Home5GMNOs vs NEPs vs SIs – the pitched battle (in numbers) over private 5G management

MNOs vs NEPs vs SIs – the pitched battle (in numbers) over private 5G management

Note, this is part of a forthcoming report on operator-run private 5G enterprise NOCs. Look out for the report next month; sign up here for the upcoming webinar on carrier-run private 5G enterprise NOCs, featuring ABI Research, Radisys, Vodafone and others.

What do we think we know about the burgeoning private 5G, and how it will play out? We know, at least we hear, that it is going to be important and massive – for both the supply-side telecoms sector and demand-side enterprise market. The first will gain new life in terms of its sales income and corporate worth; the second will have a base-level networking platform to drive transformational change. So the story goes. But how massive? It depends who you ask.

ABI Research reckons the total market value for private LTE and 5G will be around $65 billion in 2030 (with $37 billion going on 5G), from a couple of billion dollars today. That figure covers the whole ecosystem, from supply of cloud-to-edge infrastructure, cellular networking, plus all of the hardware and software pyrotechnics on top, supposed to light up whatever-4.0 market it has in mind. 

Dell’Oro Group narrows the focus, and says sales revenue from radio equipment, as a slice of the telco stack, will top just $2 billion by 2025 – a fraction of ABI’s 2030 forecast figure for the ‘total’ market value. It says the balance tilts towards 5G by the end of the period. Stefan Pongratz, vice president at the firm, says the number of installations will rise from “low single-digit thousands” today to “tens of thousands” in 2025. Still, he describes the market opportunity as, “rather large – in the tens of billions”.

The simplest, (perhaps best) market-sizing calculation remains Nokia’s. Counting-out industrial targets for its (then-new) digital automation cloud (DAC) package a couple of years back, it claimed 14 million-odd potential venues for private cellular, including 10.7 million ‘industrial’ plants and 3.3 million warehouses – plus every enterprise venue in between. For reference, all the ‘public’ infrastructure in the world uses seven million macro base stations.

What we know, then, is that – whatever happens, whenever it happens – it will happen. So what else do we think we know? What of the role of traditional mobile network operators (MNOs), with so much to gain and so much to lose? Much is written about the perceived jeopardy for them, including here – that their monopoly on spectrum is being broken market-by-market, and that industrial paranoia and plug-and-play cellular will exclude them from critical networks and jettison them from non-critical ones. 

We will get into some of that, invariably. But despite the chorus of naysayers, mostly from the ranks of early-adopter enterprises and new-breed suppliers, we know for sure – we must know – that most of these old familiars in the carrier community, including network equipment vendors (NEPs) alongside, are lining up for the play, and will be in position when the curtain is raised. The only question really is who else will be on stage with them, and how the parts will be divided up.

Nokia has a good line on this. “The customer has the right to decide who it wants to work with. Simple as that. In some cases, it doesn’t want to work with an operator, for one reason or another – maybe it feels like they’re just mass-market SIM-card shipping companies. But in other cases they trust them completely,” remarks Stephane Daeuble, head of marketing for enterprise solutions at Nokia.

“Different surveys from different analysts suggest enterprises favour system integrators (SIs) in about 40 percent of cases; they want end-to-end solutions, and SIs are seen to be able to bring together a network of partners. But about 30 percent prefer to go with operators, and another 30 percent prefer vendors. That seems to be the way the market is breaking up for private wireless.”

Of course, system integration is a broad church – from specialist SIs in the ‘vertical’ markets to generalist IT operations, to multinational professional services companies like Accenture and Capgemini. Indeed, SIs are the flavour of the month in telco-land, especially among 5G kit suppliers for new channels to market – and especially, according to a flurry of recent announcements, for flow of networking gear into enterprises in Germany.

As illustration, cellular stalwart Nokia, small cell US radio supplier Airspan Networks, and Ireland-based core network provider Druid Software have also signed deals in the home of Industrie 4.0 recently; the Finnish vendor has signed with Smart IT Labs, and the others have combined on a full-stack one-two with Siticom, targeting the manufacturing, automotive, healthcare, and agriculture sectors.

But Vodafone questions Nokia’s ratios, and thinks it is probably talking about the build phase, and not the run phase. It would make sense, as well; on reflection, its response was to a question about who takes ‘charge’ – which might be interpreted both ways, and tends to default to the build phase in most conversations. Vendors sell, integrators build, and operators run, responds Vodafone 

“The SI part is way overstated. Why would you think an SI has more experience running networks than a network operator? There is probably confusion about the build and phase. Could I imagine that kind of ratio for the build? Yes, probably, just because it is more of an open shop. But for the run? No, I think it would be turned on its head – with operators and vendors in the run phase, plus some specialist SIs that do private networks,” says Phil Skipper, group head of IoT business development at Vodafone Business. 

“If I was to wave my finger in the air, I would imagine it is more like 35-40 percent operators and 35-40 percent vendors, and the rest is made of A. N. Others. It is the run phase where you need different types of infrastructure – the service desks and monitoring capabilities, and all the rest. And we see significant synergies from applying our existing infrastructures to mobile private networks.”

This last comment is key to the conversation, of course. But just to further the case for carrier-led network management, against rivals bids from SIs in particular, it might be noted IBM, pegged last time out as the SI-style operative most-likely-to-succeed at private 5G management, has stated it is undecided, as yet, about whether to offer managed network services to enterprises.

The company told Enterprise IoT Insights it is focused on the supply of hybrid cloud and analytics services in conjunction with traditional telecoms providers. It is working variously with Nokia and Samsung, among kit vendors, and AT&T, Telefónica, and Vodafone, among mobile operators, to integrate compute and connectivity into edge bundles for enterprises seeking to get on the road with digital change.

