Private networks – Opportunity or Threat for MNOs?
It means that private networks are potentially disruptive to traditional mobile and WiFi providers. The benefits of 4GLTE- and 5G-based private networks are more consistent signal strength, stronger security, customisation capabilities, higher speeds and lower latency with support for in-building, campus and hybrid environments.
5G brings new use cases
5G also offers a broader set of new use cases. As a result, manufacturing sites, warehouse, stadiums, public venues, mines, oil and gas sites, ports, airports and transportation hubs are all getting in on the act.
Enterprises are willing to pay for the benefits. According to research from Arthur D Little, for example, the global 5G private network opportunity could be worth as much as €60-€70 billion by 2025. The challenge for the telco industry, however, is overcoming its traditionally slow and cumbersome approach, so it will need to find some speed and agility from somewhere in order to take advantage of this opportunity.
Another challenge is that the success of large private networks requires close collaboration with the verticals, and in the past arguably the two parties have struggled to find a shared language. While mobile operators and telcos would appear to be the most obvious choice, with their expertise and heritage in connectivity, can they be agile and innovative enough?
New spectrum initiatives – such as those in the US, Japan, Germany and the UK – are seeing regulators releasing highly localised or shared spectrum, which is enabling enterprises to buy spectrum and build their own networks. Of course, for operators it also means new entrants to the market with which they must compete for the provision of private networks.
In some cases, this is creating spectrum scarcity for MNOs and pushing up the price at auctions. While customers are rarely likely to have their own expertise at least at first, MNOs are no longer the only option for a partner.
Vodafone has already productised private networks with its Mobile Private Network. The product promises secure, private reserve capacity, walled off from the public network, and leverages MEC and on-premise edge compute. It’s pitched as ideal for ultra-low latency use cases and support for high density IoT.
Deutsche Telekom and Ericsson, meanwhile, launched a service for industrial campuses in 2019 with chemical giant BASF, among others, trialling the technology. Other operators are seeing traction in ports, hospitals and manufacturing facilities.
Nokia leading the way
However, some mobile infrastructure equipment providers have also publicly provided private networks. Ericsson, Huawei often work in partnership with their operator customers.
Nokia, meanwhile, is considered the ‘leader of the pack’ in this space with over 180 private network deployments so far. Nokia has sold directly to enterprises, while offering infrastructure equipment, security, edge computing and software platforms for device and application management.
Wi-Fi providers such as Cisco, HPE and Boingo are having success in buildings, campuses and stadiums – after all, WiFi is a proven and widely deployed solution. However, it’s unlikely that WiFi6 will be as adept as 5G at creating new use cases and in low-latency and IoT deployments, but there are still likely to be many that use a hybrid solution.
At the same time, new entrants such as wireline and cable companies continue to seek out mid-band cellular spectrum, which performs well in buildings and for dense urban outdoor areas, to enhance their enterprise capabilities. Enterprises and some utilities are also bidding for spectrum to deploy their own private networks. Citizens Broadband Radio Service (CBRS) specialists are also rolling out unique spectrum-as-a-service models, representing yet another new breed of competition.
It’s estimated that over 150 companies worldwide have already deployed private 4G LTE and 5G deployments, with a collective investment of millions of dollars, but this is expected to rise sharply over the next 12 months and beyond.
The question regarding MNOs is: Are they agile and innovative enough to take advantage of this huge opportunity? The ecosystem is certainly fragmenting, and we would argue that MNOs are currently lacking the momentum to be at the forefront of 5G private network deployments – and risk falling behind in their bid to remain relevant, with failure to make the most of this opportunity. After years of dominating mobile markets, they can no longer take leadership for granted.