Tag: business case

Scaling private cellular and edge: How to avoid POC and pilot purgatory

Evaluating the opportunities with private cellular and edge

The majority of enterprises today are still at the early stages of understanding the potential benefits of private cellular networking and edge computing in delivering enhanced business outcomes, but the interest is evident. Within private cellular for example, we have seen significant traction and uptake globally during 2020 and 2021, partially driven by increased availability and routes to spectrum due to localised spectrum licensing models across different markets (see this report). This has resulted in several trials and engagements with large companies such as Bosch, Ford, Rio Tinto, Heathrow Airport and more.

However, despite the rising interest, enterprises often encounter challenges with a lack of internal stakeholder alignment or the inability to find the right stakeholder to be accountable and own the deployment. Furthermore, many enterprises feel they lack the expertise to deploy and manage private networking and/or edge solutions. In some cases, enterprises have also cited a lack of maturity in the device and solution ecosystem, for example with lack of supported (or industry-grade) devices which have a 5G/LTE/CBRS capability embedded in them, or a significant inertia in the installed base around other connectivity solutions (e.g. Wi-Fi). Therefore, despite the value and business outcomes that private cellular and edge compute can unlock for enterprises, the opportunity is rarely clear-cut.

Our research is based on findings and analysis from a global interview programme with 20 enterprises in sectors that are ahead in exploring private cellular and edge computing, primarily in the industrial verticals, as well as telecoms operators and solutions providers within the private cellular and edge computing ecosystem.

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Telcos see private cellular and edge as two peas in a pod…

Telecoms operators see private cellular and edge computing as part of a larger revenue opportunity beyond fixed and public cellular. It is an opportunity for telcos to move from being seen as horizontal players providing increasingly commoditised connectivity services, to more vertical players that address value-adding industry-specific use cases. Private cellular and edge compute can be seen as components of a wider innovative and holistic end-to-end solution for enterprises, and part of the telcos’ ambition to become strategic partners or trusted advisors to customers.

We define a private cellular network as a dedicated local on-premises network, designed to cover a geographically-constrained area or site such as a production plant, a warehouse or a mine. It uses dedicated spectrum, which can be owned by the enterprise or leased from a telco operator or third party, and has dedicated operating functions that can run on the enterprise’s own dedicated or shared edge compute infrastructure. Private cellular networking is expected to play a key role in future wireless technology for enterprise on-premises connectivity. Private cellular networks can be configured specifically to an individual enterprise’s requirements to meet certain needs around reliability, throughput, latency etc. to enable vertical-specific use cases in a combined way that other alternatives have struggled to before. Although there are early instances of private networks going back to 2G GSM-R in the railway sector, for the purpose of this report, we focus on private cellular networks that leverage 4G LTE (Long Term Evolution) or 5G mobile technology.

Figure 1: Private cellular combines the benefits of fixed and wireless in a tailored way

benefits of private cellular

Source: STL Partners

Edge compute is about bringing the compute, storage and processing capabilities and power of cloud closer to the end-user or end-device (i.e. the source of data) by locating workloads on distributed physical infrastructure. It combines the key benefits of local compute, such as low latency, data localisation and reduced backhaul costs, with the benefits of cloud compute, namely scalability, flexibility, and cloud native operating models.

Figure 2: Edge computing combines local and cloud compute benefits to end-users

benefits of edge computing

Source: STL Partners

Within the telecoms industry, private cellular and edge computing are often considered two closely interlinked technologies that come hand-in-hand. Our previous report, Navigating the private cellular maze: when, where and how, explored the different private cellular capabilities that enterprises are looking to leverage, and our findings showed that security, reliability and control were cited as the most important benefits of private cellular. In many ways, edge compute also addresses these needs. Both are means of delivering ultra-low latency, security, reliability and high-throughput real time analytics, but in different ways.

…but this is not necessarily the case with enterprises

Although the telecoms industry often views edge computing and private cellular in the same vein, this is not always the case from the enterprise perspective. Not only do the majority of enterprises approach edge computing and private cellular as separate technologies, addressing separate needs, many are still at the early stages of understanding what they are.

There is oftentimes also a different interpretations and confusion of terminology when it comes to private cellular and edge compute. For example, in our interviews, a few enterprises describe traditional on-premises compute with local dedicated compute facilities within an operating site (e.g. a server room) as a flavour of edge compute. We argue that the key difference between traditional on-premises compute and on-premises edge compute is that with the latter, the applications and underlying infrastructure are both more cloud-like. Applications that leverage edge compute also use cloud-like technologies and processes (such as continuous integration and continuous delivery, or CI/CD in short) and the edge infrastructure uses containers or virtual machines and can be remotely managed (rather than being monolithic).

The same applies when it comes to private cellular networking, where the term ‘private network’ is used differently by certain individuals to refer to virtual private networks (VPNs) as opposed to the dedicated local on-premises network we have defined above. In addition, when it comes to private 5G, there is also confusion as to the difference between better in-building coverage of public 5G (i.e. the macro network) versus a private 5G network, for a manufacturing plant for example. This will only be further complicated by the upswing of network slicing, which can sometimes (incorrectly) be marketed as a private network.

Furthermore, for enterprises that are more familiar with the concepts, many are still looking to better understand the business value and outcomes that private LTE/5G and edge compute can bring, and what they can enable for their businesses.

