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This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 723172.
D2 .2 Initial business models, market analysis and strategies for the adaptation of 5G!Pagoda concept
Document Number D2.2
Status Final
Work Package WP2
Deliverable Type Report
Date of Delivery 30 June 2017
Responsible Device Gateway (DG)
Contributors DG, Orange, Ericsson, Fokus, MI, UT, KDDI, Hitachi, NESIC
Dissemination level CO
This document has been produced by the 5GPagoda project, funded by the Horizon 2020 Programme of the European Community. The content presented in this document represents the views of the authors, and the
European Commission has no liability in respect of the content.
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Change History
Version Date Status Author (Company) Description
0.1 14.12.2016 Working Georges Haour, Eunah Kim (DG) ToC and structure description 0.15 30.01.2017 Working Georges Haour, Eunah Kim (DG) Added intro and foreword 0.2 13.02.2017 Working Georges Haour, Eunah Kim (DG) Updated foreword
0.25 24.02.2017 Working Georges Haour, Eunah Kim (DG), Nicklas Beijar (Ericsson) Added 5G and IoT
0.3 06.03.2017 Working Georges Haour, Eunah Kim (DG), Hiroshi Takezawa (NESIC)
Added market analysis and 5G dynamic slice impact
0.35 10.03.2017 Working Yoshiaki Kiriha (UT), Eunah Kim (DG)
Added use case market analysis and 5G dynamic slice impact
0.4 23.03.2017 Working
Lechosław Tomaszewski (Orange), Zaw Htike (KDDI), Daisuke Okabe (Hitachi), Eunah Kim(DG)
Added use case market analysis and 5G dynamic slice impact
0.5 11.04.2017 Working Yoshinori Kitatsuji (KDDI), Eunah Kim (DG) Added dynamic slice impact
0.55 30.04.2017 Working Georges Haour(DG), Eunah Kim (DG), Sébastien Ziegler (MI)
Updated market analysis and impact on dynamic slicing
0.6 18.05.2017 Working Yoshiaki Kiriha (UT), Zaw Htike (KDDI), Daisuke Okabe (Hitachi) Added adaptations of 5G!Pagoda
0.7 24.05.2017 Working Eleonora Cau (Fokus), Cédric Crettaz (MI), Georges Haour, Eunah Kim (DG)
Added market analysis, 5G!Pagoda adaptation, Added business opportunities
0.75 29.05.2017 Working Zaw Htike (KDDI) Added 5G!Pagoda adaptation
0.8 11.06.2017 Working
Eunah Kim (DG), Lechosław Tomaszewski (Orange), Nicklas Beijar (Ericsson), Christopher Hemmens (MI)
Added 5G!Pagoda adaptation, challenges of vendor, update of challenges on telcos, refinement of text.
0.9 15.06.2017 Working Sébastien Ziegler, Christopher Hemmens (MI), Georges Haour (DG), Nicklas Beijar (Ericsson)
Added analysis of the survey on partners’ exploitation plan
1.0 20.06.2017 Submitted to the consortium
Christopher Hemmens (MI), Georges Haour, Eunah Kim (DG) Overall text refinement
1.1 25.06.2017 Version 1.1 Eunah Kim (DG) Editorial corrections and applications of partners’ input
1.2 30.06.2017 Final Eunah Kim (DG), Sébastien Ziegler (MI)
Applying comments and overall update of the document.
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AUTHORS
Full Name Affiliation Georges Haour, Eunah Kim Device Gateway SA Christopher Hemmens, Cédric Crettaz, Sébastien Ziegler
Mandat International
Nicklas Beijar Ericsson Lechosław Tomaszewski Orange Eleonora Cau Fokus Yoshinori Kitatsuji, Zaw Htike, Itsuro Morita, Phyo May Thet
KDDI
Akihiro Nakao, Yoshiaki Kiriha, Shu Yamamoto, Du Ping
UT
Daisuke Okabe, Kota Kawahara, Hidenori Inouchi
Hitachi
Hiroshi Takezawa, Kazuto Satou, Masato Yamazaki
NESIC
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Executive Summary
After one year of project work, this deliverable provides inputs on the three components of task T 2.2, which are: 1) preliminary market data concerning 5G, IoT, and selected use cases in T2.1, 2) stakeholder analysis including their benefits and challenges, 3) initial business potential analysis and adaptation of 5G!Pagoda concepts by different stakeholders, and 4) surveying the paths envisaged by the partners to exploit the results of this project.
The market analysis described in the Section 3 does not simply provide general market studies, but it discusses how the dynamic slicing of 5G, the core focus of 5G!Pagoda project, can impact on the market movement. The consortium partners are thankfully consisted of key market players and active standardization actors, and the insights of the partners have been gathered in the process.
In the stakeholder discussion in the Section 4, we identifies major stakeholders involving each segment (5G, IoT, smart drive-‐assisted services, industrial factory management, ensuring QoS on demand, smart/virtual office, content delivery network as a service and advancement of medial services). This is done with special reference to the use cases selected in task T2.1. It also discusses the benefits in each stakeholder in general categories. In all cases, a crucial stakeholder is people, who may make or break the industry.
It is followed by discussing on challenges for telecom network operators, telecom vendors and manufacturers who have most influenced by the new technologies. In the section, it is not only pointing out challenges but also leads the discussion of opportunities using the challenges.
The business model analysis shows initial observation of dynamic slicing impacts on business. It also discusses the key factors, business types and cloud models on designing further business models. A particular emphasis has been put on telecommunication companies, which will be impacted heavily by 5G and dynamic slicing. It should be stressed that it includes initial strategies for adaptation of 5G!Pagoda concepts in each major stakeholder group, which is directly from the key industry partners giving their know-‐how, company direction and insight, instead of using broad and general market data.
Intensive survey analysis of partners’ initial exploitation plan is included in the Section 7. In order to develop and recommend any realistic and feasible business models in the next iteration, it is important to assess and clarify the specific assets and uniqueness of 5G!Pagoda technological outputs, and the survey on the initial exploitation plan has been used to identify the direction of exploitation plan and further paths on designing business models. According to our initial analysis, it appears that the most likely path to exploitation will be distributed between technology transfer to standardisation and/or individual exploitation of specific outputs by individual partners.
This “work in progress” must be seen as an iterative process. One of the objectives of the next phase is to concentrate on the key issue of this task, which consists of deeper assessing where and how dynamic slicing will impact business and markets, both in providing enhanced/new opportunities, as well as threats to certain established business positions. Given the rapid change and novelty of 5G, IoT and dynamic slicing, it is going to be a challenge to anticipate events for the foreseeable future.
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Table of Contents
1. Introduction ........................................................................................................................ 12
1.1. Objectives .................................................................................................................................... 12
1.2. Motivation and scope .................................................................................................................. 13
1.3. Relationships with other tasks in WP2 and other WPs .................................................................. 13
1.4. Structure of the document ........................................................................................................... 13
2. Foreword ............................................................................................................................ 15
2.1. Digital healthcare ......................................................................................................................... 15
2.2. Connected cars ............................................................................................................................ 16
2.3. Smart reality at fingertips ............................................................................................................. 16
2.4. The companies try to adapt to the digital revolution .................................................................... 17
2.5. The serious need for healthy debates ........................................................................................... 18
3. Market overview ................................................................................................................. 20
3.1. Market analysis and impact of 5G dynamic slicing ........................................................................ 20
3.1.1. 5G ......................................................................................................................................... 20
3.1.2. Application domains from the selected use cases .................................................................. 23
3.1.2.1 Massive IoT ..................................................................................................................... 23
3.1.2.2 Smart driving .................................................................................................................. 27
3.1.2.3 Smart manufacturing ..................................................................................................... 30
3.1.2.4 On-‐demand QoS support with mobility ......................................................................... 31
3.1.2.5 Smart/Virtual office ........................................................................................................ 32
3.1.2.6 Content Delivery Service ................................................................................................ 33
3.1.2.7 Advancement of medical services .................................................................................. 35
3.1.2.8 Handling disasters or very high concentration of people .............................................. 36
4. Multi-‐stakeholder analysis .................................................................................................. 38
4.1. Identified stakeholders in 5G!Pagoda use cases ........................................................................... 38
4.2. Identification of the multi-‐stakeholders in each use case .............................................................. 41
4.2.1. Massive IoT ........................................................................................................................... 42
4.2.2. Smart drive-‐assisted services ................................................................................................. 44
4.2.3. Industrial factory management .............................................................................................. 46
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4.2.4. Ensuring QoS on demand ...................................................................................................... 46
4.2.5. The smart/virtual office ......................................................................................................... 47
4.2.6. Content delivery network as a service ................................................................................... 48
4.2.7. Advancement of medical services .......................................................................................... 49
5. Challenges for three key players ......................................................................................... 50
5.1. Specific challenges for the telecom network operators ................................................................. 50
5.2. Challenges to telecom vendors .................................................................................................... 53
5.3. Challenges to manufacturers ....................................................................................................... 54
6. Business model analysis ...................................................................................................... 55
6.1. Network slicing: a game-‐changer ................................................................................................. 55
6.2. Business model ............................................................................................................................ 56
6.2.1. Drivers and challenges of network slicing for the operators ................................................... 58
6.2.2. Business impact of network slicing ........................................................................................ 59
6.3. Business opportunities with 5G!Pagoda concepts ......................................................................... 61
6.4. Initial strategies for the adaptation of 5G!Pagoda concepts .......................................................... 62
6.4.1. Telecom operator (Orange) ................................................................................................... 62
6.4.2. Telecom operator (KDDI) ....................................................................................................... 64
6.4.3. Manufacturer (Hitachi) .......................................................................................................... 64
6.4.4. Telecom vendor (ERICSSON) .................................................................................................. 65
6.4.5. IoT platform provider (ERICSSON, DG) ................................................................................... 66
6.4.6. MVNO (NESIC) ....................................................................................................................... 67
6.4.7. IoT solution provider (DG) ..................................................................................................... 69
7. Initial Exploitation Strategy ................................................................................................. 70
7.1. Partners survey ............................................................................................................................ 71
7.2. Analysis of the survey .................................................................................................................. 71
7.2.1. Exploitable results ................................................................................................................. 71
7.2.2. Perceptions of market potential ............................................................................................ 72
7.2.3. IPR potential and strategy ..................................................................................................... 74
7.2.4. Exploitation strategy ............................................................................................................. 75
7.2.5. Specific results to be exploited .............................................................................................. 80
7.2.6. Freedom to use results .......................................................................................................... 82
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7.3. Considerations on the exploitation strategy ................................................................................. 85
7.3.1. Comparative SWOT analysis .................................................................................................. 85
8. Legal, regulatory and corporate policy issues ...................................................................... 87
9. Future Steps ........................................................................................................................ 89
Appendix 1. Exploitation Plan Survey ........................................................................................ 90
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List of Tables
Table 1 – List of Acronyms ....................................................................................................................... 10
Table 2 – Actors involved in the seven use cases selected in task D2.1 .................................................. 38
Table 3 – Partners' answer on exploitable results ................................................................................... 71
Table 4 – Perception of market potential ................................................................................................ 73
Table 5 – IPR potential and strategy ........................................................................................................ 74
Table 6 – Collective exploitation & Individual exploitation ..................................................................... 75
Table 7 – Exploitation Focus .................................................................................................................... 76
Table 8 – Joint commercial exploitation plans ........................................................................................ 77
Table 9 – Exploitation actions .................................................................................................................. 79
Table 10 -‐ Answers on results to be exploited ......................................................................................... 80
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List of Figures
Figure 1 – Exploitation strategy for 5G!Pagoda ....................................................................................... 13
Figure 2 – Impact of the digital revolution on various sectors ................................................................ 18
Figure 3 – Security Decision-‐Makers have growing concerns about IoT initiatives ................................. 26
Figure 4 – Telecommunication cost ratio in various segments ............................................................... 28
Figure 5 – MRI's forecast for smart mobility ........................................................................................... 28
Figure 6 – Smart driving in Japan in 2030 (from Yano Economic Laboratories) ...................................... 29
Figure 7 – Boston Consulting Group's prediction on smart driving (2015) .............................................. 29
Figure 8 – Global Smart Office Market Industry (source: mordorintelligence.com) ............................... 32
Figure 9 – Content Delivery Service Revenue Forecast ........................................................................... 34
Figure 10 -‐ General view of Multi-‐Stakeholders ...................................................................................... 41
Figure 11 -‐ Stakeholders of 5G Telecom operators ................................................................................. 42
Figure 12 – Internet of Things for Business (source: Beecham research) ............................................... 43
Figure 13 – Stakeholders and key players of global smart city market ................................................... 44
Figure 14 – An Ecosystem of Winners of connected car ......................................................................... 45
Figure 15 – Pre-‐5G vs. 5G-‐based factory model ...................................................................................... 65
Figure 16 – MVNO subscribers in Japan (source: Mitsubishi Research Institute, Ltd.) ........................... 67
Figure 17 – Exploitable results of 5G!Pagoda .......................................................................................... 72
Figure 18 – Answers on Focus on exploitation ........................................................................................ 76
Figure 19 – Answers on the joint commercial exploitation plan ............................................................. 77
Figure 20 – Answers on the joint research activities ............................................................................... 78
Figure 21 – Answers on the joint standardization activities .................................................................... 78
Figure 22 – Category of exploitable results ............................................................................................. 81
Figure 23 – IPR policy ............................................................................................................................... 82
Figure 24 – Free exploitation to the partners .......................................................................................... 83
Figure 25 – Free exploitation to the 3rd party .......................................................................................... 83
Figure 26 – Survey results on business concerns in deploying M2M or IoT ............................................ 88
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Abbreviations Throughout this document, the following acronyms are used.
Table 1 – List of Acronyms
Abbreviations Original terms
3GPP The Third Generation Partnership Project
5G system The Fifth Generation of Mobile Communications System
AaaS Asset as a Service
B2B2C Business to Business to Consumer
CDN Contents delivery network
CDNaaS CDN as a Service
E2E End to End
EBITDA Earnings Before Interest, Tax, Depreciation and Amortization
IaaS Infrastructure as a Service
IMT International Mobile Telecommunications
IoT Internet of Things
M2M Machine to Machine
MEC Mobile Edge Computing
MVNO Mobile Virtual Network Operator
NFVI Network Function Virtualization Infrastructures
NFVIaaS NFV Infrastructure as a Service
NGMN Next Generation Mobile Network Alliance
NSaaS Network Security as a Service
OaaS Operation as a Service
OSS Operational Support Systems
OTT Over-‐the-‐top content
RAN Radio access network
SDN Software Defined Networking
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SDO Standards Development Organization
uRLLC ultra-‐reliable low latency communications
VMN Virtual Mobile Network
VNF Virtualized Network Function
XaaS Anything as a Service
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1. Introduction
1.1. Objectives The objectives of WP2 are to define a set of reference use case scenarios for 5G!Pagoda with identification of their technical requirements (T2.1), to define target business models at work (T2.2) and to define 5G!Padoga architecture with descriptions of the specifications of different slices for different sectors (T2.3).
The general objective of task T2.2 is to explore marketing opportunities for dynamic network slicing, to analyse drivers and barriers for the adoption of the technology, and to explore viable business models. As stated in the description of action, this task is closely aligned with research and standardization activities and will evolve alongside the project.
The object of this deliverable is to present a first iteration of task T2.2's research and analysis. It identifies and outlines an initial set of market opportunities for 5G!Pagoda and analyses key drivers and barriers for the adoption of the technology among stakeholders in the whole value chain. A market overview of current and future commercial environments is provided. In order to define viable business models, realistic evaluations of the identified business models are derived and different marketing strategies are identified. In order to make realistic business models, legal, regulatory, and corporate policy issues associated with the 5G!Pagoda area are addressed and recommendations to cope with these issues are stated.
In the wording of the project proposal, for the D2.2 task, deliverables include three components:
• initial look at business models;
• preliminary market data;
• strategies for the exploitation by the partners of results of the project on dynamic slicing.
This work in progress will be complemented by a second iteration to be delivered by M30. From a research project perspective, it must be noted that the 5G!Pagoda project is a three-‐year project and most of the research results will come about in years 2 and 3, and according to the GANTT most outputs will not be finalized before M30.
At the same time, the technology landscape and 5G standardization are evolving very fast while the market and business prospects are unclear. The value of the results will thus depend a lot on the on-‐going evolution of technology and the markets.
In this context, we have chosen to focus this first deliverable on contextual analysis and a prospective view that will guide the exploitation strategy of task T6.3 which starts in M18. The second iteration, deliverable D2.4, due by M30, will extend and further detail the analysis according to the on-‐going developments and achievements of the project.
Our methodology has been chosen and adapted to this evolving market environment and to the integration with complementary tasks, namely task T6.3 on exploitation starting in M18. A coordinated strategy has been designed and adopted by tasks our task and task T6.3. Accordingly, the first iteration provides a high-‐level view that is expected to remain valid until the end of the project. It defines the overall context and framework. The second deliverable will be synchronized with the effective outputs of the project with a focus on supporting the exploitation strategy. It will also be adapted to T6.3's orientation and needs.
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Figure 1 below illustrates the exploitation strategy for the 5G!Pagoda project as well as the relationships between tasks.
Figure 1 – Exploitation strategy for 5G!Pagoda
1.2. Motivation and scope This task aims at assessing the business implications of the developments expected as a result of the advent of 5G looking in particular at the eight uses case selected in task T2.1. As an initial version of the T2.2 results, it covers initial market analysis based on current market trends and forecasting. It includes a short conceptual description of the impact on 5G!Pagoda and includes initial strategies on the adaptation of 5G!Pagoda concepts from the different actors within the consortium partners. It also covers some initial observations on regulatory, societal and cooperation issues. These initial results will keep evolving until the end of the project according to market direction and 5G!Pagoda's exploitable results that will be carried out in the next phase (D2.4).
1.3. Relationships with other tasks in WP2 and other WPs As stated in section 1.2, the market analysis is focused on selected use cases defined in D2.1 from T2.1. In addition, task T2.2 is bound by several interdependencies related to business models and exploitation strategies as indicated in Figure 1. There are two main interdependencies we can highlight:
• The market analysis and exploitation strategy is closely related to the output of the project.
• The market analysis is also closely related to task T6.3 in charge of exploitation. The initial exploitation strategy stated in deliverable D2.2 will contribute to guiding and focusing the market analysis work to be performed in D2.4.
1.4. Structure of the document Following this introductory section, the remaining part of the document is structured as follows:
• Section 2 states foreword,
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• Section 3 analyses market data and impact on 5G dynamic slicing mechanism,
• Section 3 describes and analyses stakeholders,
• Section 4 discusses challenges of three major stakeholders,
• Section 6 describes business opportunities and adaptation of 5G!Pagoda concepts,
• Section 7 states initial exploitation strategies,
• Section 8 handles legal, regulatory and corporate policy issues, and
• Section 9 draws important concluding remarks and future work.
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2. Foreword The world is at the threshold of a huge step-‐change in scale and speed in connectivity. This is due to the advent of 5G, which will provide roughly 100 times the capacity for transmission of information as compared with current 4G. At the same time, the expected exponential rise of connected objects will provide yet another level of connectivity. Some authors therefore speak of a “Digital Tsunami”. Although this industry is the object of much hype, it is clear that the digital revolution will continue to have a broad and profound impact on all aspects of human activity. People, governments and institutions are unprepared for this tsunami; this project should help improve the situation.
Not surprisingly, some aspects of the industry are negative, which should not be downplayed. If that were to happen, this would boomerang on the industry and on individual firms due to 1) loss of image and good will and 2) the possible triggering of the refusal of the technological change induced by 5G/IoT. Indeed, in recent times, the rapid pace of change has been poorly assimilated by the general public especially when other elements of the scene (geopolitics, economics, etc.) are changing at the same time. Staying away from the nostalgic “things were better before” lets us look at a few lights and shadows of this “brave new digital world”.
2.1. Digital healthcare Digital tools offer great opportunities for providing quality healthcare at a reasonable cost. The recent book by Dr. Eric Topol: “The patient will see you now” (Basic books, New York, 2015), provides a cogent vision of this large field.
Beyond the usual benefits of computer-‐aided surgical robots, such as the Vinci robot, telemedicine and tools for improved diagnostic, digital communications will be used a lot more in hospitals to improve effectiveness and efficiency. Also, there is great scope for keeping old people at home, which is the overwhelmingly preferred option when compared to retirement homes. This includes non-‐invasive sensors and user-‐friendly robots while making sure that older people live among diverse populations, for example, they could help pupils after school or read them stories or handle “hot lines”. Serious investment should be made to adapt housing to the health and needs of “seniors”. Part of the large financial resources of private healthcare companies should be mobilized to this end.
