How many base stations does 5G really require? Is it 6 million, 8 million, or something else? The number is still under debate. As user traffic and network demands continue to grow, 5G is expected to be an ultra-dense network, built with a large number of small cells and advanced infrastructure.
The issue of 5G investment and return has become a hot topic in the industry. How much will it cost to build 5G networks, and what kind of revenue and profit can they generate? There are many predictions out there, but most of them overlook a crucial factor—5G’s flexible architecture and resource-sharing capabilities.
In the 2G era, we deployed hundreds of thousands of GSM base stations just to support voice calls. In the 4G era, millions of LTE base stations were built to meet mobile internet needs. In both cases, the network was built for a single purpose—either voice or data. This meant massive investments with limited returns.
But 5G is different. It's designed for a wide range of services, from smart cities to autonomous vehicles, and even remote surgeries. To support this diversity, the network architecture must evolve. The key enabler here is network slicing—a technology that allows a single physical network to be divided into multiple logical slices, each tailored for specific use cases.
Network slicing enables operators to create different virtual networks within one physical infrastructure. These slices can serve various applications such as connected cars, smart factories, enhanced mobile broadband, and massive IoT. Each slice can be optimized for its own performance requirements, like latency, bandwidth, and reliability.
This means the way we calculate network investment and returns must also change. For example, if you spend X billion to build a 5G network, and it only serves one purpose, the ROI might be low. But if that same network can be split into two or more slices, each serving a different application, the return could be significantly higher.
Imagine cutting the network into three, four, or even five slices. That would mean building multiple networks at once, which could lead to exponential returns. The more slices you have, the more value you get from your investment.
Let’s look at a real-world example. Even today, 4G networks support a variety of smartphone applications—streaming videos, gaming, file downloads. However, these apps often share the same network without any differentiation in quality of service (QoS). This can lead to poor user experiences, like lagging games, buffering videos, or slow downloads.
The problem isn’t always about limited resources—it’s about how the network allocates those resources. Different apps have different needs: gaming requires low latency, video streaming needs high bandwidth, and file downloads can tolerate some delay. If the network can dynamically allocate resources based on these needs, users would enjoy a much better experience.
Unfortunately, current 4G networks aren’t designed to handle these varying requirements. They take a “one-size-fits-all†approach, which leads to inefficient resource use and unnecessary expansion. This results in higher costs and lower returns.
5G network slicing changes this by enabling dynamic, efficient allocation of resources. Each slice can be customized for specific applications, allowing the same physical infrastructure to serve multiple purposes simultaneously. This not only improves efficiency but also maximizes the value of the network.
As more innovative 5G applications emerge, the number of slices will increase, leading to greater network value and higher returns. This shift in thinking means that traditional cost models—like counting base stations or calculating power consumption—won’t be enough anymore. Instead, investment and returns must be calculated based on individual slices.
For example, a slice can be defined by its KPIs—such as capacity, latency, and reliability. Based on these requirements, operators can design virtual network functions (VNFs) and estimate how many physical resources are needed. This includes spectrum, bandwidth, power, and other supporting elements.
As shown in the figure, the cost of a slice is determined by the physical resources it consumes, while the income comes from the number of users and the price per unit. Subtracting the cost from the income gives the profit for that slice.
If you add more slices, you repeat the process. The more slices you create, the more opportunities for revenue and return on investment.
The real challenge of 5G isn’t just about cost—it’s about fostering new applications and services. Without diverse use cases, a few slices may not be profitable. But with the right ecosystem, 5G can deliver significant value and long-term returns.
As one carrier executive put it: “We’re building the next Internet. It’s bigger than the one in the 90s, and we need to think outside the box and embrace exponential innovation.â€
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