Private 5G networks – Options for MNOs

With the increasing interest in private networks, operators are exploring business models and potential rolls for this emerging opportunity.

Dean Budley

Founder & Director, Disruptive Analysis

21 Dec 2021

Private 5G networks – Options for MNOs

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2021 has seen huge interest in enterprises deploying cellular technologies – 4G/LTE and 5G – for private or localised, often site-specific wireless use-cases and applications.

It ties in with the telecoms industry’s view of monetising B2B “verticals” for new 5G investments and is also often aligned with discussions about network slicing and edge-computing. It parallels trends in industrial transformation, Factory 4.0 and post-pandemic recovery funding for national infrastructure and businesses.

All of this goes beyond the normal public service-type subscription models traditionally offered by carriers/MNOs (mobile network operators). It instead overlaps with some of the ownership and operation models more common for corporate Wi-Fi and IT/cloud – illustrated by Amazon's recent announcement of AWS Private 5G. In industrial settings it also fits alongside other specialised wireless technologies and OT (Operational Technology) systems.

While the advent of 5G – and especially its applicability to industrial IoT (IIoT) has catalysed focus on this area of private and vertical networks, many people are surprised to discover that the sector actually has a 20+ year history. The author of this blog first saw a GSM picocell, intended for enterprise deployment, in 2001. Private networks have been deployed on oil rigs, military bases and large ships for many years. A special version of cellular technology called GSM-R is widely used for railways’ connectivity needs. Small “edge” core network elements for such deployments have been available since 2005 or even earlier.

But 5G changes the game significantly. Firstly, its ability to handle high-performance and low-latency applications makes it significantly more attractive - beyond just a few specialised niches. Perhaps an even greater "democratising" factor is the virtualisation and cloud-based trajectory of 5G core networks and the management/orchestration layer.

But also the timing is important – 5G is emerging at the same point that enterprises are connecting many more devices and systems, collecting and acting upon gigabytes of sensor data, exploiting machine-vision, AI and robotics, and looking to increase flexibility and modularity of their assets – as well as productivity and safety of staff. Reliable wireless connectivity is essential in modern ports, warehouses, factories and hospitals – as well as consumer-related locations such as sports venues or entertainment resorts.

Larger-area users such as utilities, public safety agencies and railways are also demanding ever-more connectivity options, often with even higher reliability and security requirements than most MNOs.

Private networks (rather than standard public MNO services) are demanded by enterprises for a number of reasons:

  • Coverage: many businesses operate in areas outside the normal population centres, such as industrial zones, remote regions or even offshore or underground. These are often underserved by national MNOs. They may also need enhanced coverage indoors or on-campus, especially in areas with lots of metalwork.
  • Control: enterprise applications may need specific localised network capabilities such as ultra-low latency, or extra high-capacity uplink for video cameras, which need customised radio configuration. Moving objects may require redundant connections and emergency-stop capability for safety reasons. There may be a desire to keep sensitive data on-premise, or for local 5G identity methods to coordinate closely with IT security practices.
  • Cost: there is little appetite for businesses to pay per-GB for mobile data traffic, especially on their own sites. Owning a private network (or agreeing a special deal with an MNO) can change the cost model significantly. Others may be concerned more about liability and the cost of operational downtime if a network fails, so are willing to take ownership of networks for risk-mitigation and compliance reasons.
  • Cloud: Many possible private 5G use-cases align with cloud/virtualisation of specific applications. Data collected from industrial automation and wireless sensors may be used in digital twins, or analysed with AI tools. Realtime operations and global supply-chain management systems may be linked directly to onsite networks and devices. IoT systems may be controlled via edge servers. There may be benefits in integrating the cloud and network platforms – as the AWS Private 5G solution is attempting to catalyse.
  • Customers: Some private networks are intended as “micro-MNOs”, with the enterprise selling on connectivity or other services to local tenants. For instance, a private network on a cruise ship may sell wireless services to passengers, or a university could provide private-network SIMs to staff and students.

In short, there is a growing demand for private (or virtual-private) connectivity options for enterprises and governments, with extra features, customisations and a range of ownership/business models. This is similar to what has been seen in the past with corporate data networks or voice/unified communications systems – or even supply of electricity to industry, with its mix of grid-based power and private onsite generators.