On the subject of productivity, information and computer technologies (ICTs) do not always have such a positive impact. As a low-‐key example, professionals, highly trained to take care of patients, spend expensive time on ICT-‐driven menial tasks such as scanning medical documents in order to mitigate the consequences of a computer/network failure. More dramatically, medical devices, such as insulin pump implants in a person, may be hijacked by a third party. The latter may thus trigger the release of a high quantity of insulin, killing the person, using a blue tooth connection. Similarly, tampering can also take place with pacemakers. So far, manufacturers of medical devices have provided low protection to such hacking because they did not think of it or decided that the cost did not justify the risk. Thinking the unthinkable is not easy.
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2.2. Connected cars There is currently considerable hype – and much investment – concerning connected cars and driverless cars. This is because it concerns an object with which consumers have had a long love affair: automobiles. Also, the automotive industry is a substantial part of many countries' economy. Digital car technology has a number of difficult goals. First, it aims to reduce the number of victims in automobile accidents -‐ each year, more than a million people die on the world's roads. Certain counties, such as France, have managed to substantially reduce the number of traffic victims by a sustained, coherent set of measures, however, the digital car offers further improvement in this area. Given recent failures, however, driverless cars may not be on our roads before 2025.
Second, it aims to increase the amount of traffic that existing roads can handle -‐ one talks of an increase of 20 to 30%. Third, the car becomes a space for work and leisure. Finally, driverless cars greatly enhance the autonomy for handicapped people. One outstanding issue remains insurance -‐ in case of a car crash, the responsibility is not with the driver anymore, but then, with what or whom? The sensors, the hardware, the software, the road infrastructure? Fierce fights between experts are on the horizon. Obviously, the big economic impact will be that cars will then be leased and shared dramatically dropping the number of cars sold every year. Bad news for car-‐makers but good news for the environment. Later in this report, we’ll discuss the business aspects in this area.
2.3. Smart reality at fingertips Digital healthcare and connected cars, briefly discussed above, are pieces of a puzzle that can be named “smart reality”. There are already numerous such pieces available, many of them are often only seen and considered alone. Some of them may be reshaped according to coming technological advancements. Some of them may be made denser and more intense because technology enablers will make them affordable and their appearance on a massive scale will provide new opportunities and smart interactions between them. Some of them, currently missing, will be imagined and then created.
The idea of smart buildings, proposed in the 1970s, originates in automated manufacturing control systems and plant growth environment optimization systems. The smart building combines sensors and detectors into one, integrated management system managing facilities, installations and grids inside the building. With information coming from various sensors, the system can autonomously adapt to changes of environment inside and outside the building, optimizing its functionality, comfort, safety, security, operational costs and emissions. The idea of self-‐aware and self-‐managing building might have been perceived as futuristic in the 1970s, but nowadays it is common due to sensing, transmitting, computing and controlling technologies making it viable and affordable. This is especially true for the connected components of the smart building.
What if we think about expanding this “smartness” to cities, or regions, and, at the same time, aim to maximize the comfort of individual people? What if we expand self-‐awareness and self-‐management from air-‐conditioning, lighting, watering, access, safety and security, to other domains such as manufacturing, trade, logistics and supply chain, health, transportation and traffic, finance, information media and entertainment, etc.?
Telemedicine (including remote monitoring of human vital signs for early warning and diagnostics and automated calling for rescue, remote healthcare and consultations or even remote surgery) and connected
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cars for road security improvement and active shaping of traffic for better use of road capacity, have been discussed above. In addition, existing fleet-‐tracking technologies might be developed, densified and reused for e.g. freight/luggage/shipment tracking and localization, inventory management, smart or assisted travelling, automated goods/shipment delivery, public transportation agility and adaptation etc. Existing remote sensing technologies may be densified in order to provide high spatial resolution metropolitan pollution sensing systems associated with e.g. traffic management systems and public systems for localized warning. Another scenario with multi-‐parametric and high spatial density-‐sensing/monitoring for natural disasters anticipation and emergency detection (terrorism, fires, traffic accidents etc.) may be considered. Current systems for energy and media management used in smart buildings may be expanded to smart electricity, water and gas grids allowing balanced production and utilization with inherent centralized remote charging. Many other currently available features can be rethought, redefined or re-‐engineered.
Massive-‐coverage, high-‐density data, transmission networks, as key enablers for "smart reality", require:
• high data speeds,
• low latency,
• advanced mobility support (providing reliable connectivity for terminals in motion at high speed),
• high resolution of spatial positioning (horizontal and vertical, inside and outside buildings),
• high reliability,
• high agility and adaptability to specific use cases,
• high capacity in terms of volume of connected devices.
These features will be required in whole or part of a system, depending upon the specific individual needs. Such networks, satisfying the conditions listed above, will shortly come about with the advent of 5G.
2.4. The companies try to adapt to the digital revolution Existing firms must metamorphose themselves to adapt to this new reality. Although always profound, the digital revolution impacts various industries to different degrees: utilities or oil & gas can be said to be less drastically metamorphosed than media & entertainment, for example. Chemical companies must indeed learn to capitalize on these advances to manufacture and distribute “the digital way”, but their products themselves remain chemicals unchanged. In order to successfully negotiate such a revolution and achieve this, their activity in R&D Research and development has to be “digitalized”, not a trivial feat. Automotive companies are the most advanced in machine-‐to-‐machine communication. Plants, with modular manufacturing fully using robots and drones, are around the corner. Figure 2 illustrates the impact of the digital revolution in various business sectors. The sectors indicated close to the center are most likely to be affected by the digital revolution more than those in the outermost sectors.
In spite of the agreed upon enormous impact of digital on all walks of life, close to 45% of companies consider that this revolution is not a board issue. The power of human denial is enormous. On the other end of the scale, in 2015, close to 25% of firms were declared to be actively experimenting and proactively using the power of digital. The words “open-‐minded firms", "agility", "speed" and "quality of execution” pop up most often in the management literature.
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On the manufacturing side, the production of smartphones in Asia’s plants, sometimes “black factories” i.e. without workers, may not ever be repatriated to the “west” because the latter does not have the necessary know-‐how.
On the other hand, new companies emerge and grow in order to leverage digital tools to offer new services such as Europe-‐born Skype or Airbnb. Their business models are not rocket science and many currently lose money, but their success depends heavily on access to large investments for fast growth and quality in execution. Their model is usually predicated on the accumulation of consumer habits and details, so as to provide high value, “targeted” marketing. However, things have been at a crude stage for years, for example, Internet messages to people in the Geneva area are written in German. In the attributes of speed and scale, the Chinese are unrivalled and this is particularly the case for the mobile Internet. The example of Tencent’s WeChat Pay is particularly remarkable. Close to 400 million Chinese are doing most of their payments with their mobile phone as of Spring 2017 [1]. Some problems of hacking and disruption have been reported, but, so far, apparently in a limited way.
Figure 2 – Impact of the digital revolution on various sectors
sectors close to the center are likely to be most affected [3]
2.5. The serious need for healthy debates Concerning this coming digital tsunami, we have to hold robust debates with lucidity. The media have a full role in this; will they be up to the task? Our governments must anticipate, or at least accompany, the process with light-‐footed but effective regulations, not self-‐serving bureaucracy. Consumers demand honesty and openness. The industry must inform and engage with the population at large about what 5G and IoT mean; their negative aspects must not be covered up. These include serious issues: security (the more connectivity, the more hacking is possible), privacy and the proper use of data, opaque systems (in
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fact, in the case of “deep learning” in AI, the systems are opaque even to the authors of the software), and the very dense array of antennae required by 5G.
If these negative aspects are not responsibly addressed by the industry and the regulating bodies, impatient and demanding customers will rebel. Similarly, the world currently experiences a wave against globalization and free trade. Forgetting the downsides, these have been naively presented as panaceas. These days, when a group of people arrive at a refugee camp, one of the first things they ask for is access to Wi-‐Fi as well as electricity to recharge their cell phones. For them, a smartphone is as basic a resource for survival as food and water. This is a vivid reminder of the fact that we are fully immersed in a digital world. Currently, in the world, 150 million e-‐mails are sent every minute. However, we are about to reach the point where 50% of the world’s inhabitants are connected to the Internet, most of them securing this access via their cellular phones (e.g. “mobile internet”), which should, in fact, really be called “HC” – hand computers. This means that growth rates in the industry will begin to seriously decrease.
This explains why the industry is desperately racing ahead towards a new phase of a much more radically digital world after 2020, with all the relevant buzzwords. At that time, 5G is expected to be launched with the capability of transmitting truly massive amounts of data, roughly 100 times that of current 4G. In addition, we’ll witness the exponential growth of connected objects, the so-‐called IoT – the Internet of things. We are thus about to enter a truly new phase stepping up the impact of information technology in every aspect of human activity.
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3. Market overview As already mentioned, the advent of 5G represents a much bigger step than going from 3G to 4G. Indeed, it comes with a hundredfold increase in the capacity of data transmission compared with the introduction of 4G. Furthermore, dynamic slicing provides a way to secure additional capacity for transmitting data. Indeed, the 5G and IoT dynamics are often coupled with other elements such as Big Data, Analytics, Artificial Intelligence (AI) and block-‐chain. This bundle constitutes a most powerful driver of change in every walk of life.
The numbers articulated to evaluate the markets in 2020-‐25 vary widely depending on the source. Much assessment and validating work in the present project will be needed to arrive at “responsible” numbers. The collective wisdom of the partners in this project is key in achieving this.
Market data given below must be taken with a grain of salt. Actors involved in the various market segments are 1) either an element of the value chain or 2) operate in the context of the business activities. This context includes several issues such as a host of societal, legal, regulatory, financial and geopolitical issues, which will make or break the markets more surely than the quality of the developed technology. Let us look at the forecast for the overall markets of 5G and IoT.
3.1. Market analysis and impact of 5G dynamic slicing This section provides market overview based on the current trends and prediction. In general, more statistics are available for IoT, largely because 5G is capable of enabling the development of data and information exchange. In addition to the market study, we give our thought on each market area how the dynamic slicing of 5G, the core focus of 5G!Pagoda project, can impact on the market movement.
3.1.1. 5G (1) Market analysis
As 5G is expected to be roughly 100 times faster than 4G, corresponding speeds are in the range of 1 to 10 GB per second with latency of 1 to 5ms and bandwidth of 6 to 30 GHZ [9]. Rapid speed is the crucial ingredient provided by 5G, but also, high bandwidth and low latency constitute substantial benefits. If everything goes well, customers will have the perception that they have infinite bandwidth and limitless data.
As a first step, it is useful to look at the market evolution of mobile telephones. A recent study [4] indicates that units sold worldwide in the first quarter of 2016 were 337.2 million (representing a value of $ 101.3 billion) compared to the first quarter of 2015, for which the respective numbers are 319.3 million (an increase of 6%) and $98.5 billion (an increase of 3%). Not surprisingly, the fastest growth is in China where the year-‐to-‐year value increased by 18%. Mobile telephones are increasingly seen as indispensable and an all-‐around medium for accessing data, information and images.
With regard to 5G, in order to avoid a "can't see the forest for the trees" situation, let us start with the general picture given by Geneva-‐based ITU (International Telecommunications Union). The target set by this organization is 10 Gbps mobile download speed with a latency of one millisecond [5]. Comparing 4G
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and 5G, the ITU spells out significant improvements, especially in latency and data rate/capacity (see ITU vision IMT 2010, published in 2016).
The availability of 5G is likely to be first localized; it will then unroll slowly. In terms of overall markets, the advent of 5G will trigger vast and rapidly growing added value through services and products, primarily through the Internet of things, which will be discussed in the following section. For the latter, for example, Cisco estimates that, by 2020 [6], more than 50 billion objects will be connected. The corresponding economic added value is estimated to be close to $2 trillion across all sectors [7]. Forecasts, however, range from 16 billion (Ericsson) to more than 30 billion (IDC) connected objects by 2020-‐21.
South Korea (5G Forum) has invested $1.4 billion and is planning to launch commercial 5G in 2019 [7]. Japan, where 5GMF was established in 2014, intends to realize the commercial stage of 5G for the Tokyo Olympics, in 2020 [7].
Enabling technologies for 5G are [7] as follows:
• Wireless networks
• Optical networks
• Network management
• Effective systems
• Software
(2) Impact on 5G with slicing mechanism
As network slicing is one of the fundamental enablers of 5G technology (together with NFV and SDN concepts and the global trend of telecommunication network architecture cloudification), its implementation conditions implementation of 5G itself, especially the demands of the separation of traffic belonging to different profiles of services and processing these traffic fractions within network architectures matched to essential service requirements (e.g. IP traffic break-‐out point location dependent on maximum latency limit). The promises of 5G technologies and expectations regarding them are commonly known, especially the impact of 5G on the global economy and on civilization. Additionally, as the densification of the network will demand high investment costs, the pressure on optimizing utilization of currently owned resources will grow. That’s why all techniques increasing infrastructure flexibility, versatility, reusability and agility will play very important roles during the 5G roll-‐out.
It is expected that network slicing will be brought into common usage by 5G implementation, however, it disrupts the current “market puzzle”, which is currently under a lot of pressure and highly sensitive.
The telecom ecosystem has changed irreversibly over the last three decades. The value chain initially containing three segments (distribution, end-‐user devices and “network = service”) and often being covered even by one player (network operator) has been converted to the 7-‐segments model of distribution (physical and on-‐line), end-‐user devices, network access, network core, enablers (e.g. advertising platforms, billing & payment systems, cloud computing, web hosting and CDN), content & service providers and content producers. As was mentioned in Section 5.1, the implementation of the “all-‐IP” paradigm with coincidental separation of basic connectivity and services has capsized the position of traditional network operators fighting for survival with OTT service providers and with network access providers (offering alternative access technologies for IP connectivity, e.g. Cable TV operators, local WiFi
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operators) and breached the customers' base. It was further strengthened by state regulators’ pressure (promoting new operators, imposing asymmetric interconnected fees).
According to the forecast of Tera Consulting, the economic transformation of the telecom ecosystem will mean the total growth of the entire market (slightly more than doubling between 2014 and 2025). However, the distribution of revenues in segments is going to change dramatically, growing especially in higher segments. In 2014, the access segment part is 46% of total, while core and enablers’ parts are about 5% and service/content providers’ part is 13%. In 2025, the access segment is expected to have only 26%, the core part less than 2%, enablers almost 30% and service/content providers part almost 27%.
The technical implementation and opening a market offer of orchestrated network slicing based on NFV shall redefine the value chain again, adding the 2nd dimension to the chain and punching a wedge between underlying infrastructure and functions of network access/core, enablers’ and service/content providers’ segments. This trend will also affect the situation of network operators and change the aforementioned distribution of revenues further (e.g. operators of orchestrators, offering orchestrated services built with 3rd parties’ components, will strengthen the “enablers” segment).
New roles are going to appear:
• “Infrastructure provider” selling the “bare metal” devices (computing and storage nodes) and “naked media” (optic fibres, copper lines) or physical access (radio-‐head or fixed access-‐head devices) offering everybody infrastructural resources for last-‐mile access and scattered edge-‐computing. The latter will be spatially densified according to maximum transmission latency limits lowering (e.g. implementation of augmented reality services). The most extreme case would be implementation of a common single network infrastructure utilised by all operators and only one radio network shared by all operators. In such a scenario, the gravity of inter-‐operator competition would shift to services, as data rate and coverage differentiation will have disappeared. In case of a joint-‐venture company owned by a group of all network operators, the extremely deep cooperation between partners would be needed, but the gain on reduction of CAPEX spent on the network build. On the other side, the spectrum auctions would become pointless (one network, one license per country, one applicant) – resistance of the regulatory authority to such an extreme scenario is feasible.
• “XaaS services broker/integrator” offering various levels of services assembled from components delivered by 3rd party owners/sellers. Such an actor wouldn’t be just a dealer or reseller due to the active role of the operator of orchestrator, unbundling packages of offered and delivered services and then actively designing and delivering the new bundle composing the service requested by served customers. Probably, the relations will be multilateral and some “infrastructure providers” will be interested in expanding their offers with the offers of others and putting up the synergic, orchestrated offer for sale, thus becoming IaaS service integrators.
• “NSaaS customer” embedding the operated network into a specific wider industrial context. The main example is vertical industry (automotive, manufacturing, media grids, health sector, public safety, ITS, freight tracking and management etc.). They already use transmission, connectivity, communication, positioning or cloud services, but equipped with network slicing technology and orchestration they will become more self-‐reliant and “operator-‐like”, having a separated, secured network and their own control over its quality and reliability, thus being able to take the sole E2E responsibility for their services nested in the telecommunications network.
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The technologies of orchestration and network slicing bring opportunities and threats to network operators. They shall rethink themselves in the future “orchestrated network slicing reality” and find their position in the future shape of the value chain. They will probably not avoid mutual sharing of resources and exposing network management APIs, still wanting to be able to gain such access to the common market of infrastructure and networks. They will need to get maximum internal benefits of network slicing and function virtualization and migrate to more profitable segments of the value chain, keeping proper balance between profits and losses entailed by this common market.
3.1.2. Application domains from the selected use cases The transformational power of 5G is considerable, but yet, it is fairly unknown. Indeed, it will vary from country to country and, mainly, from one industrial sector to another. Of course, early on, the clear winners will be those companies involved in building infrastructure, as well as the chip manufacturers. The companies on the losing side will be a broad mix of companies -‐ the business of which will be impacted and displaced by the digital tsunami. Within the ICT sector, likely losers include cable-‐makers as well as gaming consoles.
The release of 3GPP-‐15 is expected for 2018 for fixed wireless, while 3GPP-‐16 is expected in 2020 for mobile Internet and massive IoT. Indeed, the advent and growth of 5G is predicated on the development of software. On the 5G and IoT scenes, dynamic slicing brings considerable added potential for an enormous range of use cases and customized applications.
It is generally accepted that two sectors will represent the biggest share of this dynamic: healthcare and advanced manufacturing [11]. We now turn to a brief overview of the market potential for the various use cases selected in task T2.1, listed below:
• Massive IoT
• Autonomous (driver-‐less) cars, or smart driving
• Factory management
• QoS on demand
• Smart/Virtual office
• Contents Delivery Networks
• Advanced medical services
• Disaster handling
We will now look at a couple of these sectors, beginning with IoT and followed by autonomous cars.
3.1.2.1 Massive IoT
(1) Overall market figure
The Internet of Things, according to Cisco, will represent, by 2020 [6], more than 50 billion connected objects. The corresponding economic value is estimated to be close to $2 trillion across all sectors [7]. Gartner estimates that Internet of Things devices will constitute 13.5 billion connected devices by 2020
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[34]. These devices will thus surpass mobile phones as the largest category of connected devices in 2018 [27]. Between 2015 and 2021, IoT is expected to increase at a compounded annual growth rate (CAGR) of 23 % [27]. In addition to the uncertainty in the estimation, these numbers also vary depending on what is counted as an IoT device. By 2025, IoT may represent a business volume between $3.9 trillion and $11.1 trillion a year [36].
(2) IoT in Mobile Networks
At the end of 2015, millions of IoT devices were connected using mobile subscriptions [6]. Cellular IoT is expected to experience the highest rates of growth among the different categories of connected devices reaching 1.5 billion in 2021 [27].
GSM/EDGE will continue to be an important alternative for Massive IoT [27]. Today, around 70 percent of cellular IoT devices support only GSM [27]. Cost reductions achieved by reducing complexity and limiting modem functionality will make LTE an increasingly viable option. This enables new low latency applications [27]. 5G networks can enable a wide range of use cases for IoT -‐ greater capacity will allow more devices to be connected and lower energy requirements will prolong battery lives more than 10 times [27]. Coverage for cellular machine-‐type communication (MTC) will support IoT applications in more remote locations such as within buildings and in underground locations [28]. Network system improvements, such as sleep mode, will support battery lifetimes beyond 10 years for remote cellular devices [27].
(3) Edge Computing
In terms of data processing, the edge cloud (or “fog” computing) concept has an important role for IoT. One reason for providing network intelligence closer to the data source is that most data will be too noisy or expensive to be carried all the way to the cloud [29]. The amount of data can be reduced by compressing, filtering, and aggregating it near the network edge [33]. Analytics, image recognition and machine control can also be provided at the network edge in order to avoid transporting the raw data to the cloud and instead only collect the important features from the data. For example, in the automatic analysis of surveillance video, the interested features could be extracted near the camera device itself, and only the resulting summarized data from the analysis, or alarms, will be sent to the central cloud. Another motivation for edge processing is the reduction of latency. Control loops collecting data from (typically multiple) sensors must react quickly to the data and send back actuation commands to the device based on the determined action. This motivates running application servers at the network edge.
