At this year’s MWC, attention was firmly set on all things AI and 5G and how the industry is increasingly moving to 5G Standalone (SA) and 5G Advanced. And although GSMA Intelligence projects that we will need to wait until 2029 before we see more than half of connections on 5G, MWC 2024 also saw us looking ahead to the prospect of 6G.
The launch of next-generation wireless technology is inevitably accompanied (or even driven) by razzmatazz and hyperbole. Needless to say, the hype surrounding the initial launch of 5G networks hasn’t produced the explosion of new services and revenues that some commentators predicted. Those who expected a transformed consumer experience with stadiums full of subscribers live streaming their football match or concert experiences may be somewhat underwhelmed, but this is not what the launch of 5G was about. Ironically, the service that has driven most 5G non-standalone (NSA) revenue globally has been fixed wireless access. According to Grand View Research, the global 5G fixed wireless access market size was valued at USD 23.78 billion in 2022 and will grow 39.9% CAGR from 2023 to 2030.
Mobile Network Operators (MNOs) have already spent so much on 4G licenses that they need to sweat their assets in these networks before moving on to another shift. In addition, many of their customers who recently invested in new 4G devices will continue to use them for a while. 5G NSA has offered a transitionary model that allows MNOs to roll out the greater data capacity and speeds that 5G radio brings while still supporting the IMS core deployed for VoLTE and other services in 4G. Consequently, for mobile messaging services, the transition to 5G NSA has been seamless. What worked via IMS over LTE or WiFi works just as well via IMS over 5G new radio (NR).
The real benefit of the launch of 5G NSA is that it has enabled MNOs to launch and prove the capabilities of 5G RAN – but without disrupting their network, services, and customers.
But investment in this technology doesn’t come cheap. MNOs urgently need to monetize this investment, and for that, they do not look to consumer-oriented services but to enterprise.
This is because, in the consumer segment, neither the handsets nor any service concepts exist to really demand 5G data rates. But in the enterprise sector, it’s a different story. MNOs who have developed and launched 5G cores and RAN can host private 5G networks or slices for enterprises whose use cases really demand 5G bandwidth and speeds. For example, enterprises that require many relatively simple, repetitive, but strenuous tasks are looking to robotic automation to increase efficiency and reduce costs. This leads enterprises such as manufacturing plants, airports, shipping ports, freight depots, mineral exploration, and power generation companies to look to private 5G to achieve this automation.
These use cases are primarily driven by M2M and IoT services, which consume vast amounts of wireless data but have no need for a voice service. IMS core to support VoNR is not required here, but there is a need for SMS. SMS is still vital in IoT services for waking devices from low-energy mode, delivering configuration updates over-the-air (OTA), and, in some cases, carrying service data. While cellular networks handle around 15% of IoT connections today, GSMA Intelligence projects that the rapid expansion of IoT will see the number of licensed cellular IoT connections reach 5.8 billion globally by 2030 (8% CAGR from 2024).
Thankfully, the specifications of 5G already recognized these needs and included a special node in 5G SA called the SMS Function (SMSF), which supports the interworking of SMS between the SMS Center (SMSC) and the 5G Access Management Function (AMF).
Having just launched their 5G network, many MNOs want to reduce costs by sunsetting the 2G and 3G investments. While they need international connectivity for services like SMS, they do not want to maintain a Circuit-Switched network simply for this purpose. However, the Diameter protocol (SGd), which is present in most networks and provides a convenient alternative IP-based bearer for SMS, is being chosen by MNOs for now. This shows that SMS is not going away any time soon. It is just finding new channels to flow through.
Although 5G’s headline act is the provision of faster, broader, and more widespread data services, 5G networks must continue to support SMS services, which will remain vital for IoT services, OTA, multi-factor authentication, and intercommunication with subscribers of legacy networks. Operators managing hybrid networks can continue to support SMS via IMS or via diameter-based fallback mechanisms to 3G or 4G. However, as more operators move to 5G SA networks, solutions like the SMSF, will be essential from day 1.
Contact us to learn more about Enghouse’s Mobile Messaging and Services (VAS) solutions, including SMSC and SMSF, or to schedule your exclusive demo today.