Dedicated networks vs. Network-slicing

Often the term “5G private networks” leads to an assumption that there are two only options for delivery of these capabilities:

  • A separate and dedicated network built for an enterprise, either created internally or provided by a systems integrator. This may use local or shared spectrum bands or rely on an MNO’s normal frequency allocations. Software network functions (such as the core) may be on-site, near-site at an edge datacentre, or in the cloud.
  • An extension or “slice” of an MNOs’ main public 5G network, configured to the enterprise needs and running in the operator’s mainstream spectrum. Some telcos use terms such as “campus network” or “non-public network” to describe their private network services.

The latter option usually has a few variations suggested. It may be necessary to add extra dedicated network coverage (for instance inside a building or factory), or to cede some form of control to the enterprise such as ownership of the user/device identities, or allowing local breakout of data traffic. Depending on the 3GPP version deployed in the MNO’s main network, it may need a separate core supporting more vertical-optimised features for the enterprise.

Originally, the mobile industry expected MNOs to be in the driving seat for 5G private networks via slicing, even though local 2G-4G systems were often run independently. However, the last two years have undermined that assumption to a fair degree. Many in the industry have been surprised by the appetite for enterprises to deploy their own 4G/5G systems, as well as a huge wave of systems integrators and vendors emerging to cater to them.

There is still a lot of involvement by telcos as well with enterprise / private networks, although often this has been more as integrators of the same style of custom deployments, rather than offering slices of the main macro 5G networks. Interestingly, this model has even allowed fixed operators, as well as MNOs, to participate in the private 5G market. (For instance, Verizon Business operates a 5G network for the Port of Southampton in the UK – a country in which it does not operate public mobile services).

There are numerous reasons for this, although one of the drivers has been much better local spectrum availability (such as the CBRS band in the US, or various other options in markets like UK, Germany, Japan and France). This, together with the desire in enterprise to push faster towards 5G Standalone and later Release 16/17 features, has led to a focus on alternatives to the (delayed) network slicing vision.

A further issue has been the need for industries to be serviced by sector-specialists familiar with the key applications, legacy systems and business practices/regulations. Telcos typically only have deep knowledge of a few verticals, and so need to pursue partnerships or develop new expertise inhouse. Other factors have included the need for “hard” service level agreements (SLAs) and a desire for greater customisation than is normal MNOs.

graphic 1

Original vision for MNO-led "enterprise 5G" is changing

How MNOs can engage

There is still optimism among operators and vendors that deployment of their own standalone cores, plus subsequent upgrades to Release 16/17, will lead to a renaissance of the "sliced national network" vision for 5G private networks.

While this may occur for certain situations, Disruptive Analysis does not expect this to stem the tide of dedicated 5G infrastructure deployments by enterprises themselves, or new types of telco like the towerco's, cloudco's, specialised industrial MNOs and IT outsourcers.

However, there are multiple ways for legacy MNOs to monetise private networks, even without slicing the main national infrastructure. As already mentioned, a number have pushed the responsibility for enterprise 5G to their internal systems integration units, or vertical-specific divisions. Deutsche Telekom's T-Systems, or Telstra's Mining business unit, are good examples of this.

We can expect many operators to select a few verticals to focus on for private 5G, usually mirroring their existing enterprise customer base, or other local market trends such as government investment in specific sectors. Some may acquire vertical specialist integrators.

But beyond those highly-customised options, there are also a range of more "productised" and automated elements for private 5G which can be delivered by MNOs. While these may mean that the operator isn't the "lead" provider of connectivity, they can still monetise many value elements within the overall solution. Examples of such Private 5G enabling service are:

