One of the big dilemmas for mobile operators in the 5G era will be how to approach industrial network opportunities. Many enterprises are looking to assert control over their mobile connectivity by relying on private networks in shared or private spectrum, which can support their own specific requirements. The MNO must make difficult strategic decisions:
- whether to support private networks itself, alone or with partners such as vertical market integrators
- whether to treat private 5G as a chance to diversify the revenue streams, or as a harmful distraction which will fragment precious spectrum
- whether to try to outdo alternative mobile service providers by developing fully sliceable networks, which can harness greater economies of scale than private networks.
While such discussions are certainly going on behind closed doors, in public, MNOs are still battling against any policies to earmark airwaves for industrial players and new entrants, claiming that this will drive up the cost of spectrum for the national mobile broadband networks that will underpin so many new consumer and business activities.
But many enterprises are interested in cellular connectivity to support their digitalisation and Internet of Things (IoT) programs, but their requirements are often poorly aligned with MNOs’ priorities. Operators may balk at the stringent service level agreements (SLAs) which accompany mission-critical networks; enterprises do not trust MNOs ever to prioritize their requirements, for low latency perhaps, or high availability, over the needs of consumer broadband.
The clash between MNO and enterprise views of spectrum policy, and of the best way to enable industrial 5G, is particularly loud in Europe, and is seen in sharp relief in Germany. Operators like Vodafone and Deutsche Telekom have led the lobbying against carving up spectrum between many sectors and providers; while many large enterprises – especially in Germany, the cradle of Industrie 4.0 – have been vocal in pushing for a new creative approach to enabling private cellular.
But behind the vocal political statements, the German operators, like their counterparts elsewhere, are exploring new models and partnerships that might finally make the enterprise cellular business profitable for them. Sharing the load of building out networks, especially in-building, could enhance the 5G case for many MNOs, if they can identify the right allies. The MNOs do have advantages still, notably their expertise in radio planning and their national mobile coverage, and they have the opportunity to build on those assets by investing in cloud infrastructure, especially harnessing their sites at the network edge, as DT is doing with its new EdgAir platform.
But the old attitudes need to change, and MNOs need to start looking at themselves as players in complex value chains with many interlocking relationships – not as they have been in the past, at the top of the rather simple mobile broadband food chains. The need to redefine their role is epitomized by their representative body, the GSMA, which often seems to have a harder time than many of its members in accepting that times have changed and that the definition of a mobile operator has changed too. New companies, from manufacturers like Hon Hai to cloud providers like Rakuten, will gain access to spectrum and emerge as ‘new MNOs’. Rather than resisting this trend, successful MNOs will work hard to form new alliances.