In his final post from MWC Shanghai Shiv Putcha, Principal Analyst at emerging tech specialists Mandala Insights, discusses the role of private networks in the new digital economy and why 5G will allow for the deployment of truly private enterprise networks.

As 5G is rolled out across Chinese cities, the technology will turbo charge the drive to digitally transform China’s immense industrial landscape, with an early focus on targeted vertical applications that in many cases will be run as private networks.

A good example of this dynamic is the BMW partnership with China Unicom and Nokia, where BMW’s Brilliance Automotive Ltd plant in Shenyang (Liaoning Province) has deployed a private LTE network using Unicom’s 4G network and Nokia’s multi-access edge computing (vMEC) solution for low latency manufacturing.

Huawei has provided Yangshan Port’s new shipping terminal in Shanghai with a private LTE network that enables automated operations.

In Europe and the US, there already seems to be momentum behind deployment of truly private networks, especially with the likes of Germany dedicating spectrum for industry. The question is whether the CSP community, outside of a few Tier 1s and perhaps some progressive operators, will be able to invest in and deploy the necessary resources and expertise that the enterprise segment will require.

Shiv Putcha, Principal Analyst

Mandala Insights

Go to market strategy for private networks is still unclear

One of the biggest open questions around private network sales to enterprises is the most effective go to market strategy. Nokia staked out the early ground by announcing a new Enterprise division that would focus on building up the requisite expertise and channel arrangements for direct sales to enterprises.

They plan to do this while continuing to work through their core customer base of CSPs in an agnostic manner. Huawei (through Huawei Enterprise) and Ericsson (through a new Advanced Industries unit) are also moving ahead with their enterprise plans but have so far focused on enabling their CSP partners to sell to enterprises.

The jury is still out on the best strategy for this segment.

We have heard passionate and reasoned arguments on both sides of the coin. However, we believe that a direct channel approach will be increasingly necessary. There is a palpable mismatch between enterprise customers, particularly in the manufacturing sector, and CSPs.

In Europe and the US, there already seems to be momentum behind deployment of truly private networks, especially with the likes of Germany dedicating spectrum for industry. The question is whether the CSP community, outside of a few Tier 1s and perhaps some progressive operators, will be able to invest in and deploy the necessary resources and expertise that the enterprise segment will require.

We tend to believe that the CSP community will struggle though to a lesser degree in Asian markets like China where the CSPs have a more level playing field.

The rise of private networks will drive non-RAN 5G capex

Regardless of whether these new networks are run through “network as a service” models offered by CSPs or as fully “on-prem” private networks, the adoption of 5G will also throw up opportunities for big investments not just on the radio side but also in the domains of edge compute and transport networks.

Optical transport networks will be essential for backhauling traffic and software defined networking (SDN) capabilities that will be needed for intelligent, “zero touch” management. Indeed, the increased demand for optical networks was validated by Nokia during their analyst day, with optical network sales showing very healthy growth across the APJ region, as enterprise clients upgrade their traditional SDH networks to optical

Shiv Putcha

Founder & Principal Analyst, Mandala Insights
  

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