Is private 5G a threat or an opportunity for telcos?, 5G

A very recent announcement seems to support the notion that the pace of the private radio network is accelerating and expanding. So far, large private network projects have dominated the emerging scene. Ports, especially in the United Kingdom (no doubt feeling their importance as Brexit bites and port efficiency become critical) are particularly remarkable. But the “big one” may give way to the “less critical and less gigantic” for the next technology news cycle.

Just one sign among many: Qualcomm and Capgemini announced this month a private 5G network that is not available. The partners say the offer includes a fully tested and validated private network: Capgemini will integrate, while Qualcomm will provide most of the basics of the technology. Between them, the couple can provide you with a nice small network with or without the help of an operator.

Private 4G LTE private networks are already used by corporations, but their proliferation must now be limited by two factors – the lack of available private spectrum and the fact that the deployment and management of a private LTE network means building significant internal expertise. As a result, LTE private networks have been targeted at critical applications, where their reliability and security make them virtually mandatory and worth the effort and cost, such as industrial setup networks.

However, with the emergence of stand-alone 5G and the likely availability of more private spectrum in many of the world’s largest markets, corporate interest in the private wireless network is growing with the adoption of LTE, seen as an early position for a possible comprehensive private stand-alone 5G approach. in turn will provide steps up to 6G … etc.

However, two closely related aspects of evolving technology are at play, which may suggest that 5G is not necessarily the mobile operator’s biggest friend at the moment.

Virtualization everywhere, especially in the kernel, means that the software bits of the network can be cut and distributed anywhere and to the one that best suits the customer or business model. This cloud model, combined with the current move to separate the traditional, carefully integrated, monolithic mobile network, will clearly open the network operator’s market to different players and new business relationships.

Telecommunications companies are also called upon to adopt networking features in the hyper-large cloud. And what can be used by a telecommunications company in this way can also – surprisingly – be used by a growing range of competing network models or even end-user companies. All this reduction of barriers to entry promises to change the competitive dynamics of the private network market.

Previously, the huge capital costs and time to generate revenue related to building a green public cellular network meant that existing mobile operators were usually able to operate without the overwhelming fear of being disrupted by someone with a clever plan, new technologies and a lower cost base.

However, the challenges facing the telecommunications model come thick and fast, mostly thanks to the cloud and cloud software. For example, all three major hyper-scale players target telecommunications companies as partners in the virtualization of the telecommunications network, but in this way they will eventually be able to serve other players using the same native cloud technology and have many players and player types willing to provide services. and / or partner with corporations willing to run their own.

Where are we?

The state of the competitive game and the progress of private radio networks are being monitored by STL Partners, a London-based telecommunications research and consulting firm, and has published a report: “Private Networks: Lessons So Far and What’s Next?”

“Players who do not own national public mobile networks but who offer alternative connectivity solutions and / or operate at some level of the mobile supply chain are considering expanding the private network market,” the report said.

This list is long and includes: Fixed and cable providers; MVNOs; Tower and infrastructure companies; Providers of fixed wireless access and wireless internet; Neutral host players; Dedicated IoT connectivity providers; [pause for virtual breath] IT and network services companies; cloud service providers.

Then, says STL Partners, there are “Vertical Specific Players” who can use private networks in their own facilities in one or more locations. These include: Manufacturers and players of industrial automation; Energy and utility providers; Municipalities and local authorities; Railway operators; Airlines and airports, port operators; Universities and educational institutions; Architecture, Engineering and Construction (AEC) players; Hospitals and health facilities.

The big question for telecoms is whether this growing interest in private radio networks is a threat or an opportunity for them.

“Telecommunications companies already have the opportunity with private networks, but it is a threat if they do not adapt to the market and instead maintain the same thinking of: “It’s a complete threat,” said Amy Cameron, chief analyst at STL Partners. The alternative, agrees Ahmed Ali, a senior analyst at STL and author of the report, is to take some partial role and develop a modular set of solutions that can be offered gradually over time, including cutting the net when ready.

“Apart from the modular aspects, what would be great to see are different funding opportunities. Is there a CapEx model for the enterprise compared to OpEx as a service model? Amy Cameron asks.

“Telcos’ potential weakness is that they lack experience in all the different uses we will see emerge,” she said. “If you take the example of the airport, there are a lot of different customers from the public side to aviation engineering and they all have different needs, so there’s no way telecommunications companies can know them all. Their ability to partner with vertical specialists to deliver this will be crucial. “

On the other hand, she says, telecoms tend to do well with “trust”: “We did a survey this year on who, from four verticals, would you trust to set up a private network for you? And telecoms were still number one on that list.

“What needs to be kept in mind is that even if you deploy a private network now and use some of the functionality of the cloud network, it’s still a relatively physical thing (as opposed to the abstract and software-defined) and becomes connected to connectivity. in another component of the IT stack, it has a clear telecommunications role. They can maintain this role if they adopt the right mindset and flexibility. ”