5G Medium and

Long Term Planning for Operators

White Paper
 contents

01 Challenges and strategies of 5G development

5G network planning in medium and long term

03
Top-level design of network planning
RAN planning
CN planning
TN planning
5G To B network planning

12
5G services planning in medium and long term
Services planning of 5G To C
Services planning of 5G To B

18
ROI analysis of 5G medium and long term planning
Building ROI model of 5G medium and long term planning
Key data acquisition and prediction
Application of ROI analysis result

21 Conclusion
Challenges and strategies of 5G development

Challenges and strategies of

5G development

With 5G launches starting across the globe in 2019, the road to 5G is becoming clearer. There had been over
80 live commercial 5G networks globally by the end of H1 2020. It can be seen that 5G enables new services
such as 4K/8K videos, cloud games, and VR services, and more importantly, expands into vertical industries to
facilitate digital transformation and upgrade of many industries. According to GSMA’s forecast, from 2019 to
2034, 5G will contribute US $2.2 trillion to the global economy.
Besides opportunities, 5G also brings new challenges, including in network deployment, services innovation
and business operation.

Challenges from network deployment Challenges from services development Challenges from operation model

Operators will face great challenges in In term of individual customer service, how With the consumer market reaching
network investment due to larger site scales to foster killer-level services to maximize saturation in the 4G era, it is difficult to
and higher single-site equipment costs. the value of 5G network traffic? Moreover, realize significant growth in 5G era through
The coexistence of 2G/3G/4G/5G networks vertical industry is the most important the traditional pipeline operation and
and differentiated To B and To C services application scenario of 5G and opens new traffic operation. In addition, there are great
aggravate the network construction difficulty value propositions to the operator. However, differences between the consumer and
and O&M complexity. compared with the consumer market, the business services, and the original consumer-
industry customers are more sensitive to oriented business model can’t be copied to
the value rather than the price for a service, the vertical industry market.
and the requirements vary from industry
to industry. How to provide high-quality
services to attract industry customers, how
to select high-value customers, and how
to achieve better investment returns in the
industrial market are big challenges to the
operator.

1
Challenges and strategies of 5G development

For operators, how to develop 5G in the future is both a practical issue and a long-term strategy. Leveraging its rich experience in
ICT industry and deep understanding of 5G, ZTE proposed to operators an road to their mid- and long-term 5G development, which
covers three aspects: network foundation building, industry empowerment and operation transformation.

Road of network foundation building Road of industry empowerment Road of operation transformation

For building highly cost-effective 5G network, To provide high-quality services to attract I t is advised that operators mak e a
first operators should make the network industry customers, operators first need to breakthrough in the existing business
top-level design, meanwhile through high build core capabilities for 5G empowerment, models, business boundaries, and
performance network planning and low which consists of core network capabilities organizational capabilities to realize value-
TCO solution to tamp the foundation of 5G (MEC, slicing, and cloud-network integration) oriented operation transformation.
development. and core industry service capabilities (video,
V2X, unmanned aerial vehicles, and robots).
Meanwhile, selecting the valuable enterprise
customers, ecosystem building and business
model design are the important path to
industry empowerment.

Based on the above three strategies of development road, ZTE further put forward the detail network planning and service
planning for 5G medium and long-term development, and customized the corresponding solutions for some operators. In next
chapters, the contents of network planning, services planning, and ROI (Investment on Return) analysis are all based on the
specific operators’ 5G planning.

2
5G network planning in medium and long term

5G network planning in medium

and long term

Top-level Before making network planning, operators need first draw out the medium and long term
development vision and objectives, including market share, user scale, revenue scale, and cash flow.
design of network
For achieving these objectives, we also need make some key strategies like leading 5G commercial
planning to preempt high-end users, maximizing the existing network values, high network performance
to improve user experience and ensure user loyalty, low TCO to ensure operational returns. With
the guidance of strategic objectives, we first make the top-level design of 5G network from the
perspectives of spectrum, architecture, and deployment rhythm.