  • Spectrum leasing or secondary re-use: Various MNOs and regulatory agencies have provided localised spectrum for enterprises in remote areas in the past – for example, a mine in the Australian Outback creating a private network, or for military bases. These have typically used manual one-off deals and regulatory processes. These types of arrangement may become more common – and more automated – in future, especially as some new 5G licenses come with terms mandating a leasing option. We may see some MNOs start to sell “dark air” as a product, the same way fixed operators sell “dark fibre”.
  • Network operations centres (NOCs): There is a growing need for NOCs for private networks, especially where they service critical industries such as manufacturing or ports. These facilities monitor performance and uptime – perhaps down to a device, application or maybe slice level in future. They can also coordinate fault-reporting and fixes, offer input into planning and upgrade decisions and so on. While some enterprises will want inhouse NOCs, others may be prepared to outsource, especially for multi-site operations, or where the NOC specialist has the latest tools and can hire the best engineers. This is a significant opportunity for telcos to participate in the private network market.
  • Multi-site network connectivity: A number of the leading proponents of private 5G are large companies (or governmental agencies) with multiple locations either domestically or internationally. A retailer with 1000 stores, a car-manufacturer with 17 global plants and a broad supply chain, or a train operator with 50 stations and yards are all examples. These organisations will likely need to link together their various private networks, both for overall management purposes, and to allow for redundancy and analytics. They may also look to obtain backhaul from a single supplier, or integrate with their other network assets. Operators (both MNOs and fixed providers) can offer WAN/SDWAN products optimised for private 5G, for instance in terms of latency, routing and resilience.
  • Multi-tenant monetisation: A number of private 4G/5G networks are almost micro-MNOs in their own right, selling on access to local tenants. An airport network may run a commercial operation selling connectivity to fuel, catering and baggage-handling providers. A property company with a campus 5G network could provide local SIMs to tenants or IoT connections to on-site retailers. MNOs could offer “billing and charging as-a-service” to the local network operator, perhaps linked to roaming or other partnering arrangements.
  • Managed telephony / voice: While many of the current private 4G/5G networks are being deployed by industrial or public safety agencies requiring push-to-talk functionality, some segments require “normal” mobile telephony services, either for internal corporate communications, or for calls with the suppliers, customers and others. Telcos (or specialist cloud communications providers) could offer either IMS- or UC-based voice and messaging options on a hosted basis. This is very similar to telcos offering cloud telephony to businesses running their own fixed/wired private networks. A secondary element to this could also be emergency calling as a service
  • SIM / eSIM management: One area of private 5G network management that may prove problematic for some enterprises – dealing with ordering, provisioning and managing SIM cards, or downloadable eSIM profiles. Obviously this is an area of deep expertise for MNOs – and one that could potentially be offered as a service. There could also be some interesting opportunities with hybrid public/private SIMs or multi-IMSI versions that could be switched between modes.
  • Managed Guest 5G: There is a possibility that easy access to small cells, along with local (perhaps unlicenced) 5G spectrum leads to venues like hotels and cafes offering “guest 5G” to visitors or customers – perhaps even for free, with a Wi-Fi like model. While at one level this may compete with MNOs’ public services, such networks may still require outsourced management. Just as some telcos offer managed guest Wi-Fi for venues, with various authentication and reporting options, we may see similar propositions emerge for small 5G sites.

This is just a selection of possible options for operators in the Private 5G arena. In addition, there may be novel partnerships where the MNO takes much greater involvement in new enterprise wireless systems – for example, providing national mobile networks for public safety agencies, or dedicated 5G / V2X coverage for new highways and transport corridors.

In general, MNOs probably have a greater role to play in networks that include a component of wide-area coverage, rather than purely on-premise for indoor or campus networks, although that will vary somewhat.

It also appears that hyperscale cloud companies (and some major network vendors) will look to MNOs as potential channel partners for combined cloud/edge/5G solutions. The recent AWS announcement suggested that new US 5G operator Dish may collaborate on B2B propositions. Given the automation-heavy nature of that solution – albeit just in preview version for now – we can expect others to try to create as many templated and easy-to-use features for Private 5G as possible.

graphic 2

Enterprises use wireless/5G networks at multiple scales

However, what is essential is that MNOs do not view verticals and private 5G networks just as "cookie cutter" service opportunities at a top level. There are certain elements and ingredients that are standard and automatable, but others will need detailed execution and partnership plans, and a willingness to provide project-based integration and customisation services.

Over time, Private 5G networks will become more standardised, better understood, and more aligned with web-based order, fulfilment and operation. Some may evolve towards true "on-demand" products with minimal additional expertise required. But the most complex – and most transformative from an enterprise point of view – will likely remain quite "hand-on" in terms of design and optimisation.

MNOs should carefully consider which verticals (or, perhaps, horizontals such as multi-site companies) they are best-placed to serve with both current generations of private 5G and future iterations. They should also be prepared to offer individual service components, rather than complete end-to-end systems.

A good philosophy is to aim for "realistic ambition", rather than "strategic over-reach". Operators which try to do everything for private 5G risk ending up with nothing, by spreading their efforts too thinly, and missing out on pragmatic (but profitable) niches.

Dean Bubley (@disruptivedean, ) is the founder of Disruptive Analysis, an independent technology industry analyst and consulting firm based in London. An outspoken analyst & futurist with over 25 years’ experience, he specialises in mobile / telecoms fields, with an eye on broader technological, futurism and societal contexts. He is one of the leading market observers and forecasters covering 5G, network infrastructure & software, IoT, telecom business models, voice/video communications, AI and broadband/spectrum policy.


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