Private LTE: new business model opportunity for vRAN

Our research predicts that the most significant and earliest use cases for edge sites will to be support vRAN for opex reduction but also to enable nextgeneration network services. Private LTE networks are one key example of this,
and represent a significant opportunity for operators to create new business models and revenues.

The private LTE opportunity

Operators and their partners are seeing significant opportunities to offer private LTE networks to customers. In the past 2-3 years, there has been growing demand for private LTE networks from enterprise customers to deliver more resilient, reliable and secure connectivity. It is increasingly playing a key role, along with edge computing, within enterprises’ digital transformation journeys.

There has been a surge in demand from enterprises across multiple verticals, from manufacturing to retail, mining to logistics. As of November 2019, Nokia alone have already been involved in over 120 deployments globally across various vertical industries, at least 25 of those with specialist private LTE provider Edzcom across the Nordic region and others with traditional telco operators such as Telefonica.

Private LTE as a significant short-term opportunity for new vRAN business model

Our recent report on building telco edge infrastructure touches upon the likely circumstances where 4G vRAN will be rolled out:

• In geographically-dispersed or underserved areas: here, vRAN offers substantial potential cost savings, as well as operational efficiencies, as it enables a dispersed estate of cell sites to be operated, managed and upgraded remotely.
• In urban areas: here, vRAN can be used to support densification of 4G and 5G and to expand coverage in suburban and rural areas, as a more cost-effective, scalable solution, and to support new locations and types of radio.

In our view, private LTE networks and neutral host networks represent the biggest short to medium term opportunity for telcos to create new business models from vRAN.

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Virtualising private LTE functions for increased flexibility and decreased costs

Most deployments of private LTE networks to date are not virtualised and provided by proprietary network equipment vendors such as Ericsson and Nokia. Virtualising private LTE network functions can enable operators to deliver private LTE solutions in a much more scalable and cost-effective way. On top of that, running these network functions on generic common-off-the-shelf (COTS) hardware can also provide more openness and flexibility to customers.

Through virtualisation of private LTE networks, operators can avoid having to handle a large or growing volume of highly distributed network equipment at separate sites as the number of deployments with enterprise customers increases. This in turn makes monitoring, maintenance and upgrades much easier and less expensive to manage.

Private LTE, 5G and network slicing as part of the same menu

Although 5G is still a ways out, network slicing even more so, operators should leverage the experience of deploying virtualised private LTE networks as a glidepath to newer opportunities that will arise from 5G and network slicing, for example providing a private network through a dedicated 5G network slice.

In our previous report on how to secure the 5G network slicing opportunity, we discuss how network slicing should become part of the private networking services menu and be positioned as a delivery mechanism for private networking services. We see virtualised private LTE networks as a way for operators to gain more experience in deploying private networks for customers. More importantly, this should also be seen as a stepping stone in engaging with enterprise customers to understand how private networking can help to address their needs and requirements.

Yesmean Luk

Yesmean Luk

Principal Consultant

Yesmean is a Senior Consultant at STL Partners and has led and managed client projects with both operators and technology companies across a number of domains, including private networks, telco cloud, network slicing, edge computing and IoT. Before joining STL, she held various consulting roles at Deloitte and IBM. She holds a Global MSc in Management from the London School of Economics, specialising in strategy and international business.