Spectrum planning strategy

Spectrum strategy is the primary consideration in top-level design. In 5G spectrum planning, industry
maturity, spectrum prices, and network performance need to be considered. 3.5GHz is the mainstream 5G
frequency band due to larger capacity with wider band In most countries. Although 3.5GHz license price
is expensive, it is still the first choice for most operators. Compared with 3.5 GHz, due to the advantageous
in coverage, 2.6 GHz is also a good choice if enough bandwidth can be obtained. At the same time, the
low + medium + high frequency combination should be considered to achieve low-cost coverage of the
5G network.

Network architecture strategy

NSA is a prudent investment choice for some operators at the early stage of 5G while SA is the target
architecture. Operators need to make reasonable choices from the perspective of medium and long-
term development. If conditions are allowed, operators can go straight to SA 5G for TCO savings and faster
expansion into vertical industries. If adopting NSA at the beginning and upgrading SA in future, the smooth
evolution solution should be considered, such as converged core network and NSA/SA dual-mode BTS, so as
to avoid or reduce repeated investment and engineering implementation difficulty.

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5G network planning in medium and long term

Deployment pace

The pace of deployment is also important in the network top-level design. Operators can follow a phased
approach based on an assessment of the future service requirements to balance between investment control
and the need for service expansion. In general, the medium and long-term development of 5G is divided into
three phases. The following is an example of an operator in Southeast Asia.

Figure 1 an reference of 5G phase planning

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5G network planning in medium and long term

RAN RAN planning is first based on top-level design, meanwhile deep analysis of the existing network
is very important. On the one hand, the identification of high-value areas through service
planning
distribution in the existing network is important, which is helpful for enhanced planning and
deployment of existing 4G networks and precise hotspot coverage in the early stage of 5G
networks. On the other hand, the reuse of existing sites resources is critical to accelerating 5G
deployment and reducing 5G network deployment costs. Based on the analysis of the existing
network, full-scenario equipment selection, KPI planning and key technology applications are
the important solutions of RAN planning.

Full scenarios coverage planning and equipment selection

Matching the most suitable products for different coverage scenarios and phased deployment is a key
solution of RAN planning, and an important means to improve the network price/performance ratio.

Figure 2 full scenarios coverage planning and equipment selection

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5G network planning in medium and long term

Figure 3 KPI planning of mobile services

Services KPI planning

5G coverage depends on uplink capability, so setting the uplink rate in cell edge is critical for network site
scale. With the emergence of innovative 5G services such as live broadcast by mobile phones, the uplink rate
is also a key requirement of user experience. Reasonable uplink edge rate can not only meet user experience
but also control the network scale.

Key technologies application planning

In RAN planning, we need apply some key technologies to improve network capability, for example,
FAST(FDD Assisted Super TDD ) enhances uplink capability, SuperDSS(Dynamic Spectrum Sharing) improve
the spectrum efficiency and realize fast 5G deployment, AAPC(Automatic Antenna Pattern Control) and
1+X SSB enhance both coverage and capacity. The technologies should be applied by stages according the
services requirement.

6
5G network planning in medium and long term

CN Core Network planning should take into account not only the current service requirements but
also the future evolution capabilities. Therefore, Common Core with converged architecture
planning
should be deployed at the beginning. Based on Common Core, vEPC NE function is provided
in the NSA phase, and the EPC + 5GC converged NE function is provided in the NSA+SA hybrid
networking phase and gradually evolves smoothly. Both software and hardware can implement
effective multiplexing, thus reducing costs and the impact on users experience. Core Network
planning and deployment focuses on multi-level DC planning, 4G and 5G interoperability,
voice services, user data platform, policy platform, network orchestration and management
platform planning.

Multi-level DCs planning and deployment are the most important solution to meet the low
latency and large bandwidth service requirements in the 5G era. Generally, we plan 3 levels
DCs for 5G networks, including central DCs, regional DCs and edge DCs.

