Real Wireless team focused on understanding the commercial drivers and business case for 5G in use cases that exercised the claims of 5G-MoNArch to be able to deliver flexible, customised and resilient so called “network slices” that provide wireless connectivity at a guaranteed quality of service to groups of end users from public mobile networks. The case study analysed was Hamburg Port and the adjacent city centre to leverage findings from the project’s GLOMO award winning smart sea port testbed.
Blog by Julie Bradford – Lead Analyst at Real-Wireless
Hamburg Port key facts
- 3rd largest seaport in Europe
- 17th largest container port worldwide
- Around 8.7 million TEUs handled in 2018
- 19.7% market share of North Range ports containerised trade
- Covers over 7,105 hectares with 43km of wharves
- Major railway hub accommodating 200 freight trains with 5,000 wagons daily
The analysis applied the Real Wireless commercial and socio-economic assessment framework and Real Wireless proprietary tools as initially developed under the EU Horizon 2020 5G NORMA project and enhanced to consider industrial services under 5G-MoNArch.
Our analysis included working closely with both consortium partners, like the Hamburg Port Authority, and other stakeholders to synthesise their wireless connectivity requirements. As Europe’s third largest seaport with a throughput of container traffic which is set to more than double by 2030, the port’s wireless needs alone were not insignificant. Having identified the wireless services of interest and related volumes of devices, these were translated into demand heatmaps for the area that a wireless network could be dimensioned and costed against. We used the Real Wireless CAPisce network dimensioning and cost modelling tool which dimensions 5G virtualised networks taking into account reliability of service and related costs.
To understand the business case for investing in network infrastructure to deliver such services and how this evolves over the 2020 to 2030 time period, Real Wireless also forecast revenues for mobile service providers for the 5G services considered. These revenue forecasts were grounded in working with stakeholders to understand and quantify the operational benefits of reliable wireless connectivity to their day to day business. Combining revenues and costs identified potential return on investment and the scenarios where there were most likely to be clear commercial drivers for mobile service providers to offer such services and solutions. Alongside these operational benefits, the wider socio-economic benefits of such services were also quantified and conclusions formed on the type of commercial and deployment models applicable to the use cases considered. A continual dialogue was maintained with stakeholders to refine the analysis outcomes.
Participation in 5G-MoNArch has matured the Real Wireless capability to analyse and quantify (through the use of proprietary analysis tools) the emerging 5G business case for providing industrial services, and, through sensitivity analysis, to establish credible scaling scenarios into the wider city area and multi-service mix.
From our discussions with industrial organisations throughout the project, it is clear that while there is a lot of interest in 5G there is also some way to go for them in articulating the associated operational benefits, technology readiness and levels of investment required from different parties. Our 5G-MoNArch analysis shed light on these strategic questions for the Port of Hamburg. We stand ready to support others in the development of their business cases for investment in what could be a bewilderingly fast technology revolution that various sectors are soon to experience.