In Pursuit of Performance: Private Cellular Networks
Harbor Research
Over thirty years expertise in Smart Systems and Internet of Things growth strategy consulting and venture development.
Wireless networking in industrial and mission critical domains is a large untapped growth opportunity for smart connected systems. It will enable the transition from dumb products and disparate disconnected networks to smart systems that become “portals” into a whole new world of customer value-creation. A new generation of wireless technology—Private IoT and 5G Networks—is unleashing an age of pervasive connectivity and awareness that is fostering entirely new modes of customer interaction and service delivery.
The growth of devices on networks today is chiefly occurring in two distinct ways. The first is that previously separate networks—Wi-Fi, cellular, sensor networks, etc.—are all migrating toward shared IP with many installed legacy networks being absorbed in wholesale transitions into new hybrid network management frameworks. At the same time, new classes of more intelligent devices such as powerful video, imaging and voice recognition technologies at the edge of the network are becoming enabled.
Wireless networking has been around for decades and has generally implied the notion of universal connectivity, but you wouldn’t know that in today’s industrial and mission critical domains like manufacturing, supply chain, transportation systems and energy. Instead, we see a fragmented landscape full of proprietary device networks, conservative users and buyers, and broken promises about the potential of wireless technologies.
PRIVATE CELLULAR NETWORKS
Users and customers expect networked devices to be functional, ubiquitous, and easy-to-use. Within this construct, however, the first two expectations run counter to the third. In order to achieve all three, diverse networks must be fully integrated and that’s where the promise of wireless has yet to be fulfilled.
Private LTE and 5G cellular networks have new key features that translate into direct benefits for the digital enterprise:
Amid all this noise and clutter, a?new generation?of wireless communications for challenging environments has emerged. Private LTE and 5G networking technology for small cells operating in unlicensed & shared spectrum enables users and customers to integrate diverse sensors, machines, people, vehicles and more across a wide range of applications and usage scenarios. It treats user concerns—from reliability and service quality, to security and compliance—as challenges that can be addressed by a single, scalable wireless networking solution.
Historical constraints, including Wi-Fi’s incurable performance and security failings, and the cost of commercial cellular service, have limited wireless networking’s reach in the market. Clever players have banded together to enable privately managed connectivity for organizations at a fraction of the cost of commercial cellular services, creating a vast new market opportunity and a new source of disruption for traditional players, particularly cellular carriers.
PRIVATE NETWORK PLAYER ECOSYSTEM
While overall private networks adoption remains low,?growth indicators for market commercialization are emerging.?Realizing the potential of Private IoT and 5G networks will require the formation of new ecosystems where innovation will be driven by a collaborative community—from customers, from partners, and from their own people. To do this, they’ll need to:
Meet Increasing Customer Demand:?There are currently 900 disclosed private wireless deployments across 350+ organizations. These use cases represent diverse industires, including mission critical resource management and mining operations, industrial and infrastructure projects, and transportation use cases. Focusing on the right opportunities with the right partners will be a critical success factor. Segments showing strong early adoption. high value potential and promising growth include?Industrial Manufacturing, Mining & Resources (O&G), Electric Utilities, Education, and Transport Venues (Ports & Airports).?Each of these industries reflect strong markets for 5G disruption harnessing the value of high-performance wireless (1-10ms latency, gigabit data rates, etc.)
Adopt Diverse Spectrum Options and Tap into Government Initiatives:?Private LTE initiatives are disrupting traditional network and broadband deployments, with flexible infrastructure, services and spectrum access enabling new wireless applications and capabilities across a diverse set of industries. There is a rise in popularity of not just private networks, but of?hybrid networks?that embrace diverse spectrum options, like CBRS. Also, recent government initiatives, such as the?Infrastructure Investment and Jobs Act?have bold spending intiatives to expand networking.?Further policy initiatives around cyber security and data privacy may also increase the adoption of private networks. Significant investment and collaborative ecosystem initiatives make?the U.S. and Europe (specifically UK and Germany)?the most advanced markets for Private Networks today.
Understand the Entire End-to-End Customer Experience:?Companies often fail to develop networking solutions focused on the right capabilities and benefits because they don’t have a good understanding of what users and customers are trying to achieve and how they want to achieve it. Players can increase their chances of success by understanding the unique wireless networking requirements (i.e. performance, reliability, latency, managed services, etc.) in new applications such as safety-critical real time location systems.
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Look for Non-Conflicting Business Models That Encourage Collaboration:?Collaborative ecosystems are coalitions of self-motivated market participants that pursue a common goal, not mere subcontractors tied to a “command and control” scheme. Successful market development for new privately managed wireless networks will depend upon understanding and choosing new or modified business models. As control of these networks shifts to more neutral hosts, many new and novel managed services business models could and should emerge.
Build Open Collaboration / Align Partner Behaviors:?M&A activity in the private network space is accelerating, with programs like Microsoft Affirmed Networks and AT&T Network Cloud. But M&A is not the only way to build your ecosystem. The customer is buying an experience with a desired result, and the ecosystem partners must work in concert to create a superior experience that provides tangible benefits to all participants. Successful ecosystems are usually composed of proactive participants, not simply a group of companies in and around a particular market space. Accordingly, a community’s design needs to allow participants to invest resources and reap rewards—indeed, to innovate openly with one another—while pursuing individual interests. Players innovating around?network software and managed services, such as?Expeto,?Neutroon, and Allot, are emerging to enable seamless network lifecycle management and hybrid network orchestration?are disruption the traditional networking landscape
Act Early, Act Often:?Assembling a collaborative ecosystem calls for a balance of timing and participants. Most collaborative opportunities will fail and re-form as learning grows. These communities do not necessarily have a finite window but they need to be initiated early and gain momentum before a competitive ecosystem emerges in its place.
The opportunity for Private IoT and 5G Networks will be significant, with a total addressable market expected to exceed over $850 billion across all venues by 2032. With this highly anticipated growth, industry players will move to capture and expand this value. The?U.S., PRC, and broader APJ?regions reflect the most promising markets relative to value and growth for Private LTE and 5G?reflecting over 60% of the Private Networks global TAM opportunity in 2032.?Private IoT revenue opportunities exist across the entire technology stack, where much of the opportunity exists in industrial manufacturing, supply chain, resource segments and energy. The benefits of IP-based networking have become very clear and this, combined with innovation around Private IoT and 5G Networks, will accelerate the uptake of wireless adoption.
PRIVATE WIRELESS NETWORKS
TOTAL ADDRESSABLE MARKET ACROSS VENUES
The current state of industrial and mission critical environments point to an inflection point in networking technology evolution. The demand to connect more devices and leverage data-driven services is transforming the way OEMs, end users and technology suppliers interact. This will continually be hindered if wireless networks continue to isolate device groups in heterogeneous industrial environments. The Private IoT model introduces a potential remedy to the current fragmentation of the industrial wireless market.
PRIVATE WIRELESS NETWORKS USE CASES
Our on-going study of high performance networking technologies is aimed directly at the innovations driving the next generation of real-time enterprise. It includes market and use case segmentation, an analysis of the trends and forces impacting the private network opportunity, technology issues, suppliers, ecosystem analysis, business models, and growth opportunities arising from the convergence of networking innovations. Harbor believes society is at the cusp of a “perfect storm” of network connectivity.
Click here to access a preview of our full research report, “In Pursuit of Performance: Private Cellular Networks.”
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