(4) Applications and use cases
Companies are focused on IoT as a driver of incremental revenue streams based on new products and services. Businesses are also embracing IoT to improve productivity and save costs, such as capex, labour, and energy [29]. While the initial drive of IoT will come from lower device costs and the availability of connectivity, the creation of new services not limited to connectivity requires enablers from cloud computing, big data management, security, logistics and other network-‐enabled capabilities [32].
IoT creates opportunities for several vertical industries, including the health, automotive, and energy sectors as well as homes and buildings [32]. Applications include smart wearables, video surveillance, smart meters and digital health monitors [26][32]. In [29], the application area is divided into connected wearable devices, connected cars, connected homes, connected cities, and the industrial internet, where the latter covers industries including transportation, oil and gas, and health care.
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The connected health consumer segment is estimated to have the fastest growth of connections between 2015 and 2020 (from 144 million to 729 million) [26]. For example, future clothes may integrate ultra-‐light, low power sensors to measure various environmental and health attributes like pressure, temperature, heart rate, blood pressure, body temperature, breathing rate and volume, and skin moisture [32]. Smart cities provide services for gas, water and electricity metering as well as environmental monitoring (pollution, temperature, humidity, and noise), light control, and vehicle traffic control [32]. Video surveillance may be supported in mobile environment such as on aircrafts, drones, cars, and security personnel [32]. The Consumer Electronics Association estimates only 10% of new homes in the United States currently utilize home automation [29]. The connected home segment will have the largest volume of connections: nearly half of all connections (2.4 billion in 2015, 5.8 billion by 2020) [26]. This is in line with [29], which expects that home automation to be at the vanguard of IoT adoption.
Western Europe will add the most connections led by growth within the connected car segment [27]. A connected car is counted here as one device, though it may have hundreds of sensors.
(5) Applications requirements for business growth
IoT devices differ significantly in terms of capabilities, power consumption and cost. IoT also poses a range of requirements on the reliability, security, latency, throughput of the network. The real impact in IoT will be felt at a later date. The true transformational role of this field will be felt after the “stovepipes” solutions have been implemented. The scope is huge, for example, in the area of energy, reducing the consumption of industry and home appliances at peak demand times will produce handsome savings. Figure 3 is a chart regarding concerns on the part of industry, from Forrester’s Global Business Security survey in 2016. As it shown in the Figure, security and privacy concerns are increasing and impact on business decision on adaptation of IoT.
IoT devices can be roughly divided into two main segments: Massive IoT and Critical IoT. Massive IoT is characterized by a high number of connections, where the data volume per connection is relatively low. Low-‐cost and low-‐energy consumption is required. Examples include smart buildings, transport logistics, fleet management, smart meters and agriculture. Many of the Massive IoT devices will not be directly connected to the mobile network, but rather through things will be connected through capillary networks, i.e. short-‐range radio networks connecting to the mobile network via IoT gateways [27]. A large group of the massive IoT devices are immobile and do not require features like handovers and location updates, which have been critical in serving mobile phones [30]. On the other hand, the connections may be very dense geographically -‐ up to 200,000 connections per square kilometre [30].
Critical IoT connections are characterized by requirements for ultra-‐reliability and availability with very low latency [27]. Examples include traffic safety, autonomous cars, industrial applications, remote manufacturing and healthcare including remote surgery [27]. Service, such as autonomous driving or remote controlled robots, requires latency in the order of milliseconds -‐ less than 5 ms for intelligent traffic monitoring (ITS) and less than 1 ms for control of motion [30].
The requirements of both Massive IoT and Critical IoT differ substantially from mobile broadband.
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Figure 3 – Security Decision-‐Makers have growing concerns about IoT initiatives
(6) Impact on 5G with slicing mechanism
VNFs are being placed in different locations (edge or core cloud) depending on the purpose of the slice. For a massive IoT slice, scalability is the main criteria. A simpler, light-‐duty 5G Core without mobility management may be sufficient [30]. In a Critical IoT slice, the 5G Core and application servers, such as vehicle communication servers (V2X), are placed in the edge in order to minimize the transmission delay [30]. Some network functions like charging and policy control can be essential in one slice but unnecessary in other slices [30]. Operators can customize network slices the way they want [30].
Operators can provide network slices with different performance characteristics to offer optimal support for different types of services for different types of customer segments [28]. Separation of core networks provides flexibility and allows the network control to be optimized for different types of traffic and priorities. In particular, it allows giving higher priority to massive IoT traffic compared to smart phone
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traffic. Network congestion and failures caused by a large number of M2M devices could impact the communication of higher-‐priority smart phone traffic. Separation between the traffic classes improves reliability and performance by reducing the impact of failures and isolating the network from each other [NTT]. In contrast to traditional QoS methods, separation also protects the core network elements and services. Additionally, cost reduction is possible by adjusting the service levels to suit the traffic characteristics and priority levels of the devices.
3.1.2.2 Smart driving
(1) Market analysis
Much of the data here comes from Frost Sullivan’ Global 2015 study [9], which included Nissan, PSA, Ericsson, Mazda and Bosch. Commercialization planned as follows:
• South Korea 2020
• USA 2025
• Japan 2020, pegged on the Olympic Game
The study concludes that consumers will have to pay in order to have the option of 5G available. This option is expected to increase the cost of a vehicle by $200. Interestingly, the study does not articulate a single prediction on the number of driverless vehicles expected to be on the roads
The autonomous car elicits much enthusiasm from consultancy firms to ridiculous lengths -‐ the obscure “Grand View” [8] consultancy pontificates that, in 2024, 138,089 driverless cars will be sold. Given the fact that this kind of forecast has a 50% error of margin, it is unnecessary to go to that level of precision, which constitutes part of the exquisite charm of market studies. Alphabet (ex-‐Google), Tesla, Ford, GM and VW/Bosch are all active in this area. Volvo, now owned by the Chinese Chery, makes similar noises on this issue.
In 2015, another pundit claimed that there will be 10 million self-‐driving cars on the road by 2020 [10]! On this glamorous issue, it is probably realistic to remain in the camp of a somewhat conservative stand since there are so many technical, practical, legal and ethical issues. Our regulatory environment will NOT be ready for a while as many crucial issues are outstanding requiring a minimum of societal consensus.
In Japan, towards the era of IoT/Big Data/AI, private sector lead organization ”IoT Acceleration Consortium” was established on October 23, 2016, in order to promote the utilization of IoT in industry, government and academia. Under this umbrella, Technology Development WG (Smart IoT Acceleration Forum) is promoting a mart mobility project, which tackles research and development of future mobility systems (Smart driving, Autonomous Robots, Drones) thanks to 5G capabilities. According to a Japanese document (http://www.soumu.go.jp/main_content/ 000397783.pdf), written by the Mitsubishi Research Institute (MRI), transportation, i.e. vehicle tracking, connected cars and ITS, and industrial segments (remote control and operation of large factories), are indeed anxiously waiting for the advent of 5G because their application depends heavily on the availability of the appropriate telecommunication infrastructure. The anticipated average communication cost in the total cost of ownership is around 10-‐30% and is compared below with the situation in other sectors.
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Figure 4 – Telecommunication cost ratio in various segments
Concerning smart driving, all automotive companies in Japan plan to commercialize automatic driving cars by around 2020. Moreover, Mitsubishi Research Institute predicts that the Japanese market, including robotics, advanced services using drones, and smart driving & ITS will grow from 1.6 trillion yen (2015) to 9.7 trillion yen (2035). One Yen is roughly equivalent to 9 US cents at current market rates so 1.6 trillion yen represents about $14.4 billion.
Figure 5 – MRI's forecast for smart mobility
According to https://japan.zdnet.com/article/35095221/, the Japanese consulting firm Yano Economic laboratory (https://www.yano.co.jp/press/pdf/1633.pdf) predicts that smart-‐driving-‐ready cars will increase to 23 million for assisted driving, 28 million for partial autopilot, 18 million for full auto-‐pilot, and 2
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million for fully autonomous vehicles. Each corresponds to autonomous driving levels 1, 2, 3, and 4 defined by NHTSA (National Highway Traffic Safety Administration). Of course, this evolution depends a lot on the autonomous capabilities of the car. However, ITS-‐related communication capabilities in 5G are also greatly expected for innovation. The ultra-‐reliability and low-‐latency capabilities in 5G are key to realizing drive assistance and partial or full autopilot in this automotive segment as well as in remote industrial operations and new drone-‐based services.
Figure 6 – Smart driving in Japan in 2030 (from Yano Economic Laboratories)
The Boston Consulting Group has reported a similar estimation (http://www.bcg.co.jp/documents/ file197533.pdf). The figures below state that around 30 million (18.4+12) cars on levels 2 and 3 will be on the market and the total size of the market will grow to $77 billion worldwide.
Figure 7 – Boston Consulting Group's prediction on smart driving (2015)
In conclusion, a note of warning: the hype around driverless cars does not mean that it will be around in a big way soon. The gross, recent failures (autonomous cars going through red lights, getting overturned,
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hitting somebody" venture capitalist, John Doerr, who stated that “Segway was to be bigger than the internet”!. These bizarre miscalculations are reported in the book “Driverless: intelligent cars and the road ahead”, by Hod Lipson and Melba Kurman (MIT Press, 2016)
(2) Impact on 5G with slicing mechanism
In order for network infrastructure to provide real-‐time and highly reliable and secure capabilities to share huge volume of ITS information, it is necessary for information-‐networking infrastructure to provide an isolated slicing mechanism. Especially in the case of supporting (semi-‐)automatic driving since a communication delay and failure may cause car accidents. It is demanding to provide high-‐quality communication avoiding the effects from other traffic. In order to deal with this, end-‐to-‐end (i.e. from cars to mobile edge servers and cloud servers) network slicing mechanism is one of anticipating and promising technologies. Thanks to the isolation capability in network slicing, ITS service providers are able to control various type of traffic (for example, car navigation, congestion information, real-‐time driving status information, real-‐time driving control commands) according to the demanding quality of services avoiding interference.
3.1.2.3 Smart manufacturing
(1) Market analysis
In the business-‐to-‐business activity of industrial manufacturing, sometimes called “smart manufacturing”, the impact of advanced ICTs is already large and is expected to be enormous in the near future. It is critically important in achieving vastly enhanced flexibility, effectiveness and efficiency. Japan is leading the way in this sophisticated, modular manufacturing. For example, Toyota is using block-‐chain to improve and secure its automotive supply chain [9].
As this is not a customer-‐focused industry, it is probably implemented more smoothly. In fact, in Japan and some areas of Shenzhen, this revolution is fully at work. Certain plants have NO workers in sight, as far as one can see. For example, most iPads are produced in “black plants”, i.e., on premises without any workers so no lighting is required. On the other hand, in such plants, the investments in IT infrastructure are enormous [6].
The market numbers for this business segment are also there and, not surprisingly, differ wildly depending on the source. More time is needed to reach meaningful (tentative) conclusions in this area. At this stage, let us only mention the optimistic anticipation by General Electric, to the effect that advanced manufacturing (with internet of things and machine to machine communications, etc.) presents the potential of adding $500 billion each year to the global economy [7].
The report "Smart Factory Market” by Markets & Markets, indicates that smart factory market size, in terms of value, is expected to reach $74.8 billion by 2022 at a growth rate of 10.4% between 2016 and 2022. The emergence of smart factories can be seen from the period of change toward cohesive control of the machineries, processes, and resources with local intelligence. The increasing focus on saving energy & improving process efficiency along with the integration of engineering and manufacturing by the adoption of IoT is expected to foster the growth of the smart factory market [23].
(2) Impact on 5G with slicing mechanism
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With the growth of device and service technology, cyber-‐attacks, which target infrastructure systems, have been confirmed in several industrial facilities. For example, in a threat to a car factory, 13 factories were shut down by a viral infection in August 2005. In addition, a reduction in processing capability of the car product line was reported in 2011. It was also reported that in a semiconductor factory, the product line was stopped by a viral infection [24].
In a typical car-‐assembly plant, it is generally expected that each minute of stopping the line costs two million yen per minute. If the damage requires an average of one hour to be fixed, this translates into a loss of 120 million yen [25]. It is hoped that the risks presented by the cyber-‐attacks may be minimized by disconnecting the slice that is caught in the attack and avoid it influencing the whole system.
3.1.2.4 On-‐demand QoS support with mobility
(1) Market analysis
It is expected that mobile communication networks built on 5G will provide 1ms latency and data transfer rates of more than 10 Gb/s. Major applications that demand a high QoS are video streaming and gaming. With the popularity of 4K videos and Virtual Reality (VR) gaming, the QoS requirements for mobile video streaming and gaming will always be increasing.
Video is set to have the highest growth rate of any mobile application in the next five years. Cisco predicts that 75% of mobile traffic will be video by 2020 [20]. It is estimated that the global video streaming market will grow from $30.29 billion in 2016 to $70.05 billion in 2021 at a growth rate of 18.3% [17]. With the popularity of video streaming apps such as Facebook and YouTube, in the coming five years it is expected that 50% of viewers will stream online videos from their smartphones [2]. In Japan, according to www.statista.com, the revenue from video-‐on-‐demand represents $545 million in 2017 and is expected to have an annual growth rate of 12.8%, resulting in a market volume of $883 million in 2021. The market's largest segment is video-‐streaming (SVoD) with an anticipated market volume of $408 million in 2017 [18].
The report from Newzoo [16] shows that gaming generated $99.6 billion in worldwide revenue in 2016. For the first time, mobile gaming will take a larger share than PC with $36.9 billion, up 21.3% globally. China alone accounts for one quarter of all global gaming revenue. It is expected that the global market will grow with a CAGR of 6.6% in 2019 eventually reaching $118.6 billion with mobile gaming at $52.5 billion. In Japan, revenue in the video game segment is expected to grow by 12%. The largest segment is constituted with mobile games [18].
Even though the markets have great potential, recent Ericsson research found that two-‐thirds of users that watch video over a mobile connection are unhappy with the quality [21]. The 5G mobile network will definitely provide a higher data rate yet it’s still a great challenge to ensure high QoS, especially for high-‐mobility users such as passengers on high-‐speed trains. For train passengers, the best way to kill time on a train is video-‐streaming or mobile gaming and each QoS requirement for each individual mobile user (passenger) should be ensured. In Japan, 157 million passengers used high-‐speed trains (Shinkensen) and 391 million passengers used normal trains for daily commuting in 2015 [19].
(2) Impact on 5G with slicing mechanism
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QoS could be defined by various KPIs such as data rate (throughput), latency, availability, error rate, jitter and so on. Always providing high QoS for all users will lead to resource inefficiency for operators but will also be costly for users. Thus, the QoS should be provided on-‐demand.
With a slicing mechanism, network slices can be implemented separately for individual QoS requirements; for example, one slice could be for mobile video-‐streaming and one for mobile gaming. For the video-‐streaming slice, a content server can be installed on the train, for example. The content server pre-‐downloads and buffers the video content and delivers high-‐quality videos even in poor network conditions. Ensuring QoS for high mobility gaming users is more challenging. The operators may implement a delicate slice for mobile gaming, optimize the handover parameters and ensure the latency requirement. UE may request access to the dedicated slices based on its QoS requirement. As an alternative, operators may create a temporary slice on demand for an UE or group of UEs and ensure the QoS requirements.
3.1.2.5 Smart/Virtual office
(1) Market analysis
The smart / virtual office is an interesting use case for the near future as the companies aim to reduce their costs and to improve their employees’ productivity. Smart buildings with sensors and actuators for comfort-‐monitoring are increasing and many products to support employee productivity and remote collaborations are coming to the market. However, there is currently no support for connecting the pieces together and there are many technical challenges to overcome to make the scenario real and effective. The adoption of the European General Data Protection Regulation also brings new requirements: while the smart office will be more and more connected, the data protection requirements will increase. Use of local servers, Mobile Edge Computing and online authentication servers will be considered.
Figure 8 – Global Smart Office Market Industry (source: mordorintelligence.com1)
There are several studies available trying to estimate the worth of the smart/virtual office market in the coming years. For example, a study2 estimates that the market for smart offices will have a value of $43.31
1 https://www.mordorintelligence.com/industry-‐reports/global-‐smart-‐office-‐market-‐industry 2 http://www.marketsandmarkets.com/PressReleases/smart-‐connected-‐offices.asp
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Billion by 2020. An industry report from mordointelligence.com3 states that the global smart office market was valued at $29.64 billion in 2016 and is expected to reach $55.36 billion by the end of 2022, at a CAGR of 11.16%. It also shows that the United States held the majority share of 86.24% of the North American smart office market in 2016. The fastest growth rate is estimated for India with a rate of 21.42% during the forecast period (2017-‐2022). The article published on 22nd March 20174 indicates that the Global Smart Office Market was valued at $26.93 billion in 2016 and is expected to reach a value of $51.26 billion by the end of 2022, growing at a projected CAGR of 11.32% during the forecast period of 2017 – 2022. The report also states that key players in the market like Siemens, Schneider Electric, ABB, Cisco, Honeywell, etc. are releasing more products and services for the smart offices market.
(2) Impact on 5G with slicing mechanism
In the near future, there is no doubt that workplaces will be a lot smarter than those today. Most of the devices will be wirelessly connected and office workers will be able to control or adjust their working environment via their smart phones or any smart devices belonging to them. Some immersive technologies, like 3D or augmented reality, will enable fully interactive business meetings and people from all over the world can join the meeting as if they were in the same room.
5G should evolve in a way that glues the separate pieces of IoT, wireless, 3D, cloud, and their related technologies into a big picture with dynamic slicing of the network. Different smart/virtual office services with different requirements can serve with different slices. For example, one slice for share files via a secured cloud, one for smart environment control for comfort and energy savings, one for reliable security alarms for fire and intrusion, and one for interactive tools and online resources to improve the employees’ productivity, etc.
The IoT service provider produces various IoT applications and, the slice could be managed by a separate company. The cloud service providers ensure the security and privacy of office files. The network operators may also provide a temporary slice for teleconferencing and remote business meetings.
The requirements of the smart / virtual office show that the 5G mobile slicing network should improve the availability, the reliability and the performance in the smart office environment for the IoT and cloud services. The 5G mobile network could bring in the near future a high bi-‐directional throughput, a high density of connections which is an important topic in high skyscrapers (think about Manhattan or Dubai, for instance). In particular, the 5G slicing mechanism offers advantages for this use case and the list of these advantages comprises an optimal handling of the communication volume, increased reliability, a reduced latency, which is important for alarms, and finally, a higher security of transmission.
3.1.2.6 Content Delivery Service Content Delivery Service, also known as Content Delivery Networks (CDN), plays a key role in state-‐of-‐the-‐art online media consumption infrastructure. Many international content providers such as Amazon, Apple, Netflix and others operate their own CDN, while smaller companies rely on the 3rd party CDN of providers
3 https://www.mordorintelligence.com/industry-‐reports/global-‐smart-‐office-‐market-‐industry 4 http://www.satprnews.com/2017/03/22/global-‐smart-‐office-‐market-‐outlook-‐2017-‐2022/
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such as Akamai, Limelight, Highwinds and others to serve their customers/users. Although there are a very large number of solutions, a common solution, which could be customized for the specific content providers, would prove beneficial, especially because of the possibility to install on-‐demand CDN networks customized for different numbers of subscribers.
(1) Market analysis
While CDN growth has slowed down recently as described in [37], they should remain an important component of networks for the foreseeable future. Adoption of ever higher-‐quality video/audio formats to meet the quality requirements of new end devices will likely increase the demands on CDN. Yet, the high demands of e.g. 4K video content-‐streaming cannot currently be fulfilled on a broad scale. This is where 5G can deliver improvements.
According to [37], CDN revenue is expected to grow from $3.2 billion in 2015 to $5.8 billion by 2020 with a CAGR of 12.5% as shown in Figure 9. North American and western European markets are expected to grow the slowest as adoption in these areas is already high. Latin America and Asia Pacific regions are set to experience the most significant growth. However, the bulk of revenue will continue to come from the North American region, which will still contribute 60% of global revenue in 2020.
Figure 9 – Content Delivery Service Revenue Forecast
Mobile consumption of high quality media is still low as consumers are aware of the high potential costs of excessive mobile data transmission and prefer using Wi-‐Fi when available.
It has to be noted that [37] does only consider pure CDN providers for its statistics as several big CDN providers are only used by their own operators. These do not have revenue per se, however, they are still relevant providers of online content and will affect 5G network usage.
(2) Impact on 5G with slicing mechanism
The anticipated increase of 5G in available mobile bandwidth is likely to trigger a significant uptake in mobile content consumption, if pricing models satisfy user expectations and can convert Wi-‐Fi users. In this
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scenario, CDN nodes would benefit from being deployed in edge slices. It is possible that CDN nodes would be deployed in a common slice as they may serve different kinds of slices. Alternatively, CDN nodes could be deployed in slices depending on access policies. For example a slice with support for a specific media-‐streaming service would require an appropriate CDN connection, which could be part of its slice.
