A variety of business models can be used when adopting cellular network technologies for private network purposes – ranging from pure private networks with no connection to public service providers to network slicing in public networks. Now, we’re seeing new business model innovations in this area. Here, we explore the five tools making these developments possible.
Before introducing private LTE, three main categories of business models dominated the market for connectivity services. The cellular network-based model, which uses a licensed spectrum, offers traffic-based connectivity services for an OPEX-centric model, where businesses pay monthly based on service usage. On the other hand, you have the private network-based model, which uses an unlicensed spectrum for a more CAPEX-centric model and dedicated Public Land Mobile Radio (PLMR) networks. These two traditional models will remain, but multiple inflection points are now driving a broad set of new business model options, including:
- The introduction of cellular 4G and 5G technologies in private networks, both in shared and licensed spectrum
- The phase-out of legacy wireless networks, such as PLMR
- The introduction of network slicing in public networks
- Network sharing realization for spectrum, network assets, operations or combinations of these three-building blocks
By explaining these options and how new business models can be created, you can make it easier for your business customers to understand the options and ensure they’re aligned with their specific needs.
The five key tools for developing private network business models
- Access to licensed spectrum
- Ownership of network equipment and software
- Managing and operating the networks
- Hybrid, public and private, network use
- Slices of public networks for private use
Access to licensed spectrum
Cellular 4G and 5G technology can be used in three different types of spectrum. The options within the unlicensed and shared spectrum are available to all businesses, and the licensed spectrum options require a partner with licensed spectrum assets.
The partner owning the licensed spectrum has two main options. Firstly, they can lease out access to spectrum, or provide spectrum integrated with a broader offering. This is a fairly novel idea, as the lease can be limited by geography, time, or for a specific use. The second alternative is to offer spectrum as part of a broader offering — a complete connectivity service, where the spectrum owner also owns the equipment and operates the network. Service providers can also consider offering combinations of the spectrum and managed network operations to businesses keen on owning network assets, with the final option for service providers to offer spectrum and network assets to businesses looking to operate their own networks.
It is common to expect the status quo to remain: data bucket-based business models as the only option for cellular networks in licensed spectrum, and unlicensed spectrum as the only option for access managed enterprise networks. The essential point here is that both service providers and businesses need to explore a broader range of options for licensed cellular spectrum, especially as the most innovative spectrum for 5G services – in high-band spectrum – only exist as a licensed spectrum.
Ownership of network equipment and software
Businesses can pursue two different paths when it comes to ownership of network assets.
- A CAPEX-centric model: buy and own required network assets
- An OPEX-centric model: rely on network assets owned by a communication service provider or a third-party that owns the network assets.
Investment incentives have an impact on selecting the optimal ownership model for the network assets and should answer these questions:
- Is the network dedicated to serving a businesses’ own needs, or used for a mix of private and public applications?
- Are private or public needs driving investment decisions?
- Are service providers and the affected businesses aligned on the required investment timing and size?
- Will the network carry services from multiple providers of cellular services?
The range of possible answers to these questions creates more possibilities for service providers and businesses than we’ve ever seen before. There is also an opportunity for pure asset owners to enter
the market, where neither service providers nor businesses wish to own the network assets.
Managing and operating the networks
It is common for businesses today to rely on a network operating partner for cellular services as well as local area networks. Communication service providers offer cellular services in a licensed spectrum. System integrators offer wireless LANs as a managed service to enterprises – and small and medium business manage their networks.
These two models for wireless network services are different when it comes to managing the networks:
- Cellular services are provided end-to-end from the user device to the core of the mobile networks
- Wireless LAN services rely on two network domains – a wireless network at the customer premises and ethernet/IP VPNs to business premises
The introduction of private cellular networks opens up new opportunities. At one end, private cellular networks can be managed by communication service providers, for dedicated or shared use. At the other, enterprises can manage a cellular network dedicated to their business. The optimal solutions also have couplings between the management of cloud infrastructure and application layers.
Hybrid, public and private networks
When it comes to business, part of business model decisions relate to the nature of the mix of private and public network use. The buildout of a 4G and 5G network at a business premises can serve both purposes. The public network can focus on serving your staff, and any visitors, with connectivity for their personal productivity environment, such as smartphones, tablets and laptops.
The need to improve cellular services at business premises for public use often comes from insufficient indoor cellular coverage and capacity, and the need to eliminate white spots in outdoor cellular coverage.
The private network use focuses on serving business processes with no connection to wide-area cellular networks. These networks are closed to external interactions. Both radio and core networks reside within business premises and can interface distributed cloud platforms.
A hybrid network model serves both purposes, with a logical separation of the two parts on one physical network. The radio portion is always shared, and the core parts can be located and operated in different ways.
The need to serve both purposes affects the three choices above.
Slices of public networks for private use
The final piece of the business model considerations relates to network slicing, which is a significant innovation for cellular networks. Network slicing allows a communication service provider to tailor the capacity and capabilities used for different purposes. The introduction of network slicing provides for separation of different traffic types, allowing for functional differences between different slices with potential for entirely different business models between slices types.
In its most basic form, you define two broad network slices for the network: one private and one public slice of a premises-based network. The consolidation of public land mobile radio for national safety and public security as well as public mobile services in the same physical network uses two different slices.
Network slices can also be more granular serve a category of use cases — the separation of enhanced mobile broadband traffic from different internet of things categories. I see network slicing as the white paint on roads. Separating traffic of similar types, and enabling bus and bike lanes to co-exist and change dynamically.
Network slicing is in the early days of the realization and business model innovation cycle. The most significant step is to move from “one slice fits all” to create a private and a public slice of the same physical network, which is taking place on a small scale already. The scale-up of network slicing across cellular networks can drive two major innovation streams. First, businesses can select a slice of a public network as a real option for their private network needs – something that has not been possible so far. Second, businesses can increase the value of a premise-based network realization by using it both for private and public purposes. Third, networks can offer a higher granularity of connectivity services end-to-end between the edge and devices with high quality and security.
The best business model for you and your business
The choice of business model will vary between industries, but the main purpose of this blog post is to help you think beyond private and public models and see the bigger picture. To stimulate you to think out of the bucket, dominated by “one-slice-fits-all” and go beyond when defining future business models for private, hybrid, and slices of cellular networks.