Marisa Viveros, the company’s vice president of strategy and offerings in IBM’s telecom, media and entertainment division, remarks: “What we are doing, primarily, is consulting – on spectrum, on architecture. Plus, we are also doing integration. Right now, the market is focused on how to put [private 5G] together and build it – as opposed to operating networks. So it is still to be seen whether or not IBM will operate [private 5G networks].”

As well, to further unravel this stubborn SI fairytale around in-life 5G management, Germany-based Software AG, playing between the lines in the supply of industrial-grade cellular with carrier types and industrial sorts, suggests SIs are in trouble, caught between hyper-scalers and the telecoms providers. Bernd Gross, chief technology officer at the firm, has them down as IT types, it seems, running data centres.

In this definition, at least, they are out of the game. He says: “When you look at that anyhow-trend towards the cloud, most of the [OT] workloads are going onto hyper-scaler clouds, onto AWS and Azure. They are not going into the SI clouds; it is always one of the big clouds. So I think the SIs are in a difficult position at the moment – sandwiched between the cloud guys and these tech providers coming in [to the OT space].” 

Interestingly, he thinks the case for enterprises to take charge is overstated, as well. It is a modish trend, he implies, part of the industrial discipline to get to grips with novel technology, symptomatic of a broader move to prime the pump for Industry 4.0. It will not last, he says. The bigger trend in IT, and also in operational technology (OT), is to outsource compute workloads, he observes – which runs contrary to the concept of in-house 5G management.

“If you think of 5G coming into that trend, it doesn’t make sense for IT departments to manage the 5G network themselves. You have to differentiate between IT on the IT-side and IT on the OT-side; and IT on the OT-side is already being automated and streamlined, and going into the cloud. There is less and less knowledge on site, and more and more normalisation in the cloud – to scale-up business.”

Mostly nothing is coming back in-house. Run-phase management of private 5G in Industry 4.0 must be viewed in this context, he says. “5G is an important complement to digitalise these factory scenarios. But that [process] will not be handled, typically, by the factory owners themselves. In 80 percent of cases, perhaps, factory owners will look to outside partners to help build and run these 5G environments.”

We should distinguish between edge placement and edge management. Gross is not suggesting the infrastructure is being centralised; privately-operated 5G in privately-licensed spectrum will be localised, on premises, and distributed through the edge-cloud continuum in German-style campus-netz. Only the run-phase edge-management – data-crunching, insight-making, network analytics – is going off-site, and being automated, as possible.

Gross advocates a hybrid architecture, strung across the site edge, network (MEC) edge, and national cloud, with the balance between shuffled with latency, reliability, and criticality requirements according to a hierarchy of industrial use cases. “We are talking about all of it, everywhere; it is about lifecycle management – about how to operate and make sure these networks run according to prescribed SLAs. The winning architecture is going to be a hybrid one.”

The opportunity for the telecoms community, also leveraging hyper-scaler infrastructure, is in over-the-top management. The hyperscalers, he reasons, are not much interested in the nitty-gritty of running industrial operations, even as they have forced the trend to outsource technology services in industry. It does not fit their business model, the logic goes. 

Gross comments: “The hyperscalers have not yet won on the application [suite] and they have not won on the domain knowhow. And, honestly, they are more interested to get workloads onto their clouds. Something like a third of their revenue is profit – because they have a completely automated and standardised offering. To an extent, they are less interested in very bespoke industrial know-how.”

So, the sense is the Vodafone’s rough run-phase ratios (and Nokia’s secondhand build-phase ratios) are about right; with SIs in trouble and hyper-scalers indifferent, the ground is left for telecoms – to make it work or mess it up. The catch, which this report will not explore much further, is in the line about “domain knowhow”. Specialist knowledge runs vertically in the industrial layer, as well as horizontally in the networking layer, reasons Gross – with both spiralling outwards from a baseline architecture that is all sewn up. 

The point is telcos will either face-off or join-with industrial giants like Bosch, General Electric, Rockwell, and Siemens in the management of enterprise 5G networks. “[There is an opportunity for] telcos with a very compact and compelling proposition to combine 5G campus networks with local cloud services – to bring the compute closer to the factory, and to meet the industrial SLA requirements around latency and other things,” says Gross.

His position is well summed-up by a throwaway comment, from some time ago, about the extant challenge for operators to walk into industry. “You don’t go to a Chinese restaurant for wienerschnitzel.” Of course, industrial 5G is just wienerschnitzel with five-spice; it gives the carrier community an ‘in’. But these commentators have vested interests, with the sale of edge equipment and services, or the app-layer gubbins to make these services stick.

We should take an independent line, and welcom back Pongratz at Dell’Oro, who makes at least two decisive observations: that operators are already engaged in most private 5G setups around the world, and that public-private (non-public) network integration (PNI-NPN), marrying on-site radios with public core infrastructure, is the preferred model in most cases. 

He says: “Operators are playing an important role in the majority of the 1,000-plus deployments so far. This partly reflects the regional mix, with China comprising a significant share in this early adopter phase utilizing the PNI-NPN deployment model with operators addressing the bulk of core related tasks using shared UPF complemented with customized tools to help the private network operator monitor the performance and manage various configurations. 

“Given the total-cost-of-ownership and time-to-market benefits of leveraging existing infrastructure, we do envision that the PNI-NPN model will play an important role outside of China as well, particularly in markets with limited local spectrum. From a use case perspective, we assume the operators will play an important role with industrial IoT and public safety. We see more upside for enterprises to bypass the operators with non-industrial use cases.”

Note, this is part of a forthcoming report on operator-run private 5G enterprise NOCs. Look out for the report next month; sign up here for the upcoming webinar on carrier-run private 5G enterprise NOCs, featuring ABI Research, Radisys, Vodafone and others.

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