Announcing its new private networks partnerships with Nokia and Microsoft (see separate item), Verizon called out low latency and real time capabilities as one of the key drivers for enterprises to adopt private cellular solutions combined with edge computing. Very low latency is one of the most important capabilities where 5G, from Release 16 onwards, shines over 4G or WiFi, and it should help many industries support critical capabilities which were previously possible only over fiber, or not at all.
But having gone to the expense of implementing very low latency capabilities in their networks, will operators be able to monetize these effectively? Customers with mission-critical requirements should be prepared to pay higher fees than those with more basic needs, but the operator has to set that against the cost of deploying such a high performance network, and against other potential risks such as taking on demanding service level agreements (SLAs).
It will also, in many cases, need to support ultra-low latency as part of a private network, at least until it can implement end-to-end slices for real time response. That entails further changes to the operator’s economics and a very different business model, and level of accountability, from the familiar generic mobile broadband services.
Operators taking on these changes will need to be sure that there is sufficient reward available, especially those which do not have a significant enterprise business on which to build their enterprise and mission-critical services offerings.
There are signs emerging that there will be significant upside in supporting very low latency. Operators are cagey about the value of private network deals, but in a recent survey of 76 MNOs, Rethink found that more than half of private network and enterprise engagements were being driven, at least in part, by the need for low latency response; and that operators, on average, believed this added a 15%-20% price premium to a deal.
However, some of the more public signs of the premium attached to very low latency are seen in the consumer world, especially gaming services. This suggests that operators which invest in advanced low latency capabilities should be able to monetize these in both consumer and industrial markets, and build multiple types of services on top of the common expertise in driving latency below 5ms.
According to a study by LightReading, US cableco Cox Communications, Germany’s Deutsche Telekom, and Luxembourg’s POST are all offering cloud gaming services enabled by low latency 5G, which command additional fees on top of normal connectivity. Cox’s Elite Gamer plan costs an extra $7 a month by promising to reduce gaming response times by up to 32%. POST’s Blacknut cloud gaming service will carry an additional fee, though this can be waived for the first year of a new 5G contract.