Figure 4 multi-level DCs planning

7
5G network planning in medium and long term

Figure 5 transmission network planning by phases

Transmission The general trend of transmission network development is high bandwidth, low latency, high
precision synchronization, automation and intelligence. Although the overall trend is that the
network
fiber proportion of the wireless network will gradually increase and OTN sinking is also a trend,
planning microwave transmission is the main stream backhaul access method in most countries. At
present, the capacity of 5G microwave has been upgraded to over 10Gbps, which can meet the
requirements of most 5G access sites. Therefore, transmission network planning should take
into account both microwave and optical fiber transmission to achieve cost-effective network.
Considering the requirement for 5G transmission bandwidth, we recommend building 50Gbps
or 100Gbps platform in the access ring, 200Gbps/400Gbps platform in the aggregation ring
and T-level in the backbone network.

In addition to capacity, transport network needs to gradually introduce new technologies to

fully meet 5G service requirements, including FlexE, SRv6, SDN, high-precision synchronization
and TSN. At the same time, for protect operators’ investment, reusing the existing transport
equipment as possible is very important in planning solution. It is an option that dual-plane
transport network is built to carry 4G and 5G services respectively.

8
5G network planning in medium and long term

5G To B network Compared with individual customer services, there are more special requirements while
applying 5G to industries like ultra-low latency, high reliability, high security, and so on.
planning
Moreover differentiated 5G industrial private networks need to be built to meet various
industries. Therefore, end-to-end 5G industrial private network planning is also an important
part of 5G medium and long-term planning.

Flexible 5G private networks for differentiated industry applications

5G private line: 5G private line from core network to RAN completely shares the 5G public network and
provides private line services for enterprises through QoS and APN. This mode is suitable for small and
micro enterprises and can be implemented in both NSA and SA modes.

5G virtual private network: The 5G public network is completely shared by 5G virtual private network,
which provides private network coverage for enterprises through end-to-end slicing. This mode is
applicable to small and medium-sized enterprises.

5G hybrid private network: In a 5G hybrid private network, MEC and UPF are separately deployed for the
enterprise, so that local data traffic can be offloaded in the enterprise campus. This mode is applied for
large and medium-sized enterprises.

5G physical private network: A separate 5G physical private network is built for a super-large enterprise,
which consists of 5GC, MEC, transmission and wireless base stations. The general application scenarios
include large industry park, ports and mines.

Figure 6 typical models of 5G industry private network

9
5G network planning in medium and long term

End-to-end solution of 5G private network planning

End-to-end 5G industrial private network consists of service platform, core network, MEC, RAN, transmission
and industrial terminals. From the perspective of end-to-end planning for the To B network, service
application cloud platform is the focus, whether To C and To B core network platforms are co-built or built
independently is a key strategy of operators, normally RAN and transmission are shared with public network
through slicing, moreover industrial terminals are the important factors of 5G application.

Figure 7 end-to-end planning of 5G industry private network

Key technologies and functions planning of 5G industrial private network

Industrial applications have higher performance requirements than individual customers services. In addition
to targeted end-to-end network planning, 5G industrial private networks need to introduce key technologies
and functions to meet the requirements of industrial application services.

Figure 8 key technologies and functions of 5G industrial application

10
5G network planning in medium and long term

5G private network planning of typical industries

Although the requirements of customers vary in different industries, the private network planning for the 5G
industry of the smart grid is used as an example.
The grid usually involves super-large enterprises, whose services are scattered in space. Therefore, 5G hybrid
private network is suitable, where multiple MECs are deployed in the regional and headquarters data centers
respectively, and 5G RAN and 5GC are shared with the public network. Main services of the smart grid include
differential protection of distribution network, phasor measurement unit (PMU), electric load response,
precise load control, HD video monitoring and unmanned aerial vehicle (UAV) inspection. As the uRLLC slice
of the grid has high requirements for delay and jitter, it is necessary to introduce PRB reservation and TSN
solutions to ensure service performance.

