Omdia Observation: Global 5G private network development is still in its early stages

[[376420]]

According to the latest report from market research firm Omdia on January 16, at the 5G World event held in November 2020, the private network ecosystem gathered online to discuss all aspects related to private networks and enterprise 5G. The discussion involved all aspects of private networks, from business models and use cases to regulations and technologies-including adjacent technologies such as time-sensitive networks (TSN) and network slicing. The event conveyed some clear and unambiguous messages: results are coming, technology is not the problem, but it is a long and tortuous road, and specialization (and specific skills) is required. Overall, private networks are still in the early market stage, which means that education (of suppliers and enterprises) remains the top priority.

Are we all on the same page?

The beginning of the private network story is obvious to all players: spectrum availability and market gaps are stimulating the development of private networks.

Ofcom (telecoms regulator), Edzcom (private network specialist), Athonet (core network provider), Bosch (industrial supplier) and many others see spectrum as a market driver. In addition to spectrum, there are unmet enterprise requirements that fall between the strengths and weaknesses of Wi-Fi, Land Mobile Radio (LMR) and public cellular networks.

Wi-Fi has taken center stage in this world, not only because private networks often target the same use cases and areas where Wi-Fi has traditionally been weak, but also because Wi-Fi was the inspiration for private networks. An emerging theme is to deliver private networks that meet enterprise expectations and current skills: Unlocking specific enterprise areas requires the simplicity and manageability of Wi-Fi.

These points are clear. However, defining private networks remains a mystery. On the one hand, the concept of private networks is clear enough—anyone can understand the market drivers and requirements, but at the same time it is vague enough—that vendors can develop diverse strategies based on their strengths. At the event mentioned in the opening paragraph, Toshiba and other companies discussed different types of private networks:

Completely private, dedicated infrastructure;

A hybrid model with dedicated and shared infrastructure (e.g., private RAN and shared core);

Virtual private networks are not strictly private networks because they are public networks that use software to provide a private-like experience.

Different deployment types also add to the complexity. Wide area networks for manufacturing campuses, utilities, and portable or temporary private networks for media and festivals are all examples.

Pablo Tomasi, principal analyst at Omdia, said: "This complexity will persist, but it will be critical for the education market to understand the 'dos' and 'don'ts' of each option. This is because different options may be better suited to different verticals - often depending on the use case. Enterprise education will be a tricky one, with different vendors bringing different perspectives and the suitability of different solutions.

Hot Topics in the Private Network Market

As a market targeting enterprises of all sizes and financial strengths across all vertical industries, there are many hot topics in the private network market.

How to manage the network has been (and will continue to be) a hot topic (skilling the team or finding a partner?), and there is no single answer for the entire market. Broadcasters may use some portable mobile network with boxed 5G technology, managed and operated by the operations team, service provider or any other service company. There are also multiple options, including the possibility of network slicing as a solution that can meet certain requirements, but at the same time it also brings new problems.

At the 5G World event, technology discussions were also at the core of discussions on the private network market, with many companies such as Metaswitch discussing the challenges and opportunities in the field. The idea conveyed by the event was that the main challenges are not technical challenges, and Omdia agrees. A big unresolved issue in the market is about the business aspects and use cases of private networks. The exploration of private networks has gone far beyond the technical part and into the business packaging around it, the ROI that has been seen or expected, and the ability to successfully scale up the technology after deployment.

All things private networks are still in their infancy, which means the opportunities are vast. Results are coming as companies like the Port of Oulu and Air France share their private network experiences, which will become increasingly important in validating private networks across multiple decentralized industries.

From an enterprise perspective, the mantra is use cases: These can be big or small, but they are all designed to address specific business needs and problems. In this regard, Omdia sees the emergence of 5G private networks. While companies such as Ford and Lufthansa are looking at the technology, the conclusion from enterprises is clear: they are looking at some use cases for 5G, but are also exploring other options (such as Wi-Fi 6) for others. Don't think this will be a 5G-only world.

Businesses, suppliers and regulators

Enterprise: When will 5G arrive?

Enterprises have a clear point that may frustrate some vendors and providers: Tomorrow is not the time for 5G. Even if a company is testing 5G private networks now, it does not mean that it is ready to bet on the technology. As mentioned above, 5G is one of many options being tested and evaluated. Even if it is verified, enterprises will not deploy it easily. Some enterprises said that even in undeveloped environments, 5G is not an easy thing - many issues still need to be resolved, such as long-term savings benefits (such as reconfigurability) and business models.

Suppliers: Market and Trust

Edzcom (recently acquired by Cellnex) is a private network specialist that represents the current state of this player category: it quickly targeted this emerging opportunity and has a clear strategy in place. The company is focused on and wants to understand the few target segments it is involved in, so it has chosen 5 verticals to understand the specific problems and become a leader. Edzcom understands the industry knowledge required and the balance between what is actually happening and what could happen. It hopes to gain enough vertical expertise to be able to fully understand and solve real problems, and the company will follow spectrum liberalization to expand. All of these steps can serve as lessons for other vendors.

From the enterprise side, companies like Lufthansa are looking for partners they can trust. In these early days, companies know that many vendors will learn from these first deployments, so the keyword here is trust. Education and clarity are necessary. This is something service providers and other companies need to keep in mind as they embark on their private network journey.

Regulators: Focus on spectrum

Although often overlooked, regulators hold the key to the private network market. Spectrum will continue to play a key role, not only as a driver of the private network market, but also in shaping the future of innovation and the ecosystem. For example, Germany's approach is to provide local spectrum that can be used, while also taking advantage of contiguous 5G spectrum provided by service providers (subject to agreement). This creates a unique spectrum environment that is different from other countries.

While many spectrum allocations are in the sub-6 GHz band, regulators are studying mmWave spectrum, with Finland planning to use 24.25-25.1 GHz (850 MHz) for private networks in 2021, and Germany also conducting research on 26 GHz spectrum. New spectrum will enable new discussions, better support certain use cases, and will generally bring new opportunities and challenges to the evolving market.

[Note: Omdia was formed by the merger of Informa Tech's research division (Ovum, Heavy Reading and Tractica) and the acquired IHS Markit technology research division. It is a leading global technology research organization. ]