There are early signs of sustainability as a 5G value proposition, but can saving money through reducing power consumption be construed as 5G monetization?
If you look at major global corporations, you’ll like notice an increasing emphasis on reducing power consumption, achieving net-zero carbon emissions, and all around making business greener. The telecommunications sector is no different with many major operators committing to substantial reductions in carbon emissions both directly and indirectly. With the ongoing deployment and evolution of 5G, coupled with rising energy costs and green initiatives, sustainability is top of mind for operators. But how do the parallel goals of reducing power consumption and 5G monetization fit together? Experts discussed just this at the recent 5G Monetization Forum.
Senza Fili Founder and Principal Monica Paolini framed up the issue. “You might find it odd we’re talking about saving power in terms of monetization, but the two go really hand-in-hand because power saving is also going to get us more efficiency, not only in the power consumption but in the way operators spend money.”
More on the nascent direct link between network sustainability and 5G monetization later, but there’s some semantic parsing that’s potentially worthwhile. Generally speaking, monetization would mean leveraging an asset, in this case a 5G network, to create net new revenue. However, when the cost of operating an asset, again, a 5G network, can be materially reduced, the asset operator realizes an opex reduction. So not monetization in the literal sense but certainly there’s a potential synergy between sustainability as a vector of operating cost reduction while generating new revenue against the macro backdrop of a move from shareholder to stakeholder capitalism.
Based on the operator-led work being aggregated within the Next Generation Mobile Networks Alliance, CEO Anita Döhler reflected on the big picture. When “talking about sustainability and talking about energy efficiency, collaboration is key,” she said. “I think it’s an industry effort and therefore, of course, it is extremely valuable to have our members working on those topics…Every operator is currently working on [their] own strategies and implement[ing their] own measures to reduce the energy consumption. It is not only…a general sustainability topic, but in the current economic times it’s clearly also an economic necessity to work on those areas.”
Bottomline, Döhler said, NGMN and other industry consortia help with “best practice sharing. And here I think that that’s the value of collaboration. We work in a pre-competitive environment.”
Vodafone UK Head of Infrastructure and Energy Francesca Serravalle said her organization is “really trying to be very holistic in our approach, in the way we plan, we build and we deliver the network so that we can deliver a network that is green by design.” This includes developing a demand-driven network topology, a more distributed network architecture, and using virtualization and automation tools; another key aspect is decommissioning legacy infrastructure and redundant network sites. The goal, she said, is to “evolve the network towards distributed and energy-centric infrastructure…There is a strong focus on energy and delivering green infrastructure.”
Hardware modernization and automation make networks more sustainable, but how do you measure that?
Ericsson has really leaned into its own decarbonization, delivering more sustainable 5G solutions to their customers, and facilitating 5G monetization in a manner that also helps end users drive decarbonization in their own businesses. It’s a complex calculus but the numbers are clear. According to recent Ericsson research, the ICT sector is growing but maintaining a fairly stable carbon footprint representing around 1.4% of total global emissions. With a switch to renewables, the ICT sector could reduce its own energy consumption by 80%.
And, by delivering technology-enabled solutions to other vertical sectors, ICT investments can help reduce carbon emissions by 15% for end users. To tie that all together, more than 200 5G communications service providers (CSPs) connect around 1 billion users; those same CSPs can expect mobile network traffic to double every two years. So as networks expand and data consumption goes up, how do you know if your investments in sustainable 5G are working?
Döhler suggested operators start with the low-hanging fruit. Because the radio access network (RAN) accounts for some 70% of an operator’s power consumption, that’s a great place to start. Modern radios, and other pieces of network kit, can be loaded up with software-based intelligence that an ingest network telemetry and scale available capacity (and attendant power draw) to demand in a dynamic manner. And that’s just one example.
Serravalle listed out what Vodafone UK is doing: optimizing the network, powering down legacy infrastructure, closing redundant sites, and otherwise “trying to really drive the acceleration of rationalization program and virtualization program all together. I think that will drive a lot of energy efficiency.” She reiterated taking a holistic approach to sustainability.
So how’s this all measured; how can the ICT industry know that it is (or is not) delivering on those potential reduction targets referenced in the Ericsson research. At a high level, Döhler said the most rational measure would be energy consumption based on data volume. But like most things 5G, it’s not quite that simple because the industry lacks a unified metering architecture and standardized KPIs that would allow a like-for-like analysis of corporate sustainability reporting.
She also teed up perhaps the most important consideration in a world where networks have to become more sustainable, operators have to pursue 5G monetization, and the former cannot come at the expense of the latter.
Driving sustainability without compromising quality of service
“We strongly believe that we need also to link quality of service (QoS)” to sustainability, Döhler said. “There is a question of would consumers, for instance, be OK with trade-offs in network quality if this lead to network energy efficiency and therefore to lowering footprint? Probably not…I think that’s a hard trade-off for operators…What we want to achieve is to deliver the same service with less energy consumption.”
How does Vodafone UK consider that potential trade-off? “We will not do it,” Serravalle said of potentially swapping QoS for energy savings. “We are becoming more and more customer-centric in everything we do, even on the way we build our network…We don’t want to have any impacts to the customer experience.”
She continued: “We are expanding the network, the traffic is growing, we’re serving more customers, we have new, more demanding services, but we have decoupled. We manage to keep flat our energy consumption with the list of initiatives that I was mentioning before…You really need to be laser focused on the program and the project you want to deliver. And most of those initiatives are also very capex intensive.”
Can sustainability directly lead to 5G monetization?
A few summary observations: In order to save money on energy, operators have to invest in modern hardware and software solutions, so spend money to save money. With the right approach and solutions, this can be done in a way that doesn’t compromise QoS and keeps up with the trend line around increasing data consumption. What about direct 5G monetization?
As referenced, essentially all major global corporations have some sort of sustainability program, many of which span their own operations as well as their vendors’ operations. 5G can enable power-saving efficiencies when adopted in the logistics sector, for instance, by optimizing fleet routing and streamlining O&M activities. Apply that framework to all industries, and operators have an opportunity for 5G monetization by building sustainability into the larger value proposition.
There’s even a potential opportunity in the consumer sector. In Germany, Vodafone is running a campaign with the tagline, “Switch to Giga Green.” This is just one aspect of the operator’s sustainability strategy which also includes climate-neutral retail locations, circular economy activities, network modernization, and switching energy mix to more renewables. From the marketing copy, “On the way to a green future, you can accompany Vodafone again this year and follow many steps to see how #SwitchToGigaGreen succeeds.” Back to that shift from shareholder to stakeholder capitalism—if consumers who support sustainability are willing to vote with their wallets, then investment in sustainable 5G networks can itself be a vector of 5G monetization.
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