Seoul, Hong Kong, New Delhi, Beijing, London, Buenos Aires, San Diego
October 23rd, 2019
Private LTE/5G networks deployed in shared and unlicensed spectrum is a hot topic at present with both mobile network operators (MNOs) and infrastructure vendors assessing opportunities to build bespoke networks for a range of enterprise and industrial applications. At the same time, many enterprises are interested in by-passing the MNOs entirely by building and managing their own autonomous networks.
Once the preserve of MNOs with licensed spectrum, the barriers to the adoption of private networks are falling rapidly. With the cost and complexity of LTE networks decreasing, and options for accessing suitable spectrum increasing, the prospects of using private networks to deliver real benefits to enterprises have improved dramatically. This is spurring the vendor community to develop innovative products, solutions and deployment models, particularly for small cell infrastructure and cloud-based core solutions.
Natural resources and utility companies deploy the majority of LTE private networks today. However, other sectors, particularly the manufacturing and logistics sectors, who are struggling to use Wi-Fi to address their needs, increasingly see the attractions of deploying LTE and later 5G-based private networks. This includes global manufacturers, particularly automotive companies, major container ports, and large warehouse operators.
In an industrial setting, LTE offers many advantages compared to Wi-Fi, including better coverage, capacity, quality of service, security as well as low/predictable latency and good mobility, critical requirements for robots, cranes, and automated vehicles in factories, ports, and distribution warehouses. Despite this, Counterpoint Research believes that enterprises will continue to use Wi-Fi for many of their connectivity needs (including leveraging the new Wi-Fi 6 standard), which is less expensive than LTE/5G and has a very large and successful device and access point ecosystem. In practice, enterprises will likely integrate Wi-Fi with LTE as combined LTE/Wi-Fi devices become available.
The availability of new spectrum at regional and global levels will be a major catalyst and will greatly facilitate the growth of private networks. This spectrum is likely to become available on both a shared access and an unlicensed basis. In the US, the Federal Communication Commission (FCC) recently released around 150 MHz of spectrum in the 3.5 MHz CBRS (Citizens Broadband Radio Services) band. In Europe, discussions on reserving spectrum are ongoing in several countries, although it is not yet clear how much spectrum will be available and to what extent any released spectrum will be licensed or unlicensed.
“The availability of end-to-end, plug-and-play LTE network solutions coupled with the emergence of new spectrum bands, in both shared and unlicensed bands, will be a gamechanger for the wireless industry and will embolden services and industrial enterprises to invest in private LTE networks,” said Gareth Owen, Associate Director at Counterpoint Research.
Counterpoint Research believes that many of the largest enterprises will acquire their own spectrum and build and manage their own networks. Others will partner with a new breed of independent vertical-focused cellular network operators with spectrum access, while the remainder will use established MNOs. Early adopters are likely to be large organizations with deep pockets and a compelling business case, but there are opportunities for LTE/5G private networks across industries, businesses, and the public sector.
For MNOs, private networks offer opportunities to develop new revenue sources. However, today operators mostly focus on consumer 5G, which requires significant investment and will take time to deliver a return on investment. MNOs should, therefore, capitalize on the burgeoning private LTE market in anticipation of later deploying 5G-based private networks. Network slicing will also be another option available for MNOs in the future. However, to succeed, they must be flexible and will need to develop a selection of vertical-specific solutions offered via new business models, typically based on an Infrastructure-as-a-Service basis.
“MNOs are not best placed to deliver a multitude of bespoke vertical solutions, which will require 24/7 support and investment in additional staff and thus higher costs,” said Peter Richardson, Research Director at Counterpoint Research. “They are more likely to focus on two or three broad-based verticals and leave the rest of the market to smaller players.”
There will also be opportunities for infrastructure vendors, large and small, to co-develop solutions directly with enterprises, city authorities, airports, etc. as well as with specialist solution developers that may become vertically focused MVNOs. This will open up new service opportunities replacing privately-owned, proprietary technology-based networks. However, vendors will need to be nimble to evolve their portfolios to meet evolving market needs. In particular, manageability and ease of deployment will be highly valued by enterprise IT teams looking to deploy private network solutions.
Counterpoint Research latest report “Private cellular Network – Critical Enablers for Industrial IoT?” provides an in-depth assessment of the prospects of LTE and 5G-based private networks with a particular focus on the manufacturing and logistics industries. This report highlights the key benefits of cellular compared to other wireless (and wired) technologies, provides details of spectrum availability around the world as well as details of key LTE and 5G use cases, trials and commercial services. Brief details of the main ecosystem players are also provided as well as an assessment of the disruptive implications of private networks on the mobile industry.
Background:
Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in the high-tech industry.
Analyst Contacts:
Counterpoint Research
press(at)counterpointresearch.com