Figure 9 network and use cases planning of 5G smart grid

Figure 10 slicing planning of 5G smart grid

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5G services planning in medium and long term

5G services planning in medium

and long term

The high-performance 5G network has and will generate a large number of innovative services,
such as 4K/8K UHD video, VR/AR, cloud game, automatic driving and remote control. The
development of any new type of services requires a large amount of industrial ecosystem
cultivation in the macro environment, meanwhile operators need to make medium and long-term
planning for 5G services development in accordance with their own environmental conditions.

services Service development in the individual consumer field has always been the top priority of
operator strategies. In the 5G era, the competition for valuable users will become more and
planning of
more fierce. Operators are striving to ensure that the consumer field develops and consolidates
5G To C revenues steadily and achieves an important foundation for sustainable development.
Therefore, how can we plan consumer services in the 5G era to break the ceiling with weak 4G
growth? Two aspects of innovation including service innovation and model innovation are the
key ways.

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5G services planning in medium and long term

Services innovation and planning

Figure 11 typical innovative services of 5G To C

All of above 5G innovative services should be introduced step by step according to the service
requirements of local users and industry maturity. The following takes the 5G To C service
planning of an operator in the Asia-Pacific region as an example.

Phase 1（2020-2021） Phase 2（2022-2023） Phase 3（2024-2025）

2K/4K UHD Video 8K UHD Video XR

FWA Cloud Game V2X

5G Message

AR/VR

13
5G services planning in medium and long term

Business mode innovation

Multi-dimensional tariff model to maximize the network value operation

For the consumer market, operators can design a multi-dimensional tariff system based on the basic feature
packages (traffic + rate + latency), value-added feature packages (connection + cloud service), and content
service packages (video, game, and music), enabling user segmentation and service differentiation.

Figure 12 multi-dimensional tariff model

User rights and interests to maximize user value operation

In short, rights and interests are based on the membership system, customer requirements, and quality and
preferential prices to provide differentiated rights and interests of users. With the in-depth development of
the Internet O2O, the consumption homogeneity problem brought by the surplus supply becomes more
and more serious, but the people's consumption mentality becomes more and more rational and mature.
Based on user rights, consumers not only enjoy different levels of network performance rights based on
different user levels, but also pay more attention to the additional rights.

In term of detail methods, operators need to increase their value chain links related to daily life and work of
consumers, such as more partners related to consumption, entertainment, and business travel. In addition,
promotion of rights based on personal service scenarios is also very important. Personal service scenarios are
divided into user preference scenarios and user location-based scenarios. For example, based on the users'
preferences, we can judge whether he/she is a follower of games or a follower of movie according to his/her
browsing history. That is, we can push the corresponding traffic acceleration card or low-latency card to him/
her. The location-based rights is to push the promotion information such as the related venues discount to
increase consumption opportunities and round-way marketing revenue.

14
5G services planning in medium and long term

Services The market of 5G To B will be a vast commercial blue ocean. According to Gartner's forecast,
5G in the vertical industry field in 2026 will generate revenue of USD 619 billion for operators
planning of
around the world, accounting for 36% of their business revenue. In 5G early stage, some
5G To B leading operators have started to explore 5G industry applications. For example, Vodafone and
Deutsche Telekom have launched applications such as medical services, remote control and
video surveillance in Europe. And SKT and KT have enabled applications such as automatic
driving, smart factory and smart grid in South Korea. While China's three major operators
have carried out wider application exploration in more industries. Based on ZTE's experience,
we believe that 5G vertical industry exploration needs to focus on 4 main aspects: industry
selection, operation positioning, profit models, business solutions.