Slices could be utilized to provide tiered access to content with a specific slice having access to a CDN node with premium content.
If users stick to their frugal ways of mobile content consumption, CDN nodes in mobile slices would likely serve smaller file sizes/lower data rates. A fixed network slice CDN node would have to take care of higher data rate transmissions. Taking slice requirements based on usage statistics into account could allow more optimized caching.
Additionally, the CDN networks could be deployed on demand and dimensioned for the specific number of subscribers actively using the service, their distribution across the multiple network providers as well as for the specific quantity and diversity of the content considered. With this, a highly customized CDN network can be achieved, efficiently serving even low numbers of subscribers and through this to provide a minimal initial investment and at the same time a fast investment return.
3.1.2.7 Advancement of medical services
This area is of great importance for the digital revolution. Not only is it a very large and growing field, but also it offers enormous scope for efficiency and effectiveness with a vision of providing quality healthcare at a low cost. Achieving that vision will take considerable staying power and insight on the part of the regulatory and tax authorities.
(1) Market analysis
Current medical services are provided at medical institutions in a physical way such as seeing doctors, giving medicine, medical examination, medical surgery and so on. And medical services have been getting more sophisticated due to medical and pharmaceutical progress. On the other hand, the medical service gap between urban and rural areas such as isolated islands is widened in proportion to population aging, depopulation in rural areas, a shortage of doctors and financial difficulties of the municipality.
Digital healthcare is another large area to be affected by network revolution, including:
• Applications for the pharmaceutical companies (management of clinical studies, bid data to help refine the most appropriate treatment, etc.): These companies are investing large sums in applications to these ends.
• Provision of healthcare to individuals (including the assistance to handicapped people and to the elderly): The model there is that the patient becomes much more involved in her own lifestyle (prevention finally becomes important…), but also in the management of her treatment, with the help of the doctors (MDs). The latter approach requires a substantial change of behaviour on the part of the patients. They currently tend to entrust their care to the MD, not wanting to know too much about their predicament. It therefore remains to be seen whether such an evolution can be engineered in this way.
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Large companies all over the world are looking at digital healthcare with great interest. As an example, roughly one year ago, IBM founded Watson Health, which intends to buy a third firm on medical data, Truven Health Analytics. The latter has 8000 customers: hospitals, MDs, private firms and government units. In China, a major building contractor, Fosun, has put healthcare as one of their three top priorities.
Digital healthcare is a huge sector. The overall picture shows that it may well represent $250 billion by 2025 [11]. This covers a wide range of activity from big data to telemedicine, individualized healthcare, keeping seniors at home, etc. The healthcare sector is particular in that it involves three parties: the patient, the insurance provider (public, or private) and the providers of medical services. Healthcare includes widely different activities, each with their own dynamics. For example, surgical advances, such as the Vinci robot (which has helped carry out close to one million surgical operations) require the approval of so called “opinion leaders”, who essentially block or approve the advance. At the same time, this is big business: the specific segment of remote medical systems, alone, is expected to represent $4,5 billion worldwide in 2018 [12].
In Japan, the market size is expected to grow to 420.4 billion yen by 2020, a 12.3% increase over 2013 [13]. For remote medical systems, the market size will be 19.2 billion yens by 2020, which is 2.5 times that of 2016 [14]. Obviously, the worldwide sales are also estimated to grow to $4.5 billion by 2018 compared to only $0.4 billion in 2013 [15].
Segmenting the various activities of the large and fast-‐growing healthcare sector will be looked at in the next phase of this project. This will be done with particular reference to dynamic slicing as a stimulus to the development of these various segments. Issues of reliability and security, privacy and professional secrecy are indeed paramount in that segment. In fact, such concerns are likely to slow down the introduction of 5G, Big data and IoT [11].
(2) Impact on 5G with slicing mechanism
With a slice mechanism, the 5G systems will contribute to the remote medical systems. One of their promising contributions will be medical information collections from a huge number of people and lead them to change habitual activities. For this purpose, a single person carries multiple medical sensors and they continuously upload the sensor data to the analysis components (in many case, to the cloud). The analysis component gives feedback in accordance with each of their lifestyles. The 5G systems are expected to increase the accommodation capacity much more than that of 4G systems. Additionally, the 5G systems may contribute to the surgery support system resulting in allowing patients to have remote medical surgeries. In this way, the communication delay can be shortened to only a few milliseconds. Simultaneously, the surgeon can also collaborate with an artificial intelligence (AI) technology to take on some parts of the surgery.
3.1.2.8 Handling disasters or very high concentration of people
(1) Market Analysis
Korea’s winter Olympics in February 2018 are likely to be the first “5G games”. The bigger test, as well as a national goal for Japan, is the Tokyo summer Olympics, in 2020. Sporting events, gatherings of heads of government and religious gatherings all present serious security challenges. Cost-‐saving is derived from automatizing administrative functions.
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The market is country-‐specific and is linked to funding by local and national governments. Pressure in this sector is to deliver “more with less” because of constraints on public budgets. The public safety segment is not geared for commercial benefits since its purpose is to protect the public. It shows some dysfunction, such as purchasing segmentation and dominance of suppliers. Policy-‐makers and public safety agencies often have different priorities. Furthermore, in less developed countries, low wages and insufficient political priority constitute barriers.
The overall market for mission-‐critical public safety networks is expected to grow from $14 billion in 2015, to $17.6 billion in 2020 [8]. Mobile broadband, on the other hand, is expected to grow at the higher rate of 25 % per annum. Digital solutions, running over hybrid voice and data networks, will be adopted. Corresponding applications, as well as infrastructure, will be supplied by current vendors as well as mobile network operators and new entrants [7]. Consumer devices have a life-‐cycle of two years or so. In contrast, responder radios and equipment in public safety have often been in service for more than ten. At the same time, mobile devices will proliferate, such as sensors and cameras, autonomous aerial and land vehicles integrated with CCTV, public displays and sensors.
Spending has been mainly concentrated in Australia, Germany and the United Kingdom in the period 2014-‐2016. In the USA, Motorola dominates the PMR market; Harris is second. In China, Huawei, ZTE and Hytera are the leading vendors. Motorola, Harris, Airbus D&S are the main international vendors.
Japan aims at increasing the resilience of its systems, following the loss of critical communications in 2011, with the earthquake/tsunami and the Fukushima nuclear disaster. NEC is the leading supplier for safer cities solutions, network equipment, cameras and facial recognition.
Key players worldwide are Nokia, Motorola, Airbus D&S, Thales, Selex ES, Sepura, as well as NEC and Huawei.
(2) Impact on 5G with slicing mechanism
The 5G network armed with network slicing mechanisms with autonomic scalability in the background and automated orchestration of entire E2E network architectures in minutes timeframe is expected to deliver the capability of (1) self-‐adaptation of the telecommunication network to traffic demand fluctuations and (2) fast and automated network reimplementation/reconfiguration after its manually requested redesign or conditionally triggered autonomous rearrangement.
Such predefined “network scenes” (refer to “lighting scenes” used in the home automation domain) may be prepared for different traffic scenarios, especially for natural or man-‐made disasters (earthquakes, floods, massive storms, traffic catastrophes, terrorist attacks) and quickly implemented in order to provide network capacity able to accommodate, on a massive scale, emergency calls, rescue actions coordination, public safety service communication etc. having the top priority according to the law's requirements and enforced by network regulators. Upscaling and downscaling capability may follow the process of traffic transfer from one network architecture instance (e.g. affected by failure or overloaded) to another (e.g. newly cloned) or spatial migration of network function instances to regions of high traffic density, preventing overall clash due to lack of underlying infrastructure resources.
Separation of different kinds of services in separate network slices will also support the flexible traffic management and adaptation of network capacity to a high concentration of people in specific areas.
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4. Multi-‐stakeholder analysis People are the most important stakeholder. In general, customers’ concerns of safety and privacy, as well as the mitigation of the possible effects of exposure to electromagnetic fields, must be considered seriously and taken into account upstream in any development. Tomorrow’s customers will rebel if they are not satisfied with the way technologies have been developed to address their concerns. In other words, in the past, the phrase “customer orientation” was often lip service for the annual reports, but essentially an empty slogan. Times have changed; firms must have effective antennae to detect, and truly take note of, people’s concerns and wishes. As already mentioned, non-‐business issues have never been so crucial to business.
4.1. Identified stakeholders in 5G!Pagoda use cases When looking at the use cases, selected in task T2.1, an overview of the actors involved is given in Table 2. The table summarises the actors mentioned by the project partners as being involved in the selected use cases.
Table 2 – Actors involved in the seven use cases selected in task D2.1
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In summary, we can categorize the stakeholders and their major benefits from 5G as follows:
Fixed and Mobile (including wireless) telecom operators
Major players Orange, KDDI (consortium members), NTT, SK Telecom, etc.
5G Benefits Better leverage of infrastructure through slicing
New network lifecycle capabilities,
New maintenance scenarios
Further automation of network lifecycle operations
Less demand for operational staff (especially centralized operations staff)
Automated inter-‐operator cooperation
Scalable network management
Cost-‐efficient service provisioning
Automated services
New services
New business models
Mobile virtual network providers (MVNO)
Major players NESIC (consortium member), Lycamobile, Patriot mobile, FreedomPop, etc.
5G Benefits New services for particular user groups with suitable SLA
Flexible business models
Lager and new markets
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Telecom equipment manufacturers
Major players Hitachi, Ericsson (Consortium members), Huawei, Cisco, etc.
5G Benefits New and updated equipment and software
New types of software
New services, including slice design services and maintenance
New products and markets
Mobile and chipset designers and manufacturers
Major players Intel, SMTElectronics, Softbank (ARM), etc.
5G Benefits New products and markets
Cloud providers
Major players Google, amazon, Microsoft, etc.
5G Benefits Bigger demand by larger data flows in 5G
New services connecting to data on different slices
Diverse business models
IoT network / solution providers
Major players Ericsson, DG (Consortium members), Amazon, Google, etc.
5G Benefits Better leverage of infrastructure through slicing
Improved scalability
Service quality guarantees
Customization of services in slice
Faster deployment of services
Easier to provide secure services via separate slice
Business transformation
New services
New markets
New business models
Diverse application service providers (e.g., IoT, ITS, Healthcare, Smart office, etc.)
Major players Smart office (Siemens, Schneider Electric, ABB, Honeywell, etc.)
5G Benefits Integrated and more sophisticated services
New products and markets
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Application service users (including citizens)
Major players Customers of all sectors (e.g., building management companies in Smart building, Hospital, Medical staffs and patients in advanced health care, etc.) and citizens for the services
5G Benefits Rich services (true mobile and fixed network convergence, Low-‐latency high bandwidth transmission)
On-‐demand services
Services with wider area covered
Secure services
Real implementation of the rule of “seamless, anywhere, anytime any device”,
Automotive services
Each of the eight selected use cases requires an analysis of what is called "industry analysis”, which looks at the chains of actors to see, along the chain, where the value is created, what actors have high bargaining power and where the benefits and risks lie. Indeed, the situation in various “use cases” may be similar so that the corresponding industry analyses may be grouped into one.
Connected with the business models, a next phase of this work will be to do what is called an industry analysis, i.e. looking at the value chain and seeing where the profits are made. This will have to include some guessing since we are dealing with a world that is in the process of being shaped by the radical and rapid changes induced by technical progress, including sophisticated network slicing. We will also, among actors along the value chain, assess which ones are most likely to be in a strong position to bargain with suppliers, customers and regulatory institutions in the next phase.
4.2. Identification of the multi-‐stakeholders in each use case In this section, we identify the traditional stakeholders, as well as the new stakeholders appearing by 5G. In a general view, the stakeholders are tiered as shown in Figure 10.
Figure 10 -‐ General view of Multi-‐Stakeholders
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Figure 11 shows stakeholders in a viewpoint of 5G telecom operators. Not only the traditional stakeholders, the following stakeholders may be newly appeared in the future:
• Infrastructure providers
• Virtual infrastructure providers
• Orchestration/service brokers
Figure 11 -‐ Stakeholders of 5G Telecom operators
4.2.1. Massive IoT The Figure 12 constitutes a striking visual on how IoT is powerfully impacting all activities, and will continue to do so. Which stakeholders are included in this use case depends on the applications and services supported with massive IoT.
In order to support a large set of IoT devices, efficient and reliable connectivity to the infrastructure is crucial. In this use case, the issue of security is heightened -‐ as the connectivity of objects increases exponentially, so do the possibilities for hacking into the system. It seems that we will have to learn to live somewhat more dangerously than we do now.
The IPv6 protocol is a tool contributing to fostering the diffusion of massive IoT. It steadily replaces IPv4, however, both protocols will co-‐exist for some time.
Given the current market movement, Smart Cities is a good example that includes a diverse set of IoT services using a large number of IoT devices on a city scale. Figure 13 illustrates key players and stakeholder of global smart city market. In the Smart City domain, the following major stakeholders include:
• Building owners and city authorities who deploy and own the IoT devices,
• IoT solution providers who provide communication integration and IoT data processing,
• IoT device manufacturers who provide IoT devices including sensors, actuators, servers, gateways, etc.
• Cloud providers who provide Cloud platforms and Cloud infrastructure,
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• Wired/Mobile/Wireless communication service providers who support network infrastructure and deployment,
• Application providers who provide user applications and services to the citizens (e.g., smart parking, smart utilities, etc.),
• Citizens who use the services and infrastructure.
The traditional stakeholders still play the key roles in 5G-‐based massive IoT services, however, the telecom operators who provide efficient dynamic slicing can take a lead on the market. In addition, under the 5G system, MVNOs can take a key role in IoT services as aggregators and optimizers of connectivity and information across multiple operator networks. A new set of application providers is also expected with real-‐time dynamic services thanks to the 5G-‐slicing mechanism.
Figure 12 – Internet of Things for Business (source: Beecham research)
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Figure 13 – Stakeholders and key players of global smart city market5
4.2.2. Smart drive-‐assisted services The use case in D2.1 handles smart driving and driverless cars together. The latter are expected to be commercially viable from around 2025. As mentioned in the Foreword, a crucial aspect is that of responsibility and insurance. Indeed, in case of an accident, today’s situation incriminates the driver. If the car is heavily equipped for driving assistance, or is a driverless car, what will the insurance company decide? Is the guilty element the sensor, the software, or the infrastructure? It seems that 1) this is a key challenge for insurance companies and 2) technical experts will have a huge task to do their forensic work in order to assess responsibility. If, for example, car-‐makers are held responsible, this carries a major risk for them. This is likely to slow down the diffusion of this particular innovation. Renault or BMW will think twice about the mass introduction of such vehicles. Malpractice insurance is very expensive, to say nothing about possible damage to the brand.
Beyond this, driverless cars present distinct ethical issues: how will the algorithm decide, for example, that a moving car hits a wall rather that an old lady unexpectedly crossing the road? Many elements of this e-‐car are installed in today’s cars: cruise control, e-‐combustion, warning of obstacles, etc. It is well-‐known that today’s cars have a powerful computing capability.
5 https://www.slideshare.net/FrostandSullivan/global-‐smart-‐city-‐market-‐a-‐15-‐trillion-‐market-‐opportunity-‐by-‐2020
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Figure 14 shows major stakeholders of the connected introduced by Symphony Teleca6, listing benefits of each stakeholder. In this area, stakeholders are the industrial actors such as automobile manufacturers, insurance companies and content providers, as well as the institutions regulating and vehicle users.
It is paramount to include, as early as possible, the perspective of users, not only in attempts to ensure reliability, safety and privacy of users, but also in order to avoid rejection of the information technology by customers. Indeed, in the case of the nuclear industry, acceptance, or the low level of it, constitutes a major obstacle to the growth and development of that industry.
Figure 14 – An Ecosystem of Winners of connected car
(Source: Symphony Teleca presentation @Cebit2014)
Concerning the key stakeholders, there are no objections to automotive venders, communication providers, and service (cloud) providers leading decision-‐makers in this market. Furthermore, eco-‐systems and collaborations are mandatory in such newly appearing markets. Actually, also in Japanese automotive vendors, lots of collaboration / cooperation, like Toyota-‐Microsoft, Toyota-‐NTT DoCoMo, Toyota-‐KDDI, Honda-‐SoftBank, Nissan-‐Microsoft, have already been announced (2016-‐2017). Moreover, MVNO will have an important role in achieving service-‐oriented customized functions (ex. security, IT application integration, redundancy, load-‐balancing, etc.) on top of the MNO infrastructure.
6 The Connected Car Revolution, Symphony Teleca @ Cebit 2014
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4.2.3. Industrial factory management The basic stakeholders in this use case are:
• Product-‐maker,
• Operator of product,
• Manufacturing line,
• Provider of support system for product-‐manufacturing line, and
• Wireless communication service providers.
The product-‐maker works on improvements to their productivity and quality continuously for competitiveness and promote introduction of the new system and machines. In addition, they control their production line to connect some systems and machines. However, even if they connected, many product-‐makers connect only a few parts of the system and the connection is limited to the closed network in the factory.
The smart factory proposed in Industry 4.0 can affect the whole supply chain, which has not been possible so far. Thus, independent systems are connected to outside networks (via the Internet) and analysing data from the whole supply chain such as design, manufacturing, distribution, sales and maintenance in an integrated fashion.
Realizing such an industrial factory management requires new stakeholders “Wireless communication service providers”, connecting with external networks, as well as “providers of support systems for product manufacturing lines”, which provide sensors in order to collect machine information in the factory.
For the “smart factory”, 5G networks are important because there are large numbers of sensors in numerous machines and systems in the factory and it is necessary to collect information from all of them in real-‐time.
4.2.4. Ensuring QoS on demand For this use case, the major stakeholders are:
• Users,
• Communication service providers, and
• Cloud service providers.
Particularly, users represent both SNS and normal mobile users who use the mobile communication service simultaneously, yet SNS users would be the ones who require high bandwidth for content-‐sharing, such as videos and photos. Wireless communication service providers (network operators) need to provide high bandwidth for SNS users and, on the other hand, also need to ensure the minimum QoS requirements for normal mobile users. The resources, bandwidth and computing, allocated to SNS users should not be stolen from the ration of normal mobile users. A key of cloud service providers’ systems is a smooth interaction for the wireless communication service providers to obtain computational resources from the cloud service providers in order to provide sufficient communication capacity to the wireless communication users in accordance with variation of the demands.
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The new stakeholders for this use case would be:
• Virtual infrastructure providers that offers NFV infrastructure (compute, network, hypervisor, etc.) as a service (NFVIaaS)
Suppose the bandwidth demand from SNS users is dramatically increased and it needs to scale up its network capabilities. On the other hand, the QoS requirement is only temporary, for example, for a month or two (e.g. during the Olympics). Therefore, the virtual infrastructure provider leases NVF infrastructure to the operator over the short term. The operator deploys a temporary network slice on the leased virtualized infrastructure and fulfils the QoS demands.
4.2.5. The smart/virtual office This use case shows different kinds of stakeholders with different roles inside a smart / virtual office. At first, the companies own the buildings where the companies’ employees are working. These buildings can be maintained by building management companies that need good connectivity to monitor and control each building remotely. This means that the building management companies are, in practice, wireless communication users, in particular for the 5G in the frame of the 5G!Pagoda project.
Different actors are present in the use case to offer digital services: IoT service providers, cloud service providers, software developers and network operators. The mobile/fixed network operators may provide connectivity with various network slices according to the requirements of each application; a network slice with high reliability but low bandwidth for IoT, a network slice with high bandwidth and security for office file transfer.
Smart/Virtual Offices is the convergence of various actors and the major stakeholders for this scenario in the 5G!Pagoda perspective are:
• Wireless communication service providers,
• Cloud service providers,
• IoT service providers,
• Enterprise (wireless communication users),
• Building management companies (wireless communication users),
• Employees of the enterprise (wireless communication user),
• Service platform / Software developers.
These major stakeholders may be put into two groups: users and service providers. Users are building management companies, mobile service users, and enterprises; they have different needs when using the services. In order to fulfil the user requirements and the required service types, all providers need to collaborate and ensure their individual roles/responsibilities. Wireless communication service providers (e.g., MNO and MVNO) provide higher throughput and secure communication services. The cloud providers provide storage or computing resources for the enterprises. It is the responsibility of MNO or MVNO to ensure the security of files/contexts transfer, e.g., to mitigate the men-‐in-‐the-‐middle attack, while cloud service providers ensure the security and availability of the files/contexts stored in their cloud. IoT service providers use 5G capabilities provided by wireless communication service providers and cloud services from cloud providers that enable reliable and secure communication services with differentiated services.
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The users access their local resources remotely through highly secured channels provided by the IoT service providers that will provide one-‐stop solutions (in this scenario, smart office centred IoT service) including cloud systems via the 5G system.
