Telco ambition put at risk by private cellular networks
The popularity of private cellular networks has increased among enterprises. There are now initiatives in 15 countries for businesses to deploy private networks according to the tech market advisory firm, ABI Research. This includes both arrangements for enterprises to obtain a spectrum from the regulator directly, as well as spectrum which is held by mobile network operators. Either way, private cellular network operators are becoming an increasing threat to the traditional communications company.
“The rising number of these spectrum initiatives underpin the strong momentum for private cellular networks that we see within enterprises around the globe,” says Leo Gergs, Research Analyst for 5G at ABI Research. “With the very economic pricing, we will see even more enterprises expressing interest, as the ecosystem for 5G connectivity matures.”
As much as the question remains of who will operate private cellular networks for enterprises, we are now seeing more network operators entering the stage which focuses on providing private cellular networks for enterprises. Specialist operators such as Anterix, Ambra, Citymesh, Edzcom and Tampnet will disrupt the market by offering business models to companies that follow an ‘Everything-as-a-Service’ (XaaS) approach. Since all these network operators have a system integrator background, they have the specific knowledge about requirements, problem areas, and the complexity of deployment. Therefore, specialist network operators, enjoy an advantage over traditional telcos in bringing connectivity to enterprises.
Large enterprises may have the manpower and the necessary financial resources to manage the network on their own. Gergs notes that, “Globally, there are only round 10 million enterprises with more than 500 employees, while there are more than 700 million small & medium sized enterprises with up to 500 members of staff, which will look for third parties to manage a private cellular network.”
To realize this immense revenue opportunity with SMEs, network operators have to leave their comfort zone and offer appealing solutions to them, which are very different from the offerings in the consumer domain. These should revolve around monetizing services such as the provision of a particularly high bandwidth, low latency, or the provision of additional capabilities like network slicing. All these costs should ideally be captured in regularly occurring subscription fees, to keep the amount of upfront financial investment as low as possible.