Private cellular networks have been one of the major themes of 2020 and despite deep uncertainty surrounding enterprise investment, as a result of the Covid-driven recession, so far the momentum has not slowed significantly.
In some cases, enterprise demand for high performance wireless networks, which they can control and optimize for their specific needs, will be driven by an intensified quest for efficiencies and service differentiation in a time of crisis. In others, private networks will be part of a general trend, driven by governments in many markets, to invest in expanding hi-tech infrastructure such as intelligent transport and smart supply chain, to improve economic resilience.
There are several big questions about private wireless, including:
- Will mobile operators will dominate, or will be outplayed by alternative service providers such as private network specialists, neutral hosts, cloud companies or system integrators? In many cases, these other groups will find it easier to make a strong business case for dedicated, specialized and localized networks, than MNOs, whose economics rely on building national-scale, generic connectivity.
- Where webscalers are involved, will they be partners with MNOs and other connectivity providers, or will they take control of the value chain and leave the operators to supply dumb pipes?
- What will be the balance of power between WiFi 6 (and future WiFi 7) and cellular in private and industrial networks? WiFi has incumbency in many environments, particularly carpeted offices and public locations such as venues and hospitality, but cellular can provide additional functionality, such as very low latency, which may be important to certain use cases. In many scenarios, coexistence will be the logical solution, though not always the cheapest one to deploy or manage. But in others (see the airports example below), the two technologies, and their different operators and ecosystems, are likely to be battling for the lead role.
- What will be the value placed on optimized enterprise services? Organizations with mission-critical communications requirements will to pay far higher fees than consumers, but in a competitive environment, it remains unclear how far operators will be able to monetize added-value connectivity functions such as ultra-low latency; and how far the value chain will be weighted towards applications or cloud services rather than the networks themselves. Some operators are starting to see chances for additional revenue from enterprise requirements such as low latency (see below), but others believe the costs of supporting such capabilities will make the business case a weak one unless they can implement network slicing, which will enable new economies of scale and broaden the addressable market; and/or derive additional revenues from other areas of the value chain such as developer platforms (a strategy that could bring them into conflict with their cloud partners).
There are no simple answers to these questions and the value chains and operator opportunities will vary in different regions, enterprise sectors and even individual organizations. This is why enterprise and industrial networks have always been challenging for operators – their requirements are fragmented, and while each may have a critical requirement for 5G in the coming years, this will be different in each case.
Partnerships are essential to make this a workable business for operators, as Verizon’s latest moves show – the US telco has announced alliances with both Microsoft and Nokia, focused on private edge/5G networks.
Successful operators will find a way to support enterprise diversity through flexible, software-driven deployments that still support huge economies of scale in the actual infrastructure. This is the goal of network slicing, but end-to-end 5G slicing, with the potential to enable a virtual, optimized slice for an individual enterprise on-demand, is years away for nearly all operators. In the meantime, they will need to identify the sectors and use cases which they can monetize effectively with more conventional technologies, while accepting that some of the value in this market will flow to other providers and to WiFi.