Since this use case is the convergence of various actors, collaboration between players, especially service providers, is important. However, for service resilience, we may need a new player or stakeholder. In case of a service failure, e.g., the public surveillance service failure, who is responsible? The sensors and/or surveillance cameras which are the IoT service providers’ responsibility? Or the communication service between sensor/camera and the application servers which is the responsibility of MNO or MVNO? For this scenario, we may need to introduce a new stakeholder called “monitoring agent” or “broker” between service providers. The roles of the broker would be monitoring KPIs and enforcing each player to ensure their SALs, sending the requests/notifications to correspondent players periodically or occasionally.
4.2.6. Content delivery network as a service In the content delivery ecosystem, we identify the following stakeholders (in no particular order):
• Content Creators – The creators of the actual content such as artists, musicians, actors, production companies a.s.o.
• Content Distributors – The companies that license content and provide it to their customers, e.g. VoD services, video-‐streaming services, music-‐streaming services, social networks, news organisations
• Content Delivery Network Providers – The companies running the CDN, e.g. Akamai, Amazon
• Internet Service Providers/Mobile Network Operators
• Advertisement Networks – The companies selling advertisement space/time target content consumers
• Advertisers – The companies advertising products to content consumers
• User Equipment Manufacturers – E.g. smart phone, smart TV and tablet manufacturers
• Application Developers
• Content Consumers
• Content Codec/Format standardization bodies
For content, delivery networks, content consumers, providers, creators and CDN providers are the most important roles: content creators want to reach as large an audience as possible and gain revenue from licensing and advertisement. Content consumers want high-‐quality content at a low cost and or with little advertising. Content providers are interested in delivering content to as large an audience as possible at a low cost while providing a high-‐quality consumer experience. They are interested in advertisement revenue, but also revenue from subscriptions and the purchase of digital content. The CDN providers need to efficiently deliver content at a low cost while gaining a fair revenue from contracts/partnerships with content providers.
Especially for bandwidth-‐hungry services such as video, a promising candidate is satellite networks for offloading the terrestrial 5G network traffic. The role of satellite in 5G networks will become extremely relevant in order to support the huge demand of multimedia services, ensuring a high data rate, low latency and higher energy efficiency. This scenario enables long-‐range and large coverage-‐oriented
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transmission, while the complementary communication solution named device-‐to-‐device (D2D) exploits point-‐to-‐point close proximity transmission.
4.2.7. Advancement of medical services This use case aims to improve the current situation of medical services by providing equal opportunities for medical treatments all over the nation. Mobile network operators, mobile virtual network operators, cloud providers and application providers should play an important role in this use case in conjunction with current stakeholders such as medical institutions, doctors, nurses, pharmacists, medical instrument suppliers and medical insurance companies.
New stakeholders can find new markets and new services in addition to providing a social contribution, and current stakeholders can benefit from this use case by improving the shortage of doctors and financial issues.
All these elements must be woven and combined in order to assess the overall impact on existing business models and on creating new ones. At a later stage, this approach will be refined to more clearly ascertain what the technical advances at hand make it possible to achieve. Then, these advances must be translated into offerings to businesses or customers while carefully designing the channels with which these will be delivered.
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5. Challenges for three key players
5.1. Specific challenges for the telecom network operators The digital revolution at early stages drove a tremendous growth of telecom business and telecom operators providing huge revenues following traffic and utilization growth. It is said that “revolution devours its own children”, however. The era of continuous revenue growth, perceived as generally unlimited, has gone away. The traffic and revenue curves have split and network operators suffer the constantly growing gap between traffic and revenue. The customer base in mature markets is stable, e.g. the mobile SIM penetration (% of population) is >130% in developed countries (>84% of population being unique customers) [http://www.gsma.com/mobileeconomy/#oaconnections] giving no room for significant growth. Even if there are some segmental efforts e.g. stimulating new M2M SIM activations or promoting a shift from feature-‐phones to smartphones, their effect on overall revenue streams is slight due to tough market competition encompassing customers’ demand for offers bundling, churn-‐preventing bonuses, etc. The “IP-‐ization” of telecommunication technologies, while the separation of network access and network services layer (the achievement and feat of 4G/LTE and natural effect of fixed/mobile network convergence trend), in addition to the unification of network architecture has resulted (as an adverse side-‐effect) in promoting OTT providers and losing the monopoly of network providers in the role of the service provider despite the operators’ competitive advantage related to their ability to control the quality of service. According to worldwide telecom market research-‐based forecasts, the revenues in 2020 will be affected by stagnation everywhere except in the APAC region [http://www.gsma.com/mobileeconomy/ #revgrrevenues].
Another phenomenon, accompanying income flattening, is the convergence of revenue and expense curves. The business effects of evolutionary remedies (process optimization and automation, reducing employment, quests for savings of network operation costs, homogenization of network equipment and reducing variety of technologies, optimization of network architecture/topologies/energy consumption, swapping old, costly technologies with newer and more thrifty outsourcing of selected operations, inter-‐operators’ sharing of resources and operations, getting rid of some unprofitable activities or assets) have ran out. Thus, keeping the EBITDA margin at the level expected by the shareholders requires disruptive ways of coming back to the business growth path.
The additional factor for financial pressure, typical for EU operators, is the legislation about phased reduction of roaming charges within the EU and the trend of building one common telecommunication market. The final movement, in force since June 2017, is the abolition of roaming charges, according to the rule of “roam like at home” (domestic tariff for customers roaming within the European area).
The picture is pessimistic, however, the operators actively respond to these disadvantageous circumstances and trends and try to rethink their vision and mission, reshape their market positions, look for innovative reuse of owned assets and new business opportunities.
New business cooperation models – “coopetition”: In the 1980s, Japan fascinated the world by the fact that fierce competitors would join forces, for a time, to cooperatively develop a new activity, in which they would later compete. Similarly, network operators tend to look for opportunities for doing business with competitors in areas where benefits may be derived.
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Such coopetition can be achieved at various levels: for example, fifty-‐fifty procurement Joint Venture between Deutsche Telekom and Orange (BuyIn – http://www.buyin.pro/), resources sharing (mobile bands and RAN infrastructure sharing, 50/50 Joint Venture between Orange Poland and T-‐Mobile Poland), shared operations (NetWorkS! – http://www.networks.pl/, 50/50 Joint Venture between Orange Poland and T-‐Mobile Poland for RAN operation), joining public-‐private partnership projects even if they are aimed to build public and competitive networks (Orange Poland joining the EU-‐sponsored regional public projects devoted to development of digital infrastructure; various models of involvement), letting OTT/content-‐providing competitors in operators’ networks in order to provide better customer experience and the own network and traffic optimization (Google CDN PoPs inside Orange Poland network).
Redefinition of company mission and vision: Traditional telecom network operators positioned themselves as communication services providers (voice, messaging, information-‐desk services – either voice-‐based or text-‐based like pre-‐IP era France Telecom’s Minitel, later on – generic data transmission). “All-‐IP” trend, blurring borders between communication and IT, migrating every type of information exchange to one IP-‐based network, has given network operators a stimulus to become “entertainment providers" delivering textual or audio-‐visual content (IPTV, VoD, infotainment portals, e-‐Books, etc.) – “triple play service providers”. Operators also looked for other added value applications based on fundamental services (e.g. offered by Orange Poland: localization services, “Cyber Shield” – e-‐Security, “Smart Home”, providing web-‐based home remote control and monitoring with IP cameras, door/window/flood/motion/smoke sensors and remote-‐controlled electric plugs). Those moves, even if technologically significant, had very little impact from the business point of view because network operators remained in the wide circle of ICT. For current challenges it is not enough, that’s why network operators look for evolution paths allowing getting away from the ICT circle using, however, their strong assets (ICT resources, sales network, customer base, potential CEM-‐based insight to customers’ needs and preferences). One of many possible paths, chosen by Orange Poland, is evolution to the role of “life-‐organizing and support service provider” or “business-‐organizing and support service provider”, offering traditional ICT services, but currently also “à la carte”: financial services (banking, life/health/travelling/property/job loss insurance), security (both cyber and physical), post-‐warranty support and assistance of home/office equipment and smartphones, utility media (currently electricity, possibly gas, heating or water in the future), virtual reception desk (web-‐based service providing appointment management and SMS/e-‐mail messaging).
Looking for new opportunities and ways of monetizing operators' assets: Network operators made money not only on their top detail offer, but also on lower level services, long before they were called IaaS, NaaS or PaaS. The variety of these services is big, e.g. copper lines, dark fibres, leased lines, colocation, hosting, traffic transiting, metro Ethernet, virtual voice switches, MVNO platforms, management services). The problem with selling these operators' services was always associated with very long delivery or even feasibility study time (measured in days/weeks/months), mainly manual “cooking of the dish” (physical network functions environment, physical inter-‐domain interfaces, involvement of local interventions teams, poor network assets, lack of multi-‐domain OSS tools designing and composing the service E2E, lack of interfaces for service configuration and activation in some domains implying manual activities etc.) and often need of assets relocation or extension. Another inherent and disincentive factor for XaaS-‐class services is the fact that the process takes place “behind the curtain”, usually giving customer-‐side engineers no hints or guides for iterative query refinement in order to find an optimal solution.
On the opposite side, the operators' “managed services” were impaired by:
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(1) Lack of a standardized data model for network infrastructure and a services description disallowing easy Inventory DBs integration,
(2) Lack of easy-‐to-‐activate equipment monitoring and management channels (fault, performance, parametrization),
(3) Lack of smart tools for discovery of E2E network topology and hierarchy for building the logical/physical model of installed services in order to be able to correlate events occurring in the network and to view their impact on services and;
(4) Actual anchored relation between NE layer and EMS/NMS layer with vendor and equipment/software version.
For both cases – “assets as a service” and “operation as a service” – the way to find agility that increases assets usage and brings new revenue is reshaping the operator's network into an environment with decoupling of functions from physical resources based on standardized physical equipment and with inherent highly standardized self-‐aware multi-‐technology E2E management.
Having such a network, the operator will be able to provide “E2E network on demand” for industries, MVNOs – such virtual and separate networks will provide unlimited ownership and freedom to their tenants, but also the ability to put their applications even at the customer’s side. Business analytics layer products (“Data and Knowledge as a Service”) can be also monetized. On the other side, due to the mutuality effect, the network operator can act as the tenant with agile ability to offer services in the new coverage areas.
Innovative applications based on operators' assets: Network operators, having a high awareness of the potential of their technology, will look for new applications allowing “repacking” and tailoring generic network abilities to services addressing specific and profitable use cases. Such activity may be associated with cooperation with start-‐ups or even coopetition with OTT players. The illustration of such attitude is high R&D involvement of Orange Group in IoT area or research of Orange Poland on high-‐density street lamppost-‐based sensor network for metropolitan smog monitoring and alerting.
Simplification of network architecture and achieving true fixed/mobile convergence: As it was mentioned before, the beneficiaries of network and service layers decoupling and “All-‐IP” trend are OTT players, so far. Implementation of IMS-‐based services other than voice calling (e.g. RCS) is rather poor. From the typical operator’s point of view, the fixed/mobile network convergence occurred up to the transport layer of the TCP/IP model. For dual-‐network operators there are typically two parallel separate network architectures implemented -‐ there is no inherent mechanism for mutual fixed-‐mobile networks offloading or seamless fixed/mobile handover. Solutions like non-‐3GPP access support in LTE architecture are rather patching overlays. The truly “access-‐technology-‐agnostic core” with architecture reflecting actual usage needs would be a compensation of previous losses to OTT players, paving the way to more efficient networks (in terms of simplicity, expenditures, operations, utilization) and materializing the “anytime, anywhere, any device” paradigm that will drive new business growth.
The 5G network with architecture adapted to use case specificity, founded on SDN and NFV, embedding multi-‐technology E2E orchestration, self-‐management and capabilities exposing mechanisms with integrated slicing will respond to the demanded disruptive scenarios.
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5.2. Challenges to telecom vendors Mobile data traffic was growing by 63% in 2016, reaching 7.2 exabytes of data per month at the end of the year [39]. The traffic is expected to continue growing in the coming years, which gives further opportunities to all telecommunication related sectors, including the network equipment and infrastructure companies. Network traffic is now driven by video, with 60% of the total traffic [39], both in the form of real time video and streaming video. By 2021, 78% of the traffic will be video [39]. The shift from traditional television to on-‐demand streaming services produces a demand for network expansion. One particular opportunity is provided by the rising interest in Internet of Things (IoT), which emerges both for the consumer sector and the industrial use of connected things. Services for smart cities being in the piloting phase in selected cities may become part of standard city infrastructure in the coming years. The focus of growth, however, may be shifting from pure connectivity to platforms for higher level services. In order to take advantage of this, vendors need to expand beyond basic connectivity.
New use cases, such as automation, remote control, traffic control, self-‐driving cars, create a demand for low-‐latency. The low latency is a major selling point for the 5G equipment. But latency is not only due to transport. For example, a 100 millisecond latency can be provided by a data center at a distance of thousands of kilometres from the user – but when the latency needs to be pushed down to a few milliseconds, the data center needs to be in the range of tens of kilometres. Edge computing will be a major solution for critical operations. Both vendors and operators need to embrace the opportunity provided by the requirement of low latency.
However, the economics of a complex network with increased amounts of traffic does not always translate into increased profit. The average revenue per user is falling in virtually every region. Consequently, as telecom vendors are dependent of operators as customers, both types of businesses share the same fate. IoT translates into a massive increase of the number of devices, but the traffic per device is minimal. The profit comes from higher level services, such as IoT platforms. The challenge of the vendors is to get a share of these services.
The increased software content of telecommunication equipment has a major impact on the telecom vendors. In 5G, the whole architecture is based on NFV. In particular, the move towards open source can have a divisive impact on the vendor community, lowering the threshold for new entrants on the markets and pushing the price level down. On the other hand, this may also lower the cost of telecommunication vendors for developing solutions containing open source components. Vendors are joining various open source industry groups and implementing open source platforms into their platforms. In the software sector, there are many more players than in the traditional telecom market. The rise of open source telecommunication components forces the telecommunication vendors to rethink their business model. This moves the market from hardware equipment toward software and, in particular, toward services. Telecom vendors have high requirements on their products in terms of reliability, security and performance, which is vital to operators for business critical systems. While operators want to break down the walls of vendor contracts, a shared history can be the difference between getting a contract and losing it to a new player [38].
Open source can partially be seen as a complement to traditional standardization work, with the interoperability between components being defined by the strongest open source projects rather than formal standard definition. Open source provides a baseline on top of which value–added services can be added to different the offerings from the competitors.
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5.3. Challenges to manufacturers Network requirements to diversify: Even if the equipment is targeting to support office network and local area network, support of 5G network gives benefits as more and more customers require various services such as disaster recovery, IoT data collection, etc. For example, when the equipment supports only VLAN for an office network, it will not satisfy network operators for their diverse requirements of traffic, quality, MTBF, IoT data collection, critical application, disaster recovery and so on. In addition to it, when a manufacturing company wants to trace and monitor the customers’ orders, it normally uses enterprise service Bus as it must be secure and reliable. 5G dynamic slicing concepts can be adapted and be used in such monitoring system with separate slice for such purpose. Thus, it is essential that equipment manufacturers closely follow up the development of 5G technologies and develop 5G supporting equipment.
Security: With the IoT era, the factory connected to the Internet will be exposed to the cyber-‐attack. As it is expected that cyber-‐attacks being fatal to the business continuation increase, it is necessary to support the equipment able to separate regular functions from the incident immediately.
Economical digital twin: The manufacturing industries are moving toward collaborative crowd manufacturing with dynamic virtual manufacturing that enables dynamic switching and linkage among partner companies. With this paradigm swift, collaborating companies exchange production resources and their related information between companies for on-‐demand production. Dynamic switching of information flow and dynamic scheduling must be provided in order to avoid confidential information leakage for using this new concept of manufacturing. If we use 5G network we are able to collect real data effectively, and we can create simulation space easily by using slicing together with providing secure and reliable channels.
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6. Business model analysis A business model is essentially the system that allows an organization to create, deliver and capture value. At this stage, it is anticipated that business models will largely be extrapolated from the 4G era. The difference is in the ability to exchange vastly superior amounts of data, interacting with AI – Artificial intelligence and block-‐chain. However, work underway underlines the fact that such a vastly enhanced speed and scale of information exchange will, on occasion, cause new, or evolved, business models to emerge.
Indeed, much of the sphere of risks and benefits stems from the firm itself and not from the “business environment”, although it is fair to say that, in this day and age, non-‐business issues have never been so important to business. Looking more narrowly at the business risks/benefits, a first iteration of the analysis is given below. It will be elaborated later in the course of this project.
6.1. Network slicing: a game-‐changer Network slicing aims at scalability and flexibility of the network architecture so that the latter may be able to support diverse scenarios. It constitutes the center-‐piece of the 5G!Pagoda project. This technique makes it possible that a multiplicity of specific networks run on a given physical infrastructure. This constitutes a major step forward because:
• it essentially allows an unlimited number of network-‐supported services
• a new ad hoc network may be set up quickly at a minimal cost
A rough analogy is that of the deregulation of railroads -‐ the infrastructure of rails and signals is run by a company that allows diverse operators to use this infrastructure for a fee. There is a big difference with network slicing, however. In this case, the number of service-‐supporting networks is unlimited, whereas the physical rails restrict the amount of train traffic that can be accommodated. In passing, let us note that such infrastructure companies are often not profitable and therefore often under-‐invest and save on maintenance because they are under pressure to charge relatively low fees by the regulators.
The advent of 5G opens the possibility of launching all kinds of specific networks and, therefore, services. For example, pupils from the same class can decide to set up their own network. A family may want to have its own specific network in order to exchange texts, photos and music, a bit like snapchat allows today. A city can set up such a network to provide inhabitants and visitors with a broad range of information concerning the activities and services available in the city.
Businesses, either dealing directly with customers or in a business-‐to-‐business mode, may use this opportunity to differentiate their offering. For example, a car-‐maker can set up a network only available to its clients in order to provide specific services, safety features or entertainment. In particular, driverless cars will be able to draw on a host of new services available to their passengers. Part of the attraction of buying a Nissan rather than a BMW may, in part, come from the services offered. It is somewhat like choosing an airline for its in-‐flight entertainment system.
Similarly, in the area of infrastructure: plants, power grids and water systems will benefit from these advances. The most compelling example at this stage is probably enabling smart grids. It can be envisaged
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that managing the power consumption, in order to reduce it at peak times, could result in not having to build another power generation unit -‐ a substantial saving.
Network slicing provides particular benefits in managing very large amounts of data concerning many segments of a highly dense population. This relates to management of disasters, such as earthquakes, hurricanes or tsunamis. It is also relevant to sports events including the largest one of all, i.e. the Olympic games. Japan is particularly concerning on this as it will host the summer Olympics in 2020, for which it plans to have this environment fully operational and is therefore diligently working on it.
In addition, this technique will allow support for IoT services, whether at the level of the home, the city, the region, the country, or the world. Network slicing truly allows a convergence of 5G with the world of the Internet of Things.
In all, network slicing provides a new world in providing a practically infinite number of services. These services are most likely to be offered by enterprises, which will work as partners with the telecom operators. It appears unlikely that the telecom operators will operate services themselves for retail -‐ they will be busy with the engineering side of the business. Let us see how this may impact telecommunication companies and information technology firms.
6.2. Business model A firm must not be constrained by its existing business model; it should make it evolves as soon it is demanded by a changing environment or by the competition. It is generally considered that a company’s business relies on several components. Central is the value proposition embodied in the firm’s offering; this is delivered through the following elements:
• The resources, including the crucial human factor.
• The processes, including the channels to the various segments of customers.
• The key partners, including suppliers.
• Finally, the financials include the cost structure and the revenue stream.
Drawing on a recent book [1], these elements are put to work in three main types of digital business models:
Model Description Examples
Based on “experience” This includes devices’ user-‐friendliness, reliability and ease of use. This also involves low latency, privacy and cyber-‐security. What offered to the customers is more convenience, more speed and better efficiency.
Netflix, Amazonprime
Platforms This over-‐used phrase includes many elements such as crowdsourcing, monetization of data and peer-‐to-‐peer transactions
ebay, Cisco, Innocentive, Airbnb
Based on cost Elements of interest there are transparency, consumption-‐based pricing, etc.
Coursera, Rolls Royce, Groupon, Trivago
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In the first model, self-‐service “disintermediation” and better control are the key. In the past, Easyjet was such an example, and before that, the US Heathkit in the 1960s. Later, Ikea asked the customer to do a bit of the work so far carried out by firm selling the offering. In the future, e-‐Healthcare and the “smart” office are examples. In healthcare, the patient may be expected to be more in charge of managing the various elements of the chain in the healthcare system. It is not clear whether this vision is realistic.