Select industries through multi-dimensional evaluation, focus on high-value industries

and customers

How to select the target industries and the appropriate application scenarios, is the first step for operators to
explore industry markets. To select target industries, the China Academy of Information and Communications
Technology (CAICT) has proposed five key factors: Profitability, Digital Level, 5G Rigid Demand, Competition
Risks and Competition Opportunities. And China Telecom has also proposed the PRMCC+A model: Policy,
Reform, Market, Customer, Cases and Advantages. In china, operators are focusing on manufacturing, energy,
mine, port, medical and public security.

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5G services planning in medium and long term

Reasonable operation positioning to fully realize operators own value

Fully considering operators' own capabilities, market size and digitalization level of customers, dependence
on 5G, and other factors, operators have four basic operation positioning in industry applications.

Figure 13 operation positioning of 5G To B

Pricing and profit model innovation to achieve business return

For the application of the 5G To B , the pricing of products and services is also one of the main research directions
of the operator's business model. Different from the traffic-based pricing models of 4G and To C, the pricing
model of 5G To B is more complicated. Corresponding to the four value positioning of operators, the basic
connection is used as the basic quotation package, while the charge of value-added services from the platform,
service, and O&M. In the basic connection quotation package, differentiated pricing can be implemented based
on the types of 5G industry private networks and the traffic of industry users.

5G private line Charge by traffic.

virtual private network In accordance with the SLA and refer to the standard of personal data package.

Connection Local traffic charge-free, charging for usage and maintenance monthly
5G hybrid private network
service Charging for dedicated UPF and BTS resource reservation

One-time charging for network construction, and charging for O&M monthly
5G physical private network
Pricing by cost and target profit

Charging for MEC by computing capability, storage capacity and access bandwidth
Telecom edge cloud
Enabling platform charging including one-time deployment and software usage
Cloud
platform
Cooperative operation or revenue sharing
service Services platform Strengthening cooperation with industry solution providers
Developing network capability to meet the industry applications

Figure 14 pricing and profit mode of 5G To B

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5G services planning in medium and long term

Services solution and planning

Each industry has its own service features. At the same time, the application of 5G in three types of services
(eMBB, URLLC, and mMTC) is gradually maturing. Therefore, the design of the specific industry service
framework and solution planning needs to be tailored. The following example of 5G smart factory shows the
service planning and design of industry applications.

Figure 15 services planning of 5G smart factory

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ROI analysis of 5G medium and long term planning

ROI analysis of 5G medium and

long term planning

How its rationality is evaluated when the medium and long term 5G planning for an
operator is accomplished. The analysis of financial return on investment (ROI) is
an important means to test its rationality, and it can also further modify the mid-
and long-term 5G planning. Based on the characteristics of the CT industry, ZTE
has designed special ROI analysis tools and methods for operators' 5G medium and
long-term planning, including basic modeling, data prediction and acquisition, and
the application of ROI analysis results.

Building ROI In a ROI analysis model for medium and long term 5G planning built by ZTE (Fig. 16), the
revenue of operators in the 5G era comes from To C and To B, while the proportion of To B
model of 5G
revenue in the 2G/3G/4G era is negligible. CAPEX includes investment in network construction
medium and (including equipment and engineering) as well as license cost. OPEX involves network-related
long term operation and maintenance (O&M) costs, and non-network-related marketing costs, general
planning and administrative (G&A) expenses and other expenses such as international gateway fees and
financial expenses, which are often listed in the operators’ annual report.

Figure 16 ROI analysis model of 5G medium and long term planning

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ROI analysis of 5G medium and long term planning

Key data In ROI analysis, data acquisition and prediction are fundamental. Some data comes from the
direct output of network planning, some from basic database, and some needs to be obtained
acquisition
through reasonable forecast tools.
and prediction
The network size is output through E2E network planning. Through network planning tools,
new 5G link budget, and service KPI settings, the number of wireless sites deployed at each
stage can be generated. For core network planning, the capacity configuration of each network
element is generally based on user and service forecasts, combined with the average rates of
users and services. The transport network is planned according to the scale of wireless sites,
which involves existing site expansion and new site construction.

