We’ve been speaking professionally about pervasive computing and the Internet of Things since the late 1990s when most people in business had no idea what we were talking about. Now everybody knows what we’re talking about, and many companies are trying to take part in it, but “giving the world a digital nervous system” has turned out to be remarkably difficult. If corporate IP battles and geopolitics don’t bring you to your knees, the most basic technical issues will—for example, achieving secure, reliable, customizable, affordable wireless connectivity for devices. Just ask anyone caught between the performance failures of Wi-Fi and the onerous per-bit cellular rates of the major carriers.

But the great virtue of technology problems is that sooner or later they all come out in the wash. Today, connecting things to other things and having them work as planned, and not going broke in the process, is almost solved at last. One solution gaining traction is private cellular networks, which means a private cellular network delivered on shared spectrum (as opposed to the licensed cellular spectrum that carriers use), and configurable for everything from simple sensor data to high-performance video.

Because wireless spectrum is a finite physical resource, the political solution had to precede the technical one in this case. Innovators evangelized the idea for a few years, and then governmental agencies allocated the spectrum to make it possible. Thanks to Wi-Fi’s incurable performance and security failings, and the cost of commercial cellular service, “LTE performance with Wi-Fi simplicity” is an idea whose time has come.

A new generation of wireless technology—Private IoT and 5G Networks—promises an age of pervasive connectivity and awareness that will foster entirely new modes of customer interaction and service delivery. Private networks augment OT networks, driving new opportunities to create value from enterprise data.

The value for enterprises is clear: private networks can enable new value creation. Wireless networking in industrial and mission critical domains in particular 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 PRIVATE NETWORK VALUE PROPOSITION

source: Harbor Research

The Advent of Private Cellular Networks for
Industrial and Manufacturing Applications

The growth of devices on networks today is chiefly occurring in two distinct ways. The first is that previously separate networks—wifi, 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.

One of the most compelling opportunities Private LTE enables is the expansion of wireless cellular into new mission-critical markets that cellular has not addressed in the past because the traditional carrier business model has been all about maintaining control of the network and its use.  Most of these emergent mission-critical applications require a new network management and service delivery model that shifts control of the network to a “neutral host” model where end customers and domain-focused players can deploy and leverage wireless in new applications.  Breaking the wireless carrier business model will allow this expansion to occur.

New networking technologies are reshaping how manufacturing businesses operate. It starts with the proliferation of both mobile “human-connected” devices and machine-connected Internet of Things (IoT) devices, which allow us to gather exponentially more data. Distributed information architectures enable far more efficient and fluid fusion of data which, in turn, enables us to capture, model and analyze information through local and cloud computational resources.

The next cycle of technology innovation and network development in the smart connected systems arena is setting the stage for a multi-year wave of growth in the industrial and manufacturing arenas based on the convergence of these innovations.

PRIVATE NETWORKS SUPPORT KEY USE CASES

source: Harbor Research

In today’s industrial enterprises, many managers feel that they do not have enough data, the right data or reliable enough data to make accurate business decisions.  Even information that seems common, such as accurate profit and cost information, often proves to be elusive.  Some reasons for this are siloed and inaccessible storage processes for data, an unclear understanding of how to extract value from data, and the absence of data that is not being collected.  This has often prevented industrial firms from successfully leveraging the data flowing from their equipment and operations.

New private cellular networks will help solve these challenges.  These networks can act as “overlays” to existing network infrastructure in plants and factories and enable new modes of data collection, aggregation and analysis.

Private networks enable new applications and use cases such as:

• The widespread collection of data to inform maintenance
• Asset management and modernization
• Video and security analytics
• Flexible production lines
• “Always connected” workers

AN OVERVIEW OF PRIVATE NETWORKS

source: Harbor Research

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:

• Quality of service and predictable latency, configurable in software
• Seamless mobility to support service continuity between small cells and other networks
• The ability to roam between private and public networks
• Efficient co-existence with other spectrum users such as Wi-Fi
• Higher performance in terms of capacity and throughput, yielding superior payloads than Wi-Fi
• Fewer required nodes while supporting enhanced interference management capabilities, thereby reducing costs with a greater network footprint per access point
• Low cost of deployment and integration because spectrum license and operator contracts are not required
• The simplicity of deployment, analogous to Wi-Fi, in unlicensed spectrum allows support of any device without an operator or, in some cases, without a SIM card.

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 and 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.

Ecosystems are Required to Succeed

Private LTE and 5G offer the promise of managing diverse networks to do everything companies need simultaneously, even in operationally intensive environments—from low-power, low-bit-rate sensors to business-critical functions like control of autonomous vehicles, voice communication and high-performance video. This is possible because hybrid networks can be configured or “sliced” via software, which leads to much more pervasive network integration for all connected things.

While mobile network operators have invested vast sums of capital into research and development of new 5G networks, large-scale public rollout remains fragmented. Costly infrastructure, spectrum allocation and management complexity are all stalling 5G deployment and adoption. At the same time, the public carrier networks that will support mobile phones and Internet hotspots are not suitable for the performance and security needs of mission-critical enterprise systems.

The key architects of this new Private LTE and 5G network ecosystem will need to understand how to create whole new markets by enabling three critical dimensions:

1) Platforms that address the needs of the many and diverse vertical industries

2) Broad product portfolios that include a wide variety of processing, connectivity, security and interoperability capabilities

3) Diverse alliances and partnerships to enable a wide range of capabilities, including network management, software development tools and vertical application solutions, among others

PRIVATE WIRELESS NETWORKS ARE INCREASINGLY ADOPTED TO SUPPORT OPERATIONS

source: Harbor Research

While overall private networks adoption remains low, growth indicators for market commercialization are emerging. The wide proliferation of 5G by traditional wireless carriers indicates that adoption of private networks will follow, especially as they are less vulnerable to cybersecurity threats. The flexibility of private networks to enhance hybrid deployments will lead enterprise IT to adopt secure private networks for company devices, trickling to OT adoption later.

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:

Target the Highest Value Customer Applications. Utilizing higher performance and more reliable Private LTE networking technology to address diverse mission-critical and industrial segments will open up many new applications where wireless use has been inhibited.  Focusing on the right opportunities with the right partners will be a critical success factor.

Meet Increasing Customer Demand. There are currently 900 disclosed private wireless deployments across 350+ organizations. These use cases represent diverse industries, 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 and Resources (Oil and Gas), Electric Utilities, Education, and Transportation Venues (Ports and 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.).

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.

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 promised bold spending to expand networking.  Further policy initiatives around cybersecurity and data privacy may also increase the adoption of private networks. Significant investment and collaborative ecosystem initiatives make the U.S. and Europe (specifically the UK and Germany) the most advanced markets for private networks today.

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 and Align Partner Behaviors. Seemingly superior offerings can also fail because ecosystem partners have no incentive to participate. 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.

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. By 2032, the network infrastructure and services market opportunity will be $133 billion and the broader digital ecosystem market for private networks across all venues will be $350 billion.

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. ◆