Information technologies constitute indeed a most powerful enabler for putting end customers to service suppliers in a fast, global and inexpensive way thanks to the Internet. How innovative is such a "business model”? The key is good algorithms, excellent implementation and abundant capital, in order to achieve speed and scale.
Customization may also be an important feature; there, manufacturing is primarily beneficial of 5G and the Internet of things. Finally, automation, probably also using analytics and block-‐chain, is the third avenue. An example is Fintech, which is in the process of strongly impacting private banking.
Platforms rely on the network effect, the value of which resides in the number of members in the network. This concerns social media, but also impacts the operations of companies. For example, a firm selling machine, can monitor them at a distance and secure the data required online enabling them to carry out preventive maintenance. Examples include elevators, energy-‐generating windmills or electricity generators.
Cost is likely to be the path for competition to change the scene most dramatically. “Dematerialization” is the mechanism at work. Sophisticated tools to provide online conference services directly compete with business travel. Manufacturing and the smart office are examples of this potential.
Taking the earlier example of the autonomous, or driverless car, the latter appears to belong to the “experience” category of business models. Currently, traditional car-‐makers remain the integrating force, with a myriad of suppliers around it. In driverless cars, the suppliers operate in new segments of activity since they represent new components to be integrated into the “new product” of autonomous cars as followings:
• Sensors: radar (Autoliv, in Sweden), or ultrasound, already used as a parking aid.
• Adaptive orchestrator, using 3D mapping computers to a) either integrate the various components from online driving information or b) proactively give “driving orders”. This is coupled with the capability of “machine learning". Companies such as Baidu, Tom Tom, Google and Nvidia represent today’s stakeholders in this area.
• Scanners using laser technology (Lidars, with companies, such as Ibeo or Quanergy).
• Cameras with a fine resolution zoom to 150 m. Currently, Mobileye is the world leader. The conditions of the recent acquisition of Mobileye (see section below) underscore the critical role of “effective vision”. This, together with high-‐performing software, appears to be the key to value-‐creation in this business.
Car suppliers appear poised to be winning this game since already half the value of a car is in ICTs. Such firms include Bosch ($45 billion of turnover in 2016), Denso, Magna, Continental, ZF, Mobis, Aisin, Faurecia and Valeo.
As automobile manufacturers are likely to remain the integrators of these elements, the system will not be very different from what it is now. Certain elements will be supplied by the current companies mentioned above. In addition, certain specific components will be supplied by newcomer firms. The latter will have to
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fight a highly competitive game between automobile manufacturers and the large suppliers. But, then, what happens to car-‐makers if these key components are not part of their pallet of production? They will have a hard time making a profit and, even, effectively developing a driverless car.
Classical industry analysis, as well as past experiences, tell us that these newcomers may have a difficult time surviving profitably as they will be squeezed between large actors constituted by the car-‐makers on one side and the large suppliers, such as Bosch, on the other. Thus, newcomers, in this business as in others, need to have antennae on what the future holds and anticipate or at least react to change with extreme agility as discussed in an earlier section.
In the scope of 5G!Pagoda, business models are different by stakeholder types. 5G!Pagoda consortium consists of telecom operators, manufacturer, telecom vendor, IoT platform providers, IoT solution providers and MVNO, which target different business focus. Based on the survey described in Section 7, there are not common assets to measure and design a common business model at this stage. Thus, instead of unrealistic design of business model, partners in each type of stakeholder provide their own plan of adaptation of 5G!Pagoda concept, which is discussed in the Section 6.3.
Yet, based on the survey results, partners consider that the telecom operators are one of the most important stakeholders. Thus, we take a look at drivers and challenges of dynamic network slicing for the telecom operators before we move to each partner’s adaption of 5G!Pagoda concept.
6.2.1. Drivers and challenges of network slicing for the operators The following questions is to find drivers and challenges of 5G network slicing system for telecom operation:
Mechanism How will operators slice their 5G networks?
-‐ By market? -‐ Per enterprise/customer within a market slice? -‐ Per type of service (i.e. voice, messaging, mobile broadband)?
Operation Should certain network functions be centralised?
Once a slice has been rented out to a customer, can it operate without interfering with another slice?
How will we achieve slices with very different requirements for reliability, privacy and security, without excessive engineering costs?
How to design the slices adapted to different scenarios?
Cost Given the negotiating power present, will the benefits of network slicing compensate its costs?
Coopetition Looking at the various pressures on operators, will these be ready and willing to share with each other how they will slice the network?
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In brief, it appears that a key issue is to develop a robust design of the architecture and functions in a given network slice, serving a specific scenario. In addition, the important role of effective software must be emphasized. In fact, a start-‐up, which offers a high performing software, will constitute an attractive partner for telecom equipment manufacturers and operators.
6.2.2. Business impact of network slicing Let us look below at the expected, likely impact on each of the actors along the value chain. First of all, as in the past in the telecom industry, the different players will have to adopt cooperation/competition practices in order to develop industry standards and accelerate the advent of 5G-‐enabled services. These players include operators, vendors and service-‐providers. In the past, this has been relatively standard practice for mobile phone industry infrastructure.
The equipment providers are likely to be relatively unaffected as they offer equipment which is an absolute requirement for the operators to be in business. The global competition, however, is likely to be even fiercer than it is now. This is partly due the advent of new global entrants, such as Huawei, who are eager to win new markets, even by offering very low prices. That company has been the first to announce the availability of a network slicing router. So far, it has been impossible to find numbers on the business volume expected to be generated by equipment for 5G infrastructure.
For equipment providers, astute, high-‐performing, supporting software will constitute crucial assets. This will make a difference in running costs for the operators in a sector that is bound to run on low margins.
For the operators, the benefits of network slicing are that they deploy only the function required by a specific customer for its application. This should result in substantial savings. The operators, however, are likely to be “squeezed” between equipment suppliers and service-‐providers. The latter will want to pay a minimal toll for the use of the infrastructure as a result of very intense competition and the extremely low barrier to entry. The service-‐provider will be compelled to constantly upgrade its offering and provide carefully targeted and differentiated services to specific segments of customers. In brief, network slicing will definitely open new markets, particularly in the sector of services, where a real explosion of offerings seems highly likely.
Some initial conclusions are emerging from this analysis at this stage:
Dynamic slicing will pave the way to new business models for the telecommunication industry. The most emblematic evolution will be reduced barriers to entry: cost and easier integration of Mobile Virtual Network Operators (MVNO).
This technological evolution will accelerate the dissociation of this industry into three distinct functions:
Business to Business (B2B) The physical network deployment and maintenance functions.
Operators sell the network slice to a company or enterprise.
Business to Customer (B2C) The telecom operators sell the network slice as a service to the customer.
B2B2X (B2B2B or B2B2C) The telecom operator sells infrastructure to brokers like MVNOs, and MVNOs provide services to customers.
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New types of players by orchestrating network slices:
Infrastructure provider, XaaS service brokers/integrators, NSaaS customers, etc.
The 5G!Pagoda adaption of the two telecom operator partners are also well synchronized with these business types. Based on the survey results stated in the Section 7, 5G!Pagoda partners see the opportunities more in B2B model. The detail survey results are in Section 7.
Telecommunication nodes are evolving more and more into SDN/NFV, particularly in 5G, which network functionalities are performing in cloud environment. The well-‐known cloud models such as IaaS, PaaS and SaaS are applied for telecom resources. On top of it, diverse XaaS can be newly introduced in use of network resources in slice levels. The followings are brief description of the cloud models.
Infrastructure as a service (IaaS)
Raw infrastructure of 5G is made available on demand. Infrastructure owners such as telecom operators are the main actors.
Platform as a service (PaaS)
Hardware and corresponding software and some services of 5G are to be available.
Software as a Service (SaaS)
Specific software for 5G is provided as a tools and utilities for services. Typically runs within the platform.
Anything as a Service (XaaS)
Diverse 5G network resource can be provided as a service. New types of actors will emerge in this model in 5G environment.
The combined impact of 5G and IoT enables a host of new services to be put in place. It also brings the promise of reduced costs in existing operations. The IT tools will allow manufacturing firms to add an efficient component of service activities. The example of ABB, which will be able to monitor and follow the parking of installed ASEA robots with a “preventative maintenance” perspective. This saves money for the client and reduces costs for the provider while enhancing its effectiveness.
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6.3. Business opportunities with 5G!Pagoda concepts As seen earlier, the basic elements of a firm's business model are:
• Key partners
• Key activities and resources
• Value proposition, which packages together the products and services in order to create value for the customers
• Customer relationship and the channels to reach them
• Cost structure and revenue stream(s)
At this stage, the digital era, 5G and IoT in particular, pretty much impacts every one of these elements to varying degrees depending on the sector and the firm considered.
In many cases, IT-‐enabled activities may well parallel previous activities, much like in the way digital books are developing but not replacing paper books. Such “blended” business models require an ambidextrous (or multi-‐dextrous) capability for the firm to effectively thrive in these conditions.
Using, as a basis, the methodology and typology of business models in the digital age outlined in Section 6.2, this part aims to describe, in the case of Telecom operators, a first iteration of what could be achieved by network slicing combined with 5G’s speed and scale for exchanging data.
A first element is to consider how value is created through 5G network slicing in the telecom operators’ business models. This can be achieved by the following:
• Cost reduction, which may include (considerable) operational simplification for the Telecom operators.
• The above may, in turn, benefit from an automation of operations.
• Enhanced services (scope, speed, nature of the range of services, etc.), as perceived by the B2B users or the final consumers.
• New services.
In effect, we have two types of impact: those that result in improved efficiency and those that provide effectiveness, i.e. something new and valued by the market. Let us look at these four elements.
Cost reduction
As an example, in a large industry change, the advent of information technology has allowed the financial sector, banks in particular, to operate at a fraction of the costs encountered previously. A specific example is Automated Teller Machines (ATMs), which have running costs at roughly 10% that of human tellers. As a result, the interior space of banks has been drastically modified, reducing the number of tellers, but also, making the ones left more convivial and pleasant to interact with. This is a particularly positive example because, not only things are cheaper for the bank, but ATMs are available 24 hours a day.
Combining 5G/network slicing with block-‐chain and artificial intelligence provides not only a cost-‐efficiency gain, but also real step-‐changes in the way one does business. It is now possible to envisage a client establishing a contract, fully automatically, without any lawyers or contractual officers.
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The efficiency at hand, therefore, is not only automatizing the transactions between clients and professionals, but allowing that transaction to be completed without any professionals, just like cashiers in supermarkets are being progressively replaced by machines.
Automation
This aspect has been touched on above. In the particular case of Telecom operators, there is considerable scope for potential automatizing operations much further than is the case today. In China, the phenomenal success of WeChat Pay is a result of this, coupled with the important fact that the algorithms have been designed to be utterly user-‐friendly. We are at the onset of an explosive growth of payments via mobile Internet enabled by the technological advances in information technology.
Enhanced services
The first impact of the technological advances being considered/developed is speed (often called “latency”). A customer, with her smartphone in hand, is not going to wait patiently for the screen to scroll on. In this respect, faster delivery of existing services is a substantial plus to satisfying customers. Another step is orchestration of data to provide, in essence, new services. The clients of Telecom operators in this regard are Bosch, General Electric and the like.
New services
This is where major impacts are expected. This concerns, not only broadband or mobile Internet customers, for example, but also B2C business models. For example, this may concern interactions with machines such as agricultural vehicles or systems such as those for irrigation. A large impact will be in the area of so-‐called “smart manufacturing”, where huge efficiency and quality gains can be achieved. Japan and China are leading in these areas. For example, in Shenzhen, certain large plants are “dark factories” -‐ since there are NO workers in the plant, no light is needed.
6.4. Initial strategies for the adaptation of 5G!Pagoda concepts As the consortium members are consisted of major players of 5G markets, each industry partners in different stakeholder types provide its insight on adaptation of the 5G!Pagoda concepts, dynamic network slicing in 5G. It is important to mention that these inputs are not from broad and general market data but directly from the key players of the market in the consortium. The partners will update its results on the adaptation of the 5G!Pagoda concepts in the next iteration reflecting the market movement and corresponding focuses of the companies.
6.4.1. Telecom operator (Orange) The situation of European telecom operators is complicated as it was described in chapter 3.6. The 5G network (especially the real convergence of mobile and fixed network) founded on such enablers like SDN, NFV and network slicing with robust automation provided by E2E orchestrating solutions, is expected to deliver technical means to shatter the bonds and give a chance to redefine the network operator’s position, both in terms of internal, technology-‐related status and business relations within the market environment. The areas of potential benefits of adaptation of network slicing technology are coupled with trending to operational and economic excellence of the operator’s technology and infrastructure and business opportunities behind various use cases (e.g. 5G!Pagoda-‐defined use cases).
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Internal operations and costs excellence: work on adopting NFV technology and gradual migration of the LTE core and previous generations' cores is already underway. This migration will be associated with the natural cycle of equipment-‐swapping. However, the main perceived barriers currently are: lack of mature software equivalents at the performance level of commercially-‐offered hardware solutions, relatively small market offer of proven off-‐the-‐shelf NFV applications, lack of price (licensing model) competitiveness of these and as a result of the separation of the infrastructure and applications layer (the consequence of the NFV paradigm) – lack of clear evaluation of E2E reliability and dispersion of responsibility for reliability of such NFV environments provided by different players. But even after resolving these issues, it remains to be seen that NFV without network slicing will only allow a topical network functions migration from hardware to software solutions. Implementing flexible network slicing should allow the operator to create entire E2E network architectures on demand, migration or partitioning of traffic between network architecture instances that are more benign and less noticeable for end-‐users networks and technology lifecycle operations such as upgrades of node software, deployments of new services, disaster recovery of entire network architecture and creation of test environments/sandboxes perfectly resembling commercial/production environments. Using standardized IT hardware with low variance of types and high potential of reusability, automatized deployment of entire network architectures, application of architectures tailored to service specificities, high maintenance flexibility and less need for staff are expected to provide serious cost saving
New business opportunities and new revenues:
B2C – this market segment is responsible for the majority of the operator's income and, at the same time, is affected by high pressure from regulators and market competition. The typical pricing trend is “more (minutes, gigabytes) for the same price”, pulling down the income/costs balance. Pure technology changes (e.g. migration of voice services from CS domain to IMS) have no value for end-‐customers. This disruptive change is the change adding new value for customers (e.g. WiFi calling at domestic prices without country restrictions – practical worldwide work-‐around to roaming charges) or a completely new service. The network slicing will have no direct impact on customers’ perceptions, however, new services coming with 5G (e.g. true mobile and fixed network convergence, real implementation of the rule of “seamless, anywhere, anytime any device”, low-‐latency high bandwidth transmission, automotive services) will. Thus, the network slicing will bring new revenue to operators as the enablers for 5G.
B2B and B2B2C: beside the typical telecommunication services offer (B2C end services in B2B wrap), these segments will be truly interested in gaining access to network operators' infrastructure and network slicing technology supported by automated orchestration for fast and flexible feasibility checking, NSaaS implementation and further reconfiguration will be directly used by B2B/B2B2C players. A majority of 5G!Pagoda use cases can be directly implemented. Additionally, NSaaS gives network operators an opportunity to migrate from the role of "connectivity service provider" (data network connecting B2B customers' or cloud providers' data centres) to the role of "telecommunication network architecture provider" (offering E2E network architecture on demand). Additionally, implementation of the "smart reality" idea (especially IoT/sensor networks, intelligent transport systems, public safety systems) will bring new customers (public sector), either in client-‐provider or public-‐private-‐partnership models.
However, it is important for the network operator not to lose revenue from B2C/B2B segments due to strengthened competitors with NSaaS at the expense of their own market position and their customer base. Thus, the benefits of 5G and network slicing should come first at the areas of internal
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operations/costs excellence and B2C/B2B opportunities related to typical telecommunications services offer, before the competitors take the network operator's customers.
6.4.2. Telecom operator (KDDI) The telecom industry is challenged by a consolidating industry and lower ARPU for the mobile subscriber segment. In the 5G era, wireless communication infrastructure would be the backbone for all adjacent industry verticals such as automotive and IoT-‐based services. Mobile network operators (MNOs) seek newer revenue streams from these adjacent industries. The dynamic network slicing could be a key enabler for network operators to expand existing businesses and create new ones. One possible way is providing Network Slice as a Service (NSaaS) [32]; MNOs provide customized network slices for their customers as a service. According to the relationships between service providers and consumers, the business models of NSaaS can be categorized into three classes as below.
Business to Business (B2B): Operators sell the network slice to a company or enterprise such as video surveillance networks for security companies, smart factory networks for manufacturing companies, IoT service providers and so on. In this case, the MNOs provide only customized wireless connections to the enterprises with SLA. Full control of devices and services are in the hand of the enterprise (customers).
Business to Consumer (B2C): In this case, the MNOs directly provide services to end-‐consumers by exploiting dynamic network slicing. A user for a group of users is able to purchase customized network slices from operators for their terminals like smart home devices but do not possess the network with service separation. The operator has full control of network slices including the services, thus, customers with the same service requirements could be registered with the same slice, such as high-‐bandwidth slice and low-‐latency slice.
Regarding the 5G!Pagoda use cases, the on-‐demand QoS scenario would fall into the B2C category while the smart/virtual office case would be the convergence of the B2B and B2C models.
Business to Business to Consumer (B2B2C): The operator plays the role of wholesale provider, meanwhile, a broker like an MVNO helps operators to be engaged with end-‐customers. In this case, operators just provide dedicated network slices to the broker without involving the business part. However, the broker could get more control from the network than traditional MVNOs.
6.4.3. Manufacturer (Hitachi) Figure 15 illustrates the PRE-‐5G manufacturing collaboration model and 5G Crowd Factory model.
In this figure, we assume that Company B is responsible for on-‐time delivery of parts, materials, or semi-‐products to Company A and each MES (Manufacturing Execution System) is connected to exchange manufacturing orders and monitoring information via a P2P-‐VPN MSB (Manufacturing Service Bus) connection.
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Figure 15 – Pre-‐5G vs. 5G-‐based factory model
There are two major potential risks in this PRE-‐5G collaboration model.
The first risk is an on-‐time delivery failure risk. If Company B encounters serious machine failures on their shop floor, Company A would not be able to fulfil on-‐time delivery of finished products to their customers unless there were enough product stock. In this scenario, manufacturing order information usually flows from Company A to Company B and monitoring information flows in the opposite direction; traffic volume of monitoring information is usually larger than that of order information. Total network traffic volume is considered to be rather small unless video information captured by Company B’s shop floor surveillance cameras are not sent to Company A. As a consequence, 5G broadband network is not always necessary.
The second risk is that of secret information leakage. Preventing secret information such as Company B’s production know-‐how from leaking to Company A is a challenging issue to be solved even if Company A and B is collaborating and worse for Company A would be information leakage to thousands of other unrelated companies. As of now, these issues will be expected to be partially solved by application-‐level trust solutions such as block-‐chain technology.
Here we will discuss the best practices of this new collaboration model in the 5G era.
As for delivery failure risk, which is inevitable for the Pre-‐5G collaboration model, integration of each company’s MES, either in the operator’s cloud or edge cloud, is expected to prevail in the 5G era. Note that in the figure only two companies and one virtual factory are shown, however, thousands of companies will be able to join multiple virtual factories via Crowd Manufacturing technology. This collaboration model can effectively fix on-‐time delivery problems for Company A because, when machine troubles occur on Company B's shop floor, a new virtual factory – able to replace Company B -‐ can be instantiated in cyberspace and then orchestrated to connect to Company A in physical space via a newly allocated 5G slice.
As for the information leakage risk, when a control application running on a virtual factory detects any inconsistent MSB transaction caused by a hacker’s attack or a software bug, it can instantly shut down any relevant 5G slice and rebuild an alternative virtual factory to continue seamless manufacturing.
6.4.4. Telecom vendor (ERICSSON) Telecom vendors have high expectations for the market of network upgrades enabled by 5G through the upgrade of both network equipment and software in telecommunication networks. Network slicing is a key feature introduced in 5G. Softwarization of functions previously implemented as hardware networking
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equipment provides both a threat and an opportunity. Many network functions implemented in software can run on generic hardware or in public data centres, impacting the business of the dedicated hardware negatively. However, deployment of slices customized for particular use cases may generate new business cases for specialized networks where the generic networks have been used earlier. As a whole, the new use cases, including IoT and autonomic vehicles, increase the use of networks and, in particular, the dependency of low-‐latency and reliable communication, which creates a need for high-‐performance equipment.
Telecom vendors will productize the research results generated by the 5G!Pagoda project. The results will impact standardization, which contributes to the adoption of the results in commercial products and services.
