Editor’s note: I used to have an editor who told me that if a headline is a question, the answer is probably, “No.”
Reflections on private 5G from Cisco Live. And from Hannover Messe and from Private Networks in a 5G World. We like to stay busy.
LAS VEGAS—Maybe it’s the heat that’s making my mind hazy. Or the neon lights and crowds. But when I look at private 5G, I see an incredibly complex network of stakeholders and I see the market somehow simultaneously developing at a snail’s pace and lightning speed. CSPs looking to monetize 5G by selling solutions into high value verticals have been peddling a vision of digital transformation that isn’t really a reality with any sort of scale. Meanwhile, enterprise users, particularly in markets with liberalized access to spectrum like Germany, are making their own digital transformation happen on their own terms. If that isn’t muddy enough, hyperscalers, some of the most valuable companies on the planet, are staking a claim, building ecosystems, and taking to market a product suite they can put in front of customers with whom they’re already well-established. And, of course, specialized system integrators have a key role to play too. So what are operators doing wrong, what else can they do, and what does all this mean?
As far as what operators are doing wrong, it’s maybe better stated that what they are doing—moving from a transactional to consultative sales model focused on hiding complexity and delivering outcomes—they’re just not doing fast enough. It’s organizationally difficult to make that sort of pivot away from selling SIM cards and commoditized connectivity to selling bespoke results aligned with what different verticals want. Mining, manufacturing, healthcare, retail, they’re all very different. That said, for public companies, shareholders often don’t care that things are difficult to do.
Boingo Wireless Chief Technology Officer Derek Peterson put it this way in a chat: “If you’re a publicly-traded company, you’re judged quarter by quarter and that can be tough. You’re making these investments that take time. How do you do it? It’s hard to be everything to everybody. You’re taking a bunch of network people and trying to get them to rethink about partnering. But they’re learning. They’re learning quick. Maybe not quick enough.”
Boingo is among technology partners supporting Google Cloud’s private 5G play which follows similar moves from Microsoft and AWS. The idea is to provide a “turn-key” private 5G network with the option to run network management, control, and user plane functions in the centralized and/or edge clouds. Peterson rightly noted that, in the context of the venues Boingo specializes in connecting, private 5G doesn’t supplant Wi-Fi or distributed antenna systems. “They want their DAS, they want their Wi-FI and they want their private network because they want all of it. Trying to find someone who can do all of it, there aren’t a lot of people.”
There is a lot of hay being made around ecosystem development as it relates to selling 5G into enterprise. And that’s all well and good. But in that paradigm, “The [service providers] are being squeezed out of the middle,” Cisco’s Ken Davidson, director of product management for IoT Control Center, told me on the sidelines of Cisco Live this week. “The service providers are going to have to reinvent themselves into something different. What we see is…the ones that survive will be the ones that become managed service providers.”
Back to that pivot, Masum Mir, vice president and general manager of Cable, Mobile and IoT at Cisco, told me that operators are accustomed to “hand-crafting their network” and taking on “long-haul system integration.” But that doesn’t work for private 5G. Enterprises want fully cloud-managed, software-centric operations that slot into their existing IT organization and operating model. “When that happens,” he said, “you have taken the network system integration problem off the table.”
Is there a different tack that will help operators crack open enterprise, get the revenues flowing and start delivering 5G-enabled digital transformation at scale? My colleague James Blackman is reporting from London on just this at an Informa event called Private Networks in a 5G World. The program opened with Omdia Principal Analyst Pablo Tomasi talking around making private 5G replicable across enterprises and scalable across industries. He said the “big opportunity” for operators may be to “jumpstart” private 5G in markets where regulators haven’t set aside spectrum for enterprise use. “They can become the first entrants in these new markets,” Tomasi reasoned. “Eventually regulators will liberalize spectrum and the market will continue.”
This matches up to how Mir is thinking about what else operators can do. “In other countries, we’re also looking at can we partner with carriers who might have spare spectrum?…It’s the same offer but leveraging their spectrum.”
Omdia tallies 50 private 5G product launches in the past year. “Which shows that everyone wants to be in this market,” Tomasi said. “But a lot of the…big splashes are not commercial. Let’s be honest. This is a difficult scenario. What is [operator’s] unique asset, ahead of system integrator?” But what about all that spectrum? “Some tell me this is a big asset. But it is a roadblock because the market only starts when it’s liberalized.” Read James’s excellent coverage here.
Also from that event, the operator defense courtesy of Telia and Deutsche Telekom. In brief from Henning Huuse, manager of 5G business development at Telia: “Two years ago, the CEO [of the industrial park] said, ‘This is way too important to leave to telcos. We need our own spectrum – to do it alone. And we took that as an invitation.”
Back to Germany where many industrial giants have quickly begun to make use of the mid-band frequencies set aside by regulators, and back to Davidson: “It is on fire,” he said. “Everybody is embracing it like there’s no tomorrow. What that will do is it will force a much more accelerated evolution of the technology at a totally different scale than we’ve ever seen before.” Enterprise-led private 5G “is going 95 miles per hour.” CSP-led private 5G, more like around 20 miles per hour, Davidson reckoned.
There’s another angle here, covered at length at the giant Hannover Messe industrial fair, a show we’ve covered in these pages for the past six years so we can try to figure out how all of this is and will come to life. From reporting by our Executive Editor Kelly, that other angle is this: is private LTE sufficient at least for now?
“Just because 5G has come, doesn’t mean people will leave everything and come to 5G,” Jagadeesh Dantuluri, GM of private and dedicated networks at Keysight Technologies, said during a session at Hannover Messe. It takes time, effort and money to deploy private 5G, when most companies already have a combination of Wi-Fi and wired connectivity that works. “All those systems will not go away, even with 5G,” he adds. “They will co-exist.” And if companies really do want to get into cellular, well, 4G is a lot more mature and less expensive.
To those challenges, Dantuluri adds: A lack of industrial-grade 5G chipsets and devices, lack of cellular system familiarity/expertise in enterprise IT departments, and depending on the region and/or company, lack of spectrum resources. He also points out that a number of practical questions have yet to be answered: For instance, who guarantees the potentially stringent Service Level Agreements that private networks promise to deliver: An operator, perhaps—but what if, as in Germany, enterprises don’t need an operator because there’s a dedicated spectrum allocation? Will it then be an equipment provider, or a managed services provider as Davidson saw as a potential outcome. More coverage from Hannover Messe here, here, and here.
So what does it all mean for operators? “I think every carrier has to figure out how to reduce their operating cost,” Mir said. “Price pressure is not going away. Getting a handle on the operating costs is super important. We should do everything in our power to build technology that reduces their long-term operating cost.”
And what does it all mean for, say, Cisco? Well, given that the company supports operators and enterprises, and has partnered with specialized SIs to drive regional private 5G adoption, and that operators are moving to more IT-type networks that are software-driven and programmable, and that enterprises are embracing cellular but in a way that complements Wi-Fi and existing IT workflows, it would appear to be a good time to be Cisco.
“I think there’s a very important role for us to play,” Jonathan Davidson, Cisco executive vice president and general manager of the Mass-Scale Infrastructure Group, said. “One, because we’re a trusted partner to many enterprises globally. Second, we’re the number one Wi-Fi vendor in the world. And three, I think we’re really good at helping system integrators and [service providers].”