 

Table of Contents

  • Executive Summary
  • Introduction
    • Evaluating the opportunities with private cellular and edge
    • Telcos see private cellular and edge as two peas in a pod…
    • …but this is not necessarily the case with enterprises
    • Most private cellular or edge trials or PoCs have yet to scale
  • Edge and private cellular as different tracks
    • Enterprises that understand private cellular don’t always understand edge (and vice versa)
    • Edge and private cellular are pursued as distinct initiatives
  • Breaking free from PoC purgatory
    • Lack of stakeholder alignment
    • Ecosystem inertia
    • Unable to build the business case
  • Addressing different deployment pathways
    • Tactical solutions versus strategic transformations
    • Find trigger points as key opportunities for scaling
    • Readiness of solutions: Speed and ease of deployment
  • Recommendations for enterprises
  • Recommendations for telco operators
  • Recommendations for others
    • Application providers, device manufacturers and OEMs
    • Regulators

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Private networks: Lessons so far and what next

The private networks market is rapidly developing

Businesses across a range of sectors are exploring the benefits of private networks in supporting their connected operations. However, there are considerable variations between national markets, reflecting spectrum and other regulatory actions, as well as industrial structure and other local factors. US, Germany, UK, Japan and the Nordics are among the leading markets.

Enterprises’ adoption of digitalisation and automation programmes is growing across various industries. The demand from enterprises stems from their need for customised networks to meet their vertical-specific connectivity requirements – as well as more basic considerations of coverage and cost of public networks, or alternative wireless technologies.

On the supply side, the development in cellular standards, including the virtualisation of the RAN and core elements, the availability of edge computing, and cloud management solutions, as well as the changing spectrum regulations are making private networks more accessible for enterprises. That said, many recently deployed private cellular networks still use “traditional” integrated small cells, or major vendors’ bundled solutions – especially in conservative sectors such as utilities and public safety.

Many new players are entering the market through different vertical and horizontal approaches and either competing or collaborating with traditional telcos. Traditional telcos, new telcos (mainly building private networks or offering network services), and other stakeholders are all exploring strategies to engage with the market and assessing the opportunities across the value chain as private network adoption increases.

Following up on our 2019 report Private and vertical cellular networks: Threats and opportunities, we explore the recent developments in the private network market, regulatory activities and policy around local and shared spectrum, and the different deployment approaches and business cases. In this report we address several interdependent elements of the private networks landscape

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What is a private network?

A private network leverages dedicated resources such as infrastructure and spectrum to provide precise coverage and capacity to specific devices and user groups. The network can be as small as a single radio cell covering a single campus or a location such as a manufacturing site (or even a single airplane), or it can span across a wider geographical area such as a nationwide railway network or regional utility grids.

Private networks is an umbrella term that can includes different LAN (or WAN) connectivity options such as Wi-Fi and LPWAN. However, more commonly, the term is being associated with private cellular networks based on 3GPP mobile technologies, i.e. LTE or 5G New Radio (NR).

Private networks are also different from in-building densification solutions like small cells and DAS which extend the coverage of public network or strengthen its capacity indoors or in highly dense locations. These solutions are still part of the public network and do not support customised control over the local network access or other characteristics. In future, some may support local private networks as well as public MNOs’ services.

Besides dedicated coverage and capacity, private networks can be customised in other aspects such as security, latency and integration with the enterprise internal systems to meet business specific requirements in ways that best effort public networks cannot.

Unlike public networks, private networks are not available to the public through commercially available devices and SIM cards. The network owner or operator controls the authorisation and the access to the network for permissioned devices and users. These definitions blur somewhat if the network is run by a “community” such as a municipality.

Typically, devices will not work outside the boundaries of their private network. That is a requirement in many use cases, such as manufacturing, where devices are not expected to continue functioning outside the premise. However, in a few areas, such as logistics, solutions can include the use of dual-SIM devices for both public and private networks or the use of other wide area technologies such as TETRA for voice. Moreover, agreements with public networks to enable roaming can be activated to support certain service continuity outside the private network boundaries.

While the technology and market are still developing, several terms are being used interchangeably to describe 3GPP private networks such dedicated networks, standalone networks, campus networks, local networks, vertical mobile network and non-public networks (NPN) as defined by the 3GPP.

The emergence of new telcos

Many telcos are not ready to support private networks demands from enterprises on large scale because they lack sufficient resources and expertise. Also, some enterprises might be reluctant to work with telcos for different reasons including their concerns over the traditional telcos’ abilities in vertical markets and a desire to control costs. This gap is already catalysing the emergence of new types of mobile network service providers, as opposed to traditional MNOs that operate national or regional public mobile networks.

These players essentially carry out the same roles as traditional MNOs in configuring the network, provisioning the service, and maintaining the private network infrastructure. Some of them may also have access to spectrum and buy network equipment and technologies directly from network equipment vendors. In addition to “new telcos” or “new operators”, other terms have been used to describe these players such as specialist operators and alternative operators. Throughout this report, we will use new telcos or specialist operators when describing these players collectively and traditional/public operators when referring to typical wide area national mobile network provider. New players can be divided into the following categories:

Possible private networks service providers

private networks ecosystem

Source: STL Partners

Table of content

  • Executive Summary
    • What next
    • Trends and recommendations for telcos, vendors, enterprises and policymakers
  • Introduction
  • Types of private network operators
    • What is a private network?
    • The emergence of new telcos
  • How various stakeholders are approaching the market
    • Technology development: Choosing between LTE and 5G
    • Private network technology vendors
    • Regional overview
    • Vertical overview
    • Mergers and acquisitions activities
  • The development of spectrum regulations
    • Unlicensed spectrum for LTE and 5G is an attractive option, but it remains limited
    • The rise of local spectrum licensing threatens some telcos
    • …but there is no one-size fits all in local spectrum licensing
    • How local spectrum licensing shapes the market and enterprise adoption
    • Recommendations for different stakeholders
  • Assessing the approaches to network implementation
    • Private network deployment models
    • Business models and roles for telcos
  • Conclusion and recommendations
  • Index
  • Appendix 1:  Examples of private networks deployments in 2020 – 2021

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