Currently, the commercialization of slicing technology is ongoing in the form of trials and demonstrators. Ericsson has been one of the most progressive providers of network slicing solutions working with operators since 2014. In October 2015, Ericsson and SK Telecom demonstrated the use of network slices for Internet of Things, enterprise solutions, augmented reality and video. In June 2016, Ericsson and NTT DOCOMO presented a proof of concept of dynamic network slicing technology in 5G core networks including slice creation, slice selection, lifecycle management and service management. The standardization process is ongoing in 3GPP and other relevant organizations. Telecom vendors are major contributors to standardization and develop their products and services according to standards. Telecom vendors typically implement the whole range of products, from hardware data center equipment and switching equipment to OSS/BSS systems and core network VNF software.
6.4.5. IoT platform provider (ERICSSON, DG) IoT applications range from critical applications with strict requirements in terms of latency and reliability to massive IoT applications, where scalability and cost are more important than service quality. Network slicing allows customization of the QoS for dedicated use cases. Moreover, they can have different functional requirements. Whereas mobility is important in some applications such as vehicular IoT, other use cases, such as building automation, have static devices. In addition to the network-‐related functions, IoT platform providers want to customize the applications in the slice. In most cases, only a fraction of the data generated by IoT devices is actually used. According to [36] only 1% of data from an oil rig with 30,000 sensors is examined and mostly used for anomaly detection and control.
Edge computing has important applications in IoT, including:
• Data reduction at the edge (filtering, aggregation, compression, caching, local storage) as there is significant redundancy in data and a major part of the individual raw data points are not needed after a first phase processing.
• Computation offloading by moving computation from IoT devices to the cloud enables simpler devices with lower energy consumption. It also allows devices to be more generic and inexpensive with the customization and specialization implemented in the cloud.
• Control and automation uses only local data and requires a control loop with low latency.
The use of edge computing in IoT is driven by the need to
• Reduce end-‐to-‐end latency
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• Utilize the locality in information
• Reduce transported data amount
• Improve reliability and autonomy
NFV and slicing provide the means for the IoT application provider to place processing in the network. In contrast to traditional data-‐center-‐based solutions, NFV allows placing the processing closer to the device. Multi-‐domain network slicing allows the application provider to offer multi-‐domain and multi-‐national platforms that still have a local presence in each domain with local processing. Edge computing pushes the IoT application platform all the way to the base station.
In some applications and countries there may be legal requirements for storing and processing data in a given region. This requirement is addressed by placing the NFVs and services in specific domains. Moreover, several industries are unwilling to place business critical information in public clouds or in devices operated by their customers. Therefore, network slicing provides the means for creating isolated industry-‐specific networks extending enterprise networks to the customer devices.
6.4.6. MVNO (NESIC) MVNO Market
In Japan, "cheap SIM" provided by MVNOs has been highly debated recently. The number of subscribers served by MVNOs in March 2016 achieved 7 times the number in March 2013 and is predicted to grow to 11.7 million by March 2018. Not only in the low-‐price range, but also original and attractive services become an important factor in differentiating themselves from other competitors.
In recent years, MVNOs have started to provide a new service form called “Full MVNO” by the operation of HLR/HSS opened by MNO and it is expected to lead to a high creation of variety services.
Figure 16 – MVNO subscribers in Japan (source: Mitsubishi Research Institute, Ltd.)
0.75 1.73
3.26
5.39
0
1
2
3
4
5
6
2013 Mar. 2014 Mar. 2015 Mar. 2016 Mar.
No. of subscribers served by MVNO in Japan (million)
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Technical Challenges
The MVNO market size is predicted to grow continuously, however, at the same time, since what MVNOs can control is limited to their own equipment of PGW, RADIUS, PCRF, etc., there are two challenges that prevent MVNOs from providing creative variety services for waiting customers.
1) One is the limitation of information and resources obtained by MVNOs, which hampers the exploitation of services. MVNOs desire to become able to utilize network bandwidth borrowed from MNOs more efficiently.
2) The other one is the quality of mobile network, which depends on the network provided by MNOs, which MVNOs are not able to control. Therefore, it is hard to satisfy customer needs because of the non-‐guaranteed end-‐to-‐end services.
Possible Adaptation of the 5G!Pagoda Concepts
Thanks to 5G, the following requirements are expected to be fulfilled and they will help MVNOs to solve the problems mentioned above and provide more satisfactory services.
1) The expansion of the field controlled by MVNOs being provided with MEC cloud service. It will be helpful if MNOs can provide computing resources, i.e. networking function, computer (virtual or dedicated hardware), data storage etc., deployed on the edge of the mobile communication network, such as base station (eNB) to MVNOs as a kind of cloud service. For the reason that it is necessary to get required resources on demand to provide real-‐time services on slice network. Besides, it can lead to the cost reduction due to the efficient utilization of network bandwidth by optimizing computing resources arrangements.
2) To realize various services, the provision of customer information retained by MNOs is necessary. For instance, to provide a high-‐security service, the customer information such as IMEI, SIM, accurate GPS information, etc. is essential to prevent illegal access when IoT devices are stolen or SIMs are missing.
3) The definition of the quality of slice services. There are various elements to determine the service level such as bandwidth, priority control, latency and so on. But if service levels are separated for each MNO/MVNO, it is unable to guarantee the SLA with customers. From this perspective, to provide end-‐to-‐end service, it is necessary to define a common service level. As a result, it will become possible to provide extra value through service level definition in addition to general eMBB, mMTC and URLLC.
Based on these new environments, some services in different fields have been assumed and expected to be provided by MVNOs.
1) The utilization of edge resource. (Mobile Edge Computing).
• For the 4K/8K content delivery service by OTT, the mobile edge is preferred to the mobile network provided by operators.
• Placing a high-‐quality camera image on the mobile edge, security companies will be able to operate a video surveillance solution efficiently.
2) Security and Location-‐based services.
• Via the practical use of minute communication limit of terminal information and location information, high IoT-‐device-‐security can be realized, e.g. to stop communication when IoT devices are stolen.
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• Information delivering suitable advertisements in accordance with location information
• Games using information on location.
3) Quality assurance service.
• The end-‐to-‐end SLA of corporate users. For example, voice call, backbone communication and so on.
• The guarantee of emergency contact means in disaster areas. When disaster happens, the emergency network can be provided promptly and dynamically.
• In the medical field, the guarantee of the security of private information used for contact with hospitals and other organizations.
6.4.7. IoT solution provider (DG) Although IoT solutions form a diverse market, they are still limited to regional services and there are a lot of technical challenges such as:
• Quality of service: in order to improve the QoS of IoT services, it needs better leverage of infrastructure. Through a slicing mechanism, several important functions can be performed at the edge and directly serve the IoT data processing that can reduce latency and improve quality of service;
• Security and privacy by design: some applications and services do not need high-‐security consideration but some have critical security and privacy concerns. Security on IoT continues to be heavy and expensive. These challenges can be improved by dynamic slicing mechanisms from 5G by allocating a slice for enforcement of security and privacy for security-‐critical services and applications;
• Service in scale-‐on-‐demand: in current IoT markets, interoperable IoT platforms are a key challenge to making scalable and extendable services. In 5G environment, some platforms naturally evolve to support in multiple domains with multiple slice with higher cost while some targets specified local services.
• Enrichment of the business model: With a dynamic slicing mechanism, diverse customized services can be integrated into IoT gateways making customized services easy and also widening convergence services by integrating/ breaking/ orchestrating multiple slices.
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7. Initial Exploitation Strategy In order to build realistic and feasible business models in the next iteration, it is important to identify and clarify the expected unique and specific outputs and assets of 5G!Pagoda considering that several 5G related research project are working on 5G dynamic slicing. Although the Exploitation strategy will be led by task T6.3, to be started in M18, this deliverable includes initial views on potential exploitation strategies from the partners. It is important to assess the potential ways for project results to be tuned into new or modified businesses and activities.
From the initial market analysis, it clearly appears that 5G!pagoda is positioned in a changing market environment and standardization landscape. Parallel research projects are working on the same topic and the formal specification of 5G standard will determine what technology will be integrated and part of the 5G offer, and what technologies will be ignored or abandoned.
The initial review and analysis of the 5G!Pagoda results, on the basis of the information communicated by the partners, points to two exploitation paths:
A. Direct exploitation of 5G!Pagoda results in terms of products and services, most likely by individual partners;
B. Indirect exploitation by third parties using 5G!Pagoda research results.
The chances of success for option A depend on several factors, including:
• Clearly identified technological enablers developed by the project;
• Effective ownership and IPR protection of the enablers to be exploited;
• Presence of comparative advantages on the future market that can enable market penetration and justify potential investments;
• Interest and motivations of project partners to commit to commercial exploitation.
• The actual market offer and competition by the time the enablers will be mature enough to be commercialized.
• The alignment and conformance of the developed enablers with 5G standardization.
The second option, B requires a clear approach favouring the integration of 5G!Pagoda results into standardization processes, as well as an open dissemination strategy in order to support effective adoption and exploitation of 5G!Pagoda enablers by third parties.
At the end of the first year of research, it appears unlikely that the consortium will provide a fully integrated solution ready to be marketed that both options remain open. Analysing and comparing these two options requires us to closely follow the on-‐going research activities and partners' motivations.
This section requires more interaction with the companies involved in the project and we have gathered initial exploitation strategies from the consortium members on a confidential basis.
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7.1. Partners survey In order to better assess the potential of 5G!Pagoda, all partners of the consortium have been invited to fill a survey. The survey has been prepared with T6.3 leader and has been designed to identify the potential products or services that could be commercially exploited. It also intended to identify any competitive advantage that could justify financial investments and reasonable chances of success to take shares of the market. All partners have been followed up to provide their views and information, and almost all partners have responded and completed the survey. The results enable to clearly identify what each partner perceives in terms of exploitation potential.
The partners’ exploitation plans are also influenced by the profit orientation of the partners. First, the partner companies see the advent of 5G and IoT as new opportunities to provide hardware, software and IT-‐enabled services. Second, the university partners consider the exploitation of the output of the project as new knowledge and acquired familiarity with industrial requirements. For them, these elements constitute a basis for further research and, possibly, for patents leading to IP-‐based licensing to companies.
In order to understand individual partners’ needs and initial exploitation plans in adapting 5G!Pagoda concepts and potential results, the questionnaire attached in Appendix 1 has been used. In the course of the month of May and beginning of June 2017, the information has been collected on a confidential basis and the consortium has requested that the present deliverable be handled as a confidential deliverable.
7.2. Analysis of the survey All the partners were invited to complete a survey and all partners except one provided the answer. The following results are based on the partners’ inputs.
7.2.1. Exploitable results The following table summarizes the perception of anticipated exploitable results by the consortium members.
Table 3 – Partners' answer on exploitable results
PartnerOpen source technology
enablers
Proprietary technology
enablersProducts Online services
Consulting service and/or
technology transfer
Other
Device Gateway X X X
Ericsson X
EURECOM X
Fraunhofer X X
Hitachi X
KDDI X
Mandat International X X X X
NEC X
Orange X X
University of Tokyo X X
Waseda University X X
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According to this table, half of the partners regard proprietary technology enablers and consulting service as the main exploitable results. Another exploitable result mentioned by a third of the partners is open source technology enablers. It is to be noticed that none of the categories is identified by all partners as an exploitation potential. It can be anticipated that diverging views on exploitation potential are likely to lead the project towards heterogeneous and individual exploitation plans.
Figure 17 – Exploitable results of 5G!Pagoda
7.2.2. Perceptions of market potential The Table 4 synthesizes the value proposition, the competitors, the competitive advantages and the priority customers.
Value Proposition
There is a converging view among the partners that the value proposition of 5G!Pagoda should be defined as being related to “Dynamic network slicing for 5G”. Another key characteristic is the “Multi-‐domain orchestration” of slices. While the former one seems to be addressed by several other research projects, the multi-‐domains and multi-‐tenants abilities could constitute a differentiator.
Main competitors
According to the received inputs, the main competitors are:
• Other research teams on the 5G;
• Mobile network operators;
• Wireless protocols with a relatively long-‐range connectivity such as LoRa and SigFox.
Four companies have been specifically mentioned: Ericsson, Nokia, Huawei and Cisco.
Competitive advantage
The two main competitive advantages of 5G!Pagoda technology are:
• The joint collaboration between European and Japanese partners;
• The dynamic slicing mechanism enabling programmability and easier manageability of network slices.
0 10 20 30 40 50
Open source technology enablers
Proprietary technology enablers
Products Online services
Consul�ng services
Other
Exploitable results of 5G!Pagoda
Partners (%)
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However, at the current stage, nothing enables to identify prominent and effective competitive advantages and barriers to entry, such as clear and strong Intellectual Property Rights.
Priority customers
There are converging views that the two main customers are:
• Telecommunication network operators;
• Network vendors.
Other potential customers such as MNOs and MVNOs must also be taken into account. It results that the 5G!Pagoda market perspectives are primarily in the business-‐to-‐business (B2B) market.
Table 4 – Perception of market potential
Partner Value proposition Main competitors of 5G!Pagoda Competitive advantage Priority customers
Device Gateway
Dynamic network slicing for IoT services as the value proposition developped by 5G!Pagoda
Main competitors in the scope of 5G!Pagoda concepts are LoRa and SigFox
A competitive advantage of 5G!Pagoda is the dynamic connection to the core network infrastructure for broader IoT services
The priority customer 5G!Pagoda should target are telecommunication operators as well as telecommunication vendors
Ericsson Multi-domain orchestration of Network Slices as the value proposition developped by 5G!Pagoda
Main competitors in the scope of 5G!Pagoda concepts are proprietary orchestrators
A competitive advantage of 5G!Pagoda is the focus on every aspects of slicing as well as the collaboration between Japan and Europe
The priority customer 5G!Pagoda should target are telecommunication vendors and operators
EURECOM Multi-domain orchestration of Network Slices as the value proposition developped by 5G!Pagoda
Main competitors in the scope of 5G!Pagoda concepts are 5GPPP, projects on the 5G as well as manufacturers
(-)
The priority customer 5G!Pagoda should target are network operators
Fraunhofer Highly configurable 5G standard as the value proposition developped by 5G!Pagoda
Main competitors in the scope of 5G!Pagoda concepts are other projects on the 5G as well as initiatives such as Slicenet or 5GEx
A competitive advantage of 5G!Pagoda is the transfer of results from basic research to industry.
The priority customer 5G!Pagoda should target are R&D laboratories around the world of operators, equipment vendors, new software providers, infrastructure providers and use case owners, especially the vertical markets and mobile virtual network operators
Hitachi Dynamic network slicing for IoT services as the value proposition developped by 5G!Pagoda
Main competitors in the scope of 5G!Pagoda concepts are IoT platform benders
A competitive advantage of 5G!Pagoda is the collaboration between Japan and Europe
The priority customer 5G!Pagoda should target are telecommunications carriers
KDDI New communication services with 5G mobile system as the value proposition developped by 5G!Pagoda
Main competitors in the scope of 5G!Pagoda concepts are non-existant
A competitive advantage of 5G!Pagoda is the architecture forming multiple stakeholders
The priority customer 5G!Pagoda should target are mobile network operators, mobile virtual network operators, IoT service providers, network vendors ans well as firms
Mandat International
Creation ad hoc of networks on demand as the value proposition developped by 5G!Pagoda
Main competitors in the scope of 5G!Pagoda concepts are the research teams working on 5G and network slicing as well as LoRa and SigFox
Collaboration between Japan and Europe
The priority customer 5G!Pagoda should target are telecommunication operators
NEC Dynamic network slicing for IoT flexible services as the value proposition developped by 5G!Pagoda
Main competitors in the scope of 5G!Pagoda concepts are mobile network operators and mobile virtual network operators
A competitive advantage of 5G!Pagoda is the slicing mechanism including RAN and deep programmable network
The priority customer 5G!Pagoda should target are network service providers and mobile network operators
Orange The value proposition developped by 5G!Pagoda is the convergent architecture addressing some topic that relatively new in the context of slicing (RAN, multi-domain slicing, legacy subsystems inclusion, DP programmability)
Main competitors in the scope of 5G!Pagoda concepts are other projects trying to address these issues
The main competitive advantages are linked to the partners of 5G!Pagoda ; Eurecom (FlexRAN RAN slicing), FF (Open Baton, Open 5GCore) and UT (FLARE)
The priority customer 5G!Pagoda should target are infrastructure operators, orchestrators operators (network slice services brokers), telcommunication operators, verticals and their slicing solutions providers
University of Tokyo
Programmable Node System as the value proposition developped by 5G!Pagoda
Main competitors in the scope of 5G!Pagoda concepts are Ericsson and Huawei
A competitive advantage of 5G!Pagoda is the deep data plane programmability (FLARE system, implementation of emerging network(ICN) Slice)
The priority customer 5G!Pagoda should target are mobible virtual network operators and mobile network operators
Waseda University
Dynamic network slicing for IoT services as the value proposition developped by 5G!Pagoda
Main competitors in the scope of 5G!Pagoda concepts are NOKIA, Huawei and CISCO
A competitive advantage of 5G!Pagoda is the deep data plane programmability (FLARE system, implementation of emerging network(ICN) Slice), dynamic and scalable orchestrater as well as early total system PoC implementation
The priority customer 5G!Pagoda should target are telecommunication operators, mobile virtual network operators, companies as their own slice creators, telecommunication equipment venders, service creators
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7.2.3. IPR potential and strategy The following tables summarize the Intellectual Property Strategy of the individual partners who completed the survey:
Table 5 – IPR potential and strategy
Patent results
According to the surveys, the majority of partners have no plan to patent the results of 5G!Pagoda. Only the universities of Tokyo and Waseda plan to partially patent the results. This lack of patent will render the ability to prevent another competitor from copying the developed 5G!Pagoda technology and software unlikely.
Open source results
Concerning the release of open source code, there is, as of yet, no consensus on the subject. Discussion between partners on the matter is needed. However, by analysing the inputs of the partners, the majority does not have any intention to release open source code.
Partner Plan to patent results Open sources results
Device Gateway No There is no specific plan to release open source software
Ericsson No There is no yet plan to make results open source and publicly available, but there is a contribution to ONAP
EURECOM No There is plan to make results on RAN slicing open source and publicly available by its implementation using OpenAirInterface (OAI)
Fraunhofer No There is plan to make source code open source and publicly available through a commercial Fraunhofer license
Hitachi No There is no plan to make results open source and publicly availablem still the result of project is assets of MIC, so it will be opened in JapanKDDI No There is no specific plan to release open source software
Mandat International No There is no specific plan to release open source software
NEC No There is no specific plan to release open source software
Orange No There is plan to make the components related to orchestration and management (D2.5) public
University of Tokyo There is plan to patent some results related to FLARE architecture
There is plan to make some application module results open source and publicly available, but it is still unsure
Waseda University There is plan to patent results in ICN field, but not directly related to 5G!Pagoda
There is no specific plan to release open source software
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7.2.4. Exploitation strategy The partners of the consortium have been invited to clarify their expectations in terms of individual and collective exploitation plans. The following table summarizes the information provided by the partners:
Table 6 – Collective exploitation & Individual exploitation
Collective exploitation
While some of the partners do not wish to help with a collective exploitation, most of them would like it to happen. This could lead to the creation of focus groups with interested parties to discuss some ad hoc collaboration. As both European and Japanese partners are interested, this collaboration could enable the exploitation to have a broader range of impact geographically.
Individual exploitation
There is a converging view on individual exploitation. Practically all partners are willing to exploit their own results individually. This can be explained by the diversity of specific enablers and developments.
Focus on exploitation
According to the survey, more than half of partners identify the European and Japanese synergy opportunities as a focus for exploitation. From a business point of view, this collaboration would allow 5G!Pagoda to have a greater economic impact on a larger scale. On the other hand, 5G!Pagoda enablers and network were mentioned by a half of the partners.
