The issues highlighted in the previous piece about moving AI steadily towards the network edge are part of a wider discussion about where that edge lies; and how it can be pushed closer and closer to the user to support highly personalized services and superior network experience.
For the operator, there is a double-edge sword here though. The more that intelligence lives in a device, a gateway or a localized sub-network (an enterprise-controlled small cell cluster, perhaps, in shared spectrum such as the US’s CBRS band), the more it may be exploited by another service provider, not the MNO. The combination of localized AI and context awareness, shared or unlicensed spectrum, and affordable small cells, can finally enable enterprises or cities, and their specialized service providers, to escape the compromises which they perceive from running their business critical applications on a network which was devised for consumer broadband.
There is a very logical outcome in some markets, where the MNO provides wide area mobile coverage for consumers and enterprises, but at the edge, supports a huge variety of ‘heavy MVNOs’ (virtual operators which build their own small cell or WiFi networks for local or specialized purposes, and just use the wide area mobile RAN for wide area coverage and interworking). The predecessor of this model is the WiFi-first MVNO or cableco, but there are far more sophisticated approaches emerging in enterprise and Industrial IoT sectors.
An extreme example is the mining industry in Australia, where very remote sites have mission critical requirements, such as predictive maintenance and safety monitoring, which could be enhanced if the mines were wireless connected to AI analytics and drone-based surveillance. This could reduce human risk and improve efficiency, but has traditionally been achieved, if at all, using proprietary networks run by specialized providers which understand this sector’s very specific needs in a way that, the mining companies often believe, an MNO could not.
Yet most enterprises do not want to build and run networks themselves. One solution is for the MNO to work more closely with vertical sector integrators, and support high availability, high quality connectivity services for the mines – today using end-to-end VPNs, in future using network slicing. However, there is also a scenario where the MNO is squeezed out, except to provide wide area connectivity. Nokia’s recent aggressive moves into private network support show how a vendor or integrator – from the telecoms or IT space – could seize the most lucrative elements of this kind of deployment by supporting all the local requirements, from high quality local connectivity (using small cells in shared spectrum), to core network, subscriber management and business analytics services, from the cloud. Where those cloud resources need to be distributed close to the enterprise, that can be achieved with MEC (Multi-access Edge Computing) says Nokia.
Last week, the Finnish vendor added new MEC and WiFi capabilities to its enterprise portfolio, both with the potential to undermine the MNO’s place in the value chain.
It is providing an upgraded virtualized MEC solution which runs on standard servers and can be integrated into enterprises’ existing IT infrastructure, making deployment simpler and putting it fully in the hands of the CIO or the integrator, not the operator. The offering includes features which have been trail-blazed by smaller enterprise MEC pioneers like Quortus – which provides a full network-in-a-box for self-contained enterprise use, based on a virtualized packet core. In Nokia’s case, as in Quortus’s, there is support for virtual core and local breakout (LBO), allowing operators to deliver private LTE networks which can then be managed by the enterprise itself.
The question, of course, is who that operator might be, once the core is localized and the spectrum is licence-exempt – an MNO, a specialized vertical market player, an IT integrator, or a vendor like Nokia (or Amazon or Google) supporting large numbers of private networks from the cloud?
Potentially, Nokia’s latest offerings demonstrate a platform which could be implemented by a wide range of service providers or enterprises, since licensed spectrum – the MNOs’ great competitive asset – is becoming less essential. Better techniques for preventing interference in unlicensed bands – as developed for the US white spaces and CBRS bands – are making these frequencies more usable for business critical purposes, particularly in environments like factories where the networks can be sealed within the premises and protected from external signals.
So the latest additions to Nokia’s platform include the Hybrid Access Gateway, which can combine licensed and unlicensed connectivity as well as fixed and satellite and is specifically optimized for mission critical, remote scenarios like mines or oil rigs.
And it announced a new version of its AirScale WiFi Access Point, which is designed to be compact, cost-efficient and easily deployable, to create internal networks for non-critical applications, which do not need an MNO’s spectrum and only need limited recourse to its macro network and core.
If Nokia can harness unlicensed spectrum and small cells to target new vertical market customers, so can others. There is an obvious case for the webscale companies to add private wireless networks to their cloud service portfolio, but they do lack the intimate understanding of connectivity and telco networks which Nokia (and MNOs) can boast. This may lead to strategic partnerships, like the one which Amazon Web Services and AT&T have already forged in the US to serve enterprises. Vendors like Nokia will also do well to pursue those alliances, rather than seeking to go head-to-head with the web giants.
To boost its own telco-specific credentials, Nokia has enhanced its Cloud Packet Core, the centrepiece of its attack on the vertical network market, which in turn is a cornerstone of its broader strategy to drive new revenues from vertical market “adjacencies”, particularly via its new standalone software business, and via cloud services.
Overall, Nokia is calculating that, in the mobile space, the targeted adjacencies represented an addressable market of €2bn ($2.2bn) in 2016. This is small compared to its total mobile addressable market of €64bn ($69bn, but the new areas will grow at a compound annual rate (CAGR) of 23.2% over the next five years, it estimates, compared to just 0.4% for the mobile sector as a whole.
Its key targets, as set out in December 2016, are:
Managed and cloud services for key verticals – public safety, energy, transport, government, manufacturing – often linked to the IoT
Professional and cloud services in the core telco market
New IoT services
IT services where these are tied to the network, but often with partners
Disrupting rivals with extreme automation via SDN
Thorsten Robrecht, head of advanced mobile networks solutions at Nokia, said in a statement: “We want to support the evolution toward the fourth industrial revolution by giving companies the ability to leverage private wireless networks for their critical communications needs and rapidly ramp up business applications that improve efficiency. We continue to evolve our end-to-end solutions and services to allow enterprises to transition towards digitalization in a smooth and cost-efficient way in preparation for 5G automation in the future.”
Nokia is doing one thing which is vital to fulfil the potential of the Industrial IoT and the mobile-first enterprise – giving enterprises themselves the control, and the choice of whether they want to manage their networks in a hands-on fashion, rely on their own chosen partners, or trust to the MNO. In the past, the choice has too often been between using the MNO’s network, but not trusting the operator or the RAN to prioritize their requirements; or to use an entirely private network and operator, optimized but expensive, and often divorced from employees’ rising use of mobile apps and services.
Now, says Nokia, the combination of small cells (cellular or WiFi), unlicensed and shared spectrum, MEC and localized, virtualized packet core can provide enterprises with the flexibility to self-manage their networks or work with operators and other partners. The Finnish firm’s aim is to provide the cloud and connectivity platforms – and as many value added services, such as asset management and big data analytics – as possible, whatever the operating model.
Officially, the MNO is still at the heart of what Nokia is offering in its rapidly expanding private networks platform business. For instance, Nokia might provide cross-border services for an international enterprise, on top of networks deals which were struck on a country-by-country basis by one or more MNOs.
But the potential conflicts of interest seem larger than the opportunities to partner, especially as more open sources of spectrum emerge for the IoT. And if the operators fail to capitalize on the potential of the distributed Industrial IoT, Nokia will not be able to be too sentimental about its traditional base.