Following on from the article last week, about “ecosystem linkage” in the private 5G market, Stephen Douglas, head of market strategy at Spirent, presents five key trends with cellular in the broad enterprise space. Note, he lists a bunch of others in conversation, as well – critical security, network convergence, for example – but the five below are presented in loose narrative as connected progress-points to get private 5G to stick with enterprises (plus we just need to post articles and we are short of time). The other points, plus more, will feature in an upcoming report on the state of private 5G in 2024, out at the start of next month (April); a webinar on the same topic, also featuring Douglas from Sprient, is available on-demand here. In the meantime, find a taster below.
1 | Simpler systems – for smaller enterprises
Across the Spirent workbenches, the clearest trend is for smaller and simpler systems, says Stephen Douglas, head of market strategy at Spirent. “We’re seeing lower-cost, smaller-footprint private networks-in-a-box, particularly in North America; and development of capabilities so they can be deployed in an automated fashion.” The point is to jettison functions, reduce costs, and automate complexity – and thereby to open new markets. The ambition is to make private 5G accessible to more than just big firms with deep pockets, with which it has tended to find a natural home until this point.
“The supply industry wants to sell to smaller businesses – or probably less-small sized and more medium-sized, at this point,” remarks Douglas. “There has been a whole change in mindset – from slow and complex 5G installations to lighter-touch 5G offerings, comprising just a few radio cells and a stripped-back core network, with only the network functions that you actually need, rather than all the stuff that goes into a public network.” But more than stripping-back macro tech, and abstracting complexity into automation software, vendors are bundling-in edge compute systems.
This is certainly Nokia’s strategy with its MXIE system, built to run Industry 4.0 apps next to the core network. The sense is the Finnish vendor is out on its own; but the test lab says rivals are readying similar options. “Certainly this trend for bundling is coming into the test arena,” says Douglas. But that’s not all; 5G systems may be getting smaller and smarter, but they are also being integrated with “applications around performance”. Douglas says: “It’s not just automation to operate, but automation to run the whole lifecycle – for maintenance, patches, revalidation.”
It is for performance monitoring as well, and not just for infrastructure upkeep; but we will come to that.
2 | Easier climes – more than manufacturing
In ways, this trend for simplification is a direct response almost to the stop-start progress of private 5G in the manufacturing sector, the original Industry 4.0 poster child for the technology. It is not, quite; it is a natural evolution, and a logical response, to scale the technology in the mass market. But manufacturing is hard, notes Douglas, and private 5G remains a developing technology, which, as yet, does not quite deliver sufficient features or confidence for manufacturing companies to fully get behind. That will happen, but it will take time, the message goes.
Douglas says: “It is just a more complex environment; the use cases are more challenging, as well, in terms of the technological maturity. A lot are dependent on Release