Partner Collective exploitation Individual exploitationDevice Gateway Interested in a collective exploitation by mutualizing the
developments made by 5G!Pagoda and exploiting them as a consortium or joint venture among the partners
Interested in an individual exploitation by using its results independently from the other partners
Ericsson Not interested in collective exploitation Interested in an individual exploitation by using its results independently from the other partners
EURECOM May be interested in a collective exploitation by mutualizing the developments made by 5G!Pagoda and exploiting them as a consortium or joint venture among the partners
May be interested in an individual exploitation by using its results independently from the other partners
Fraunhofer Interested to address the vertical markets with a comprehensive offer created with the other research institutions: Aalto, Eurecom, UTokyo, Waseda U
Interested in an individual exploitation by using its results independently from the other partners
Hitachi Not interested in collective exploitation Interested in an individual exploitation by using its results independently from the other partners
KDDI Interested in a collective exploitation by mutualizing the developments made by 5G!Pagoda and exploiting them as a consortium or joint venture among the partners
Interested in an individual exploitation by using its results independently from the other partners
Mandat International Interested in a collective exploitation by mutualizing the developments made by 5G!Pagoda and exploiting them as a consortium or joint venture among the partners
Interested in an individual exploitation by using its results independently from the other partners
NEC May be interested in a collective exploitation by mutualizing the developments made by 5G!Pagoda and exploiting them as a consortium or joint venture among the partners
Uninterested in an individual exploitation
Orange Not interested in collective exploitation May be interested in an individual exploitation by using its results independently from the other partners
University of Tokyo Interested in a collective exploitation by mutualizing the developments made by 5G!Pagoda and exploiting them as a consortium or joint venture among the partners
Interested in an individual exploitation by using its results independently from the other partners
Waseda University May be interested in a collective exploitation by mutualizing the developments made by 5G!Pagoda and exploiting them as a consortium or joint venture among the partners
May be interested in an individual exploitation by using its results independently from the other partners
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Table 7 – Exploitation Focus
Figure 18 – Answers on Focus on exploitation
Partner 5G!Pagoda enablers 5G!Pagoda network EU-Japan synergies opportunities
Device Gateway X X
Ericsson X X
EURECOM X X
Fraunhofer X X
Hitachi X
KDDI X
Mandat International X X
NEC X
Orange X
University of Tokyo X X
Waseda University X X X
0
20
40
60
80
5G!Pagoda enablers 5G!Pagoda network EU-‐Japan synergies opportuni�es
Focus on exploita�on
Partners (%)
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Joint commercial exploitation with 5G!Pagoda
Partners have been invited to assess their interest in joint exploitation. The following table summarizes the received replies.
Table 8 – Joint commercial exploitation plans
There are no clear incentives for joint commercial exploitation. This can be explained thus: the partners interested in the potential economic gains would rather perform the commercial exploitation individually. Additionally, the academic partners are more interested in the research aspect rather than the commercial one.
Figure 19 – Answers on the joint commercial exploitation plan
PartnerJoint commercial exploitation with
5G!Pagoda partners
Joint research activities with
5G!Pagoda partners
Joint standardization activities with
5G!Pagoda partners
Device Gateway Perhaps Very much Rather Yes
Ericsson Not really Very much Perhaps
EURECOM Not at all Rather yes Not really
Fraunhofer Rather Yes Very much Rather Yes
Hitachi Not really Rather yes Not really
KDDI Perhaps Perhaps Rather yes
Mandat International Rather Yes Very much Rather Yes
NEC Perhaps Perhaps Not really
Orange Perhaps Rather Yes Rather Yes
University of Tokyo Very much Very much Very much
Waseda University Perhaps Very much Rather yes
0
10
20
30
40
50
Not at all Not really Perhaps Rather yes Very much
Joint commercial exploita�on with 5G!Pagoda
Partners (%)
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Joint research activities with 5G!Pagoda
There is a strong consortium for 5G!Pagoda partners to undergo joint research activities. Among the partners, universities target academic achievement in 5G!Pagoda. On the other hand, firms also have incentives to undergo research in order to stay updated on the achievements made and, therefore, be more competitive in the market. It seems that the possibility to pave the way to future joint research activities is a consensual element of interest among the partners who replied.
Figure 20 – Answers on the joint research activities
Joint standardization activities with 5G!Pagoda
According to the survey results, there are divergent opinions concerning joint standardization activities. However, we are able to distinguish seven 5G!Pagoda partners who are eager to undergo standardization activities with other partners.
Figure 21 – Answers on the joint standardization activities
Hence, the creation of a focus group for standardization between these 5G!Pagoda partners is relevant. Those partners are:
• Device Gateway;
• Fraunhofer;
• KDDI;
0
20
40
60
Not at all Not really Perhaps Rather yes Very much
Joint research ac�vi�es with 5G!Pagoda partners
Partners (%)
0
20
40
60
Not at all Not really Perhaps Rather yes Very much
Joint standardiza�on ac�vi�es with 5G!Pagoda
Partners (%)
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• Mandat International;
• Orange;
• University of Tokyo ;
• Waseda University.
This is aligned with the strategy to be developed by WP6 regarding standardization. The project intends to encourage joint collaboration between Europe and Japan. Moreover, the standardization track constitutes an interesting alternative to direct exploitation, in order to maximize the adoption by the market and the exploitation by third parties of the project research results.
Exploitation actions to be performed in 5G!Pagoda
Partners have been invited to identify exploitation activities. According to the inputs received, the main exploitation actions that have been suggested are:
• Focus groups with the industrial partners to better identify the commercial exploitation opportunities;
• Standardization activities;
• Joint publications (even if this is more related to dissemination);
• Joint demonstrations and exhibitions;
The idea is to use the potential economic gain of the software to attract potential customers such as firms. This is achieved through the publication of academic papers on the subject as well as the utilization of use cases and testbeds.
Table 9 – Exploitation actions
Partner Exploitation actions to be performed in 5G!PagodaDevice Gateway Organize focus groups with industrial partners to explore collaborative exploitation
plans and EU-Japan collaborationEricsson Exploitation actions to be performed in 5G!Pagoda are:
- standardization, - joint publications, presentations and demonstrators;- sharing research results within consortium
EURECOM Through D6.2Fraunhofer An exploitation actions to be performed in 5G!Pagoda is a comprehensive testbed
offer which includes the integration of the components of the different partners, flexible enough to integrate also with third parties, creating a vertically integrated business for the testbed offering
Hitachi To demonstrate through the use cases that telecommunication industry is able to make business by the use of the 5G.
KDDI Standardizations to 3GPP SA5 WGMandat International Exploitation actions to be performed in 5G!Pagoda should be performed through
focus groups with industrial partners and through standardisation at the ITUNEC To develop a promotional demonstrator to show 5GPagoda concepts, values and
benefits for services and applicationsOrange No specific planUniversity of Tokyo Exploitation actions to be performed in 5G!Pagoda are:
- standardizations; - demonstration and exhibitions; - co-authored papers and presentations.
Waseda University No specific plan
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7.2.5. Specific results to be exploited After inviting the partners to assess the exploitation potential of the project as a whole, we invited them to identify and analyse specific developments they are working on. The results provided by the partners were quite interesting and were globally consistent with the initial high level analysis.
According to the tables the main results to be exploited are:
• Software systems
• Multi-‐domain slice orchestrator
• Lightweight core and deep data plan
• Services (MVNO service, Online IoT service)
Table 10 -‐ Answers on results to be exploited
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Category of exploitable results
Considering the survey results, it seems that 5G!Pagoda exploitable results belong most likely to the Software category as shown in the Figure 22 – Category of exploitable results.
Figure 22 – Category of exploitable results
0 20 40 60 80 100
So�ware IPR Hardware
Category of exploitable results
Partners (%)
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Exploitable results
According to the inputs received, the main exploitable results of 5G!Pagoda are;
• Dynamic slicing
• Contribution to the orchestrator and the architecture
• Scientific publications
• Software licenses
• Software securing product quality
• Platform
• Integration of IoT devise in the 5G network
When will it be mature enough to be commercialized?
According to the information provided by the partners, there is no short-‐term exploitation. This is due to the constant evolution of the market. Furthermore, the technology choice concerning standardization is still uncertain. It is therefore difficult to establish a precise marketing position for 5G!Pagoda. However, there is no limit to 5G!Pagoda’s contribution to current standardization efforts and its ability to influence its evolution and communication technologies.
7.2.6. Freedom to use results The general perception is that 5G!Pagoda is not IPR-‐protected. Results show that 5G!Pagoda is seen as IPR-‐unprotected by more than half of the partners and partially protected by most of the other partners. This lack of IPR protection could render the competition harsher as nothing would prevent competitors from simply copying the code.
Figure 23 – IPR policy
However, when asked if other members of the consortium can use the results developed by the partners, majority of partners replied that it needs to be discussed among the partners. Only one partner opposed to it. It is to be noticed that the consortium agreement includes provision on foreground and background access to IPR. The following figure details the results.
0 10 20 30 40 50 60 70
Yes Par�ally No
IPR protected
Partners (%)
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Figure 24 – Free exploitation to the partners
When partners are invited to clarify if they would be ready to share their developments with third parties, outside of the consortium, the position is quite more negative, with about half of the partners opposed to it. Unlike the previous table, there is a stronger opposition to the free exploitation by third parties. Regarding this table from an economic point of view, this opposition can be explained as a wish to commercialize and make profit from the code. If third parties could freely exploit it, then there would be no economic gains.
Figure 25 – Free exploitation to the 3rd party
Value proposition and uniqueness
The followings are the list of value proposition and uniqueness what partners consider:
• Support for 5G-‐IoT integration
• Ability to consider features outside orchestration
• Key technology element of the 5G architecture.
• Solutions for testbeds
0
20
40
60
80
Yes To be discussed No
Other members can freely exploit it
Partners (%)
0
10
20
30
40
50
60
Yes To be discussed No
Third par�es can freely exploit it
Partners (%)
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• The platform allows the service provider to implement their service without vendor help nor with less help than it currently has
• FLARE System has competitive advantage over Network Slicing.
Competitive advantage
The main competitive advantages stated by the 5G!Pagoda partners in the survey are:
• The large-‐scale tests across the world
• Speed and cost to deploy new communication services
• Experience gained
Elements that would prevent the competitors from simply copying or reproducing it
There is a consensus among the partners concerning the element to prevent any copying:
• Learning curve
• IPR elements
• Testbed undergone
• Customization mechanism of the software
• Application capability on top of FLARE system
Potential customer
According to the inputs received, the major potential customers are:
• IoT markets
• Telecommunication operators
• Network operators
• Manufacturers
• Factories
• Stores
• R&D laboratories of operators
• Institutions
• Services providers
• MVNO and MNO.
This confirms the initial appreciation that the 5G!Pagoda technology is essentially positioned in a B2B market.
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7.3. Considerations on the exploitation strategy Focus of exploitation
In the survey, 8 partners out of 11 partners answered that EU-‐Japan synergies should be the first focus of 5G!Pagoda exploitation. 5G!Pagoda enablers are chosen by 6 partners in the multiple-‐choice question. Obviously consortium members expect that the 5G!Pagoda enablers will be meaningful in 5G studies by realizing dynamic slicing in 5G. However, considering that 5G!Pagoda is not the only research project working on 5G dynamic slicing, the partners’ answer on EU-‐Japan synergies on top of such technical building is meaningful.
This result is matching in 5G!Pagoda objectives as well. One important 5G!Pagoda objective is to develop a coherent proof of concept with two testbeds in Europe and in Japan, using a uniform network orchestration and a set of slice-‐support mechanisms. The other important one is to establish long-‐term research collaboration between leading industry players, top research institutes and universities in Europe and Japan.
The survey results confirm that the real added value of 5G!Pagoda eventually comes from strong building of long-‐term collaboration between Europe and Japan. Thus the exploitation strategies should focus on maximizing the EU-‐Japan collaboration synergies.
Priority geographic markets
There is a converging view on the priority geographic markets. The two main markets are the Japanese and European ones. This is due to the strong collaboration of the partners from these parts of the world. The American market also represents an important potential market because of its size. The exploitation of the code at the global level is conceivable.
7.3.1. Comparative SWOT analysis After reviewing the perception of the partners regarding the potential exploitation of 5G!Pagoda results, we will complement our analysis by comparing the two main collective exploitation options: collective commercial exploitation and standardization. The following SWOT analysis compares two different approaches of building EU-‐Japan collaborative exploitation plan: centralized and common exploitation vs. exploitation by third parties through standardization and dissemination.
A. Common commercial exploitation
STRENGTHS WEAKNESSES
• Mix of industry and academic partners from both regions;
• Complementary expertise and market accesses.
• Diverse and diverging expectations among the partners;
• The project tends towards a set of heterogeneous enablers and individual research outputs rather than a common and well integrated research output;
• Some enablers are linked to other projects and may be bound by complex IPR
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constraints;
• Diverging views on a potential collective exploitation;
• Fast moving and highly competitive market.
OPPORTUNITIES THREATS
• Possibility to ease market access to partner of the other region and reciprocally.
• Risk of tensions in case of unbalanced strategy or disagreement on collective exploitation.
After analysing the survey responses from each partner, it is noticed that the level of expectation from the project outputs are diverse and have different IPR policies. The collective exploitation is unlikely to occur. This is confirmed by the first SWOT analysis. It shows that there are more disadvantages than advantages concerning a centralized exploitation.
B. Exploitation through standardization
STRENGTHS WEAKNESSES
• Capacity to represent two geographic regions;
• Complementary leadership roles in SDOs;
• Enables each partner to freely position itself and exploit the identified opportunities.
• Requires clear commitment, information sharing, and trust building.
OPPORTUNITIES THREATS
• Opportunity to push coordinated and consolidated views with a stronger impact;
• Possibility to support each other on a reciprocity basis;
• Possibility to influence the future 5G standard and to align the technology to the expertise of EU and Japanese partners.
• Potential reaction from other regions.
The second SWOT analysis is focused on the dissemination and standardization process. It seems to indicate that enabling exploitation by third parties through standardization provides more advantages than disadvantages. This result should be taken into account in development of the future exploitation plan of the project.
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8. Legal, regulatory and corporate policy issues Non-‐technical, contextual issues have been briefly mentioned previously. It should, again, be borne in mind that non-‐business issues have never been so important to business as they are now. These may be clustered into several groups as indicated below:
The corporate issues
Corporate issues pertaining to a firm’s business model are:
a) the normal questions of profitability, competitiveness and agility to adapt in a brutally fast-‐changing environment and,
b) the context of ethics and proper code of conduct.
In the life sciences area, this includes “good laboratory practices”, as well as the regulated development path for bringing a new molecule, or medical device, to market.
Novel legal and regulatory issues
Legal and regulatory issues are raised by the perspective of the near-‐term advent of 5G and IoT, but accompanied with AI and block-‐chain. Such issues are only beginning to be discussed or tackled by the regulatory bodies. It would be healthy to have more debates on them.
One issue has been mentioned earlier concerning the driverless car: ethical and insurance issues. Faced with a choice, how will the autonomous car be programmed to respond to difficult, spontaneous, ethical situations? The insurance aspect has also been raised. It seems that, in different countries, the car assembler is likely to be considered responsible, which may considerably slow down the development and introduction of autonomous cars on the roads.
Another example is the tax system in the case of automated factories (see below). It is important to stress the importance of a sound legal environment, not only for the wellbeing of society, but also as a factor promoting or hindering innovation.
Security and privacy
Developers must have security and privacy present in their mind so that they may integrate these concerns as early and as robustly as possible in their development activities. Having this awareness at the onset of developments is a must. Indeed, retooling/fixing after the fact is expensive and much less effective. The notion of security is usually related to people, however, another (large) risk concerns infrastructure.
We have heard of the Iranian centrifugal machines for Uranium enrichment who were victims of malware injected by the Israeli and US intelligence services (see, for example: The New York Times dated November 12, 2015). Pipeline or plant explosions present major risks. These will be greatly augmented when so many objects, connected on the Internet, are poorly, or not at all, protected. These offer countless doors to hackers. The recent attacks on OVH via 145,000 connected objects, as well as on Dyn via surveillance cameras, constitute stark alarm bells in this respect. (see Le Monde” dated January 30, 2017, page 8). There is an urgent need for robust and effective “smart” regulation in this area.
The point is not for bureaucracies to generate massive amounts of regulation. The point is to have effective and robust, but “light-‐footed”, regulations. However, we’ll have to experience several major disasters
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before the industry seriously addresses these issues because there are costs attached to making the IT scene more secure. Several international bodies, such as the European Union are about to put into effect regulations concerning the security and privacy of data. These will be reviewed and discussed in the next phase of this project.
Macro issues in the IT/Telecom world
A macro issue concerns the concentration of many services in the hands of a small number of very powerful firms. This goes against the concept of net-‐neutrality and considerably augments the anxiety of the public over the innocuousness of the business practices touted by these giants. Probably, some regulation, robust and light but effective, is in order.
This issue of size, control and ethics occurs at a time when, in the USA, we seem poised for another round of megadeals among telecommunication companies, largely prompted by the large infrastructure costs to be invested in preparing for 5G. The following figure comes from the Forrester report “What IoT brings to business (2016).
Figure 26 – Survey results on business concerns in deploying M2M or IoT
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9. Future Steps The deliverable constitutes a “work in progress”. The Market data have been presented. Benefits of Major stakeholders and challenges have been discussed. Models for business in the industry and the adaptation of 5G!Pagoda concepts have been presented and discussed. Finally, a comprehensive survey with project partners has been allowed to find the direction of the exploitation plans of this project.
Clearly, the potential of network slicing is very large and will upset the current, established positions in the various actors -‐ the telecommunications companies in particular. It will also open up new market possibilities, especially in the service sectors. On the basis of the work so far, it is understood that:
• The technology landscape is evolving very quickly
• The specific assets to be exploited depend upon the progress of work and effective outputs of the various technical tasks and WPs.
• The market demands, also, are fast evolving -‐ we need to better identify the true added value and uniqueness of the outcome of the project.
In this context, task T2.2 will focus on the following key question:
• What is the uniqueness of 5G!Pagoda compared to other research projects on 5G?
• What can be the business impact of network slicing on the market?
• What could be the business opportunities in leveraging future dynamic slicing in 5G networks?
The exploitation survey results will be used in T6.3 to build project exploitation plan and the output of it will be also used as an input for the continuous work on T2.2.
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Appendix 1. Exploitation Plan Survey
Joint survey between WP2 and WP6 on behalf of T2.2 and T6.3 to be returned by ALL partners
Dear partners, in order to pave the way to a successful exploitation plan of the 5G!Pagoda results, we need your inputs. We are aware that as a research project, not all results are identified yet, but we would like to get from each partner a clear description of your expected exploitable result out of the project. The results of this survey will be used by WP2 and for future work of WP6 (T6.3). The form has to be sent to: [email protected]
Partner name:
Person of contact name:
Person of contact email:
Person of contact phone number:
Part A – Partner perspective 1. Please define which exploitable results your organization is planning to get from 5G!Pagoda? (Please fill in multiple categories if applicable)
q Open source technology enablers:
q Proprietary technology enablers:
q Products:
q Online services:
q Consulting service and/or technology transfer:
q Other (please specify):
Please complete one Form B (at the end) for each 5G!Pagoda exploitable results.
2. What is, according to you, the value proposition of what we are developing in 5G!pagoda?
3. Could you identify and describe the main competitors in the scope of 5G!Pagoda concepts?
4. What competitive advantage do we have against competing solutions (advantage that cannot be easily reproduced by competitors)?
5. Who are the priority customers 5G!Pagoda should target?
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6. What is your Intellectual Property Strategy?
-‐ Do you have or plan to patent results?
o If yes, could you clarify what will be patented?
-‐ Do you plan to make results open source and publicly available?
o If yes, could you clarify what will be made open source?
7. What exploitation strategy are you interested in:
-‐ Collective exploitation: by mutualizing the developments made by 5G!Pagoda and exploiting them as a consortium or joint venture among the partners:
q YES q EVENTUALLY q NO
-‐ Individual exploitation: by using your results independently from the other partners:
q YES q EVENTUALLY q NO
8. Where should be the focus for exploitation?
q 5G!Pagoda enablers?
q 5G!Pagoda network?
q EU-‐Japan synergies opportunities?
q Other, please specify:
9. Would you be interested to develop partnership in 5G!Pagoda in:
-‐ Joint commercial exploitation with 5G!Pagoda partners:
q Not at all q Not really q Perhaps q Rather yes q Very much
-‐ Joint research activities with 5G!Pagoda partners:
q Not at all q Not really q Perhaps q Rather yes q Very much
-‐ Joint standardization activities with 5G!Pagoda partners:
q Not at all q Not really q Perhaps q Rather yes q Very much
10. Would you please suggest some exploitation actions to be performed in 5G!Pagoda?
Part B – Exploitable Result Description Please complete one Form B for each 5G!Pagoda exploitable results. Just copy and paste this section for each.
1. Name of the result to be exploited:
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2. Category of exploitable result: q Software q Hardware q IPR / patent q Other, specify:
3. Short description of the exploitable result (10-‐15 lines):
4. Which 5G!Pagoda partners are (or will be) involved in its development?
5. When will it be mature enough to be commercially exploitable?
6. Is it (or will it be) IPR protected?
7. Can the other members of the 5G!Pagoda freely exploit it?
8. Can third parties freely exploit it?
9. What is the value proposition and uniqueness of this asset?
10. Does (or will) it include competitive advantage compared to other existing solutions?
11. What are the elements that would prevent the competitors to simply copy or reproduce it?
12. Who could be the potential customers?
13. What would be the priority geographic market?
14. Other remarks to be specified:
Thank you very much for your answers!
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