1. Private Network are not new, but we are entering a new era for Private Networks
The concept of a dedicated wireless network is not a new one. Private Mobile Radio (PMR) networks, and then Private LTE Networks dedicated to public safety uses, have been around for decades. But these networks tended to be focused on specific use cases, with dedicated cores, International Mobile Subscriber Identity (IMSI) ranges and network service features like Push-To-Talk. Fundamentally, despite some early adopters like mining and off-shore energy, Private LTE never really crossed over into other market segments in a meaningful way. Those end user markets did obviously engage with Wi-Fi, where spectrum was free, access points were commoditised, deployment was straightforward and there was no need to deal with physical SIMs. But those points of differential are now changing – and that’s due to 5G.
2. How 5G makes a key difference
To understand why 5G makes a difference, you need to look back at how LTE developed. There was a feeling in Europe that much of the value of LTE had been captured in North America by the developers of the super consumer apps as well as the app construct: such as Apple, Google and Facebook amongst others, all part of the 4G app economy boom. As 5G standards were developed, European policy makers and industry (e.g. the EU Telecom Commission, with the Horizon 2020 programme, industry consortia like 5GACIA, 5GAA etc) took an early lead to shape the imminent next G technology to transform their industrial and manufacturing base, by baking in a lot of industry-specific features into the standards. That helped shape 5G something that was built from the ground up to address use cases such as Industry 4.0, smart utilities, transport, cities and so on. Focussing on new parameters around latency, reliability, security, spectrum support and deployment flexibility moved 5G beyond the realms of the consumer centric app-focused network.
Further to that, there has been a loosening of the spectrum environment – with 5G NR offering not just support for more bands, but having the ability to operate in shared and unlicensed spectrum bands. Again, Europe and the USA took different paths here. In Europe, a country like Germany reserved 100 MHz at the 3.7 GHz band for enterprise use, awarded directly to a business if an application met certain quality and requirements thresholds, and actually disincentivised operators from profiting commercially from that spectrum.
In the USA, where CBRS was the preferred mechanism for shared spectrum, things have moved slower. I think that’s because businesses have waited for 5G devices and access points to become available, and also there was some uncertainty of the business case due to the role of Priority Access Licenses (PALs), which gave operators a commercial presence in the value chain.
But in Europe and parts of Asia, things are much more advanced and we are seeing networks supporting applications such as automated guided vehicles, production line robotics and advanced location based services. We expect 2021 to be the year when the USA also really starts to unlock the potential of private 5G CBRS.
3. Private Networks are still an opportunity for operators
We all know that operators have struggled historically with the enterprise market. According to the recent GSMAI report on Operator revenue in the Enterprise market (Mar’21), data indicates that enterprise revenue as a share of operator revenue varies between 10% and 50%. With the majority of the revenue coming from traditional communication services and the focus being heavily dependant on selling SIM connections, airtime and data bundles. Transitioning the pricing model to a business where the KPI is in enhancing operational efficiency, or productivity, and not around the raw consumption of minutes or data – is not proving to be easy or straightforward.
We have also seen that although 3GPP-based cellular technology can capture economy of scale benefits, in the case of Private Networks there is still a fair amount of overall systems integration and customisation required to integrate the network with legacy enterprise applications, customised security policies and so on.
MNOs need to revisit business model and commercial constructs with enterprises. Additionally, they need to work on positioning their value in a world that will now have lightly licensed or eventually unlicensed spectrum. So they are defining their role around use cases that demand mobility, where the device or user roams out into the macro network. Then the operator play makes sense. I also see MNOs pivoting towards new roles like managed services or managed network providers in time – this would be helpful for those enterprises and industries that adopt a more hands-off approach to the complexities of managing dedicated cellular connectivity platforms, that interact with macro cellular networks.
4. 5G SA brings new gains
One area that will really move this market forward, and indeed is moving it forward, is 5G Standalone (5G SA). There’s a lot of movement here within research institutes and industry test bed, moving that market forward. Because it is designed on cloud native principles, with a modular, service-based architecture, it can scale independently of the LTE core, and decouple the data plane and the control plane. That brings a lot of benefits in flexibility of deployment and also in the use cases it can support.
I’d say again we are seeing Europe take an early here – for example there are many RFPs for 5G SA in Germany around for Private Network licence holders. But we and others are also working in Japan and South Korea, aligned closely with the mobile operators in these cases, to deploy 5G SA Private Networks.
5. Deployment flexibility is key
We have seen real benefits from our Network in a Box type, shrink-wrapped solution, where we can quickly and easily deploy an on-campus solution for big industry. This provides a containerised, software-driven, zero-touch provisioning network in a box, but although it is integrated, it is also designed to be deployed building blocks, meeting IT principles. It’s hard for the major vendors to design solutions like this because although they can scale up, they cannot disaggregate their solutions and scale down. For Mavenir, which is built on virtualisation and cloud-native principles, we have been successful with this approach. Additionally, once we took that architectural approach, enabling more automation and cloud principles also made it a lot easier to integrate with Public Cloud providers, meaning we can meet the deployment choice of a given enterprise.
In Europe we find that companies are keener on on-campus solutions so they can meet privacy and security policies. In the US companies are not owning assets and leveraging the public cloud or hybrid cloud.
6. The industry must overcome Go-To-Market challenges
Addressing the Private Networks opportunity means addressing a diverse enterprise base. For a vendor you are going way beyond the few hundred mobile network operators that you are used to engaging with directly. You are looking at hundreds of sectors and tens of thousands of businesses – all with their own specific needs.
Mavenir has a clear strategy to treat operators as a Go-To-Market channel, but they’re just one channel. Alongside that we leverage a network of major Systems Integrators as well as regional or boutique SIs and app companies that deliver good local or vertical specific engagement. We’re also engaging with infrastructure owners on neutral host models, where the site owner delivers network as a service third-party customers. Finally, we go beyond a sell-through relationship to create deeper partnerships with the likes of NTT Data for example , where we combine our connectivity technology with their BSS/OSS to create a full technology stack for a Private Network business case. In each constellation – MNO, SI, full partnership – we understand the value we bring, what our partners bring, and how that enhances the end customer’s business. I would ask – is everyone else as clear on their role in the value chain?
7. Finally, industry needs to broaden the ecosystem
As you can see, we are explicit and clear that our ambition is to get hardware and software out, and then build value over the top. We want to see partners become autonomous as soon as possible, and then we can focus on broadening and expanding the ecosystem to identify and create specific use cases.
For example, working with chip companies to develop a packaged solution for AR/VR applications that are specific to the use case. So for an AR application for Preventative Maintenance, we work with the ecosystem to create a packaged solution that is validated, tested and implemented alongside a third-party application for delivery. Here we are engaging more of a “sell with” than “sell through” model.
Once we have moved from a boots-on-the-ground model, we can really start to add value, and that’s where Private Networks can really become transformative for the businesses and customers that deploy them.
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*This is a sponsored feature produced by TMN for its Private Networks Market Report. Download the full report here.