It is quite important to estimate the cost for a single site, so a few typical site models are
established in network planning. Through the site models, the number of equipment
configured at each site and the engineering work can be clearly known, so both equipment
and engineering expense of a single site can be calculated.

Some key data such as the number of users, ARPU, and vertical industry income, which are
recommended to be forecasted through specific methods and intelligent big data platform.

Figure 17 5G ARPU forecast based on multi-dimensional

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ROI analysis of 5G medium and long term planning

Application The main purpose of ROI analysis is not only to understand the medium and long term return
on investment, but also to guide us to carry out targeted strategies for future 5G network and
of ROI
business planning.
analysis
First of all, it is necessary to make a CAPEX analysis. According to the ROI analysis of the
result
medium and long term 5G planning of some operators, the investment in RAN accounts for
70–80% of total network CAPEX, in bearer network (BN) about 15%, and in core network (CN)
about 5%. Therefore, in terms of cost control, it is critical to reduce TCO of wireless network.
First of all, it is most important to reduce wireless network investment is to control the number
of the sites, the main schemes include reasonable spectrum planning, reasonable coverage
planning, and reasonable setting of performance indicators, especially the uplink edge rate.
Reducing the cost of a single site is also quite important. The extreme simplified site solution is
the trend of 5G planning.

The second is OPEX analysis. By the OPEX analysis, we find that network O&M cost, marketing
cost and administrative expense account for the same proportion, which constitute the vast
majority of OPEX. From the perspective of equipment suppliers, we usually give strategic
suggestions on network O&M cost. By further analysis, it is illustrated that electricity cost, site
rental cost and network maintenance cost are three major ones, so the solution is reducing
energy consumption, simplifying the site, and intelligent O&M.

The last part is the analysis of key financial indices, especially focusing on cash flow trends.
Due to the large investment in 5G, few individual users in the early stage and the difficulty of
industry applications to produce economies of scale, the pressure on cash flow is very high.
Operators need to reserve enough funds to deal with it, including using 4G business revenue
to feed 5G. If the operators’ own financial strength is weak, they need to broaden financing
channels or adopt innovative business models in cooperation with suppliers. In the analysis
of ROI financial indicators, there are several key indicators to evaluate the rationality of 5G
investment.

Earnings before interest, taxes, depreciation and amortization (EBITDA) above 40% is
relatively healthy margin for the telecom industry.

Net present value (NPV) is the difference between the present value of future capital inflows
(income) and the present value of future capital outflows. An investment with a positive
NPV will be profitable, while an investment with a negative NPV will result in a net loss.

Internal rate of return (IRR) refers to a metric used in financial analysis to estimate the
profitability of potential investments. IRR is generally higher than the loan interest rate of a
local bank.

20
Conclusion

Conclusion

Network foundation building, industry empowerment and operation transformation are the
essential strategies of 5G development in medium and long-term. They must be executed
together to help operators realize long-term, healthy development. ZTE applies the three
strategies throughout 5G network and services planning in medium and long term, and
customizes according the specific conditions to build a steady development road for operators.

As a pioneer in 5G, ZTE's strong comprehensive capabilities in technical, products, networks,

and service innovation can ensure to provide a reasonable solution of 5G medium and long
term planning. ZTE is capable of providing end-to-end products and services from pan-
terminal, wireless access, transport network, core network and service platform. In addition,
ZTE has continuously launched various innovative solution like AAPC, 1+X SSB, FAST, SuperDSS,
PowerPilot, UniSite and intelligent O&M to build future-oriented supreme networks. In terms of
service innovation, especially vertical industry applications, ZTE has applied 5G to hundreds of
industry customers in dozens of industries through new round digital transformation in China.
Meanwhile, ZTE also has accumulated a large number of 5G industry application experience
that can be promoted overseas.
Medium and long-term development strategies as well as corresponding network and service
plans should be formulated by operators at the beginning of 5G stage to achieve long-term
and healthy development. ZTE is willing to work with customers to contribute wisdom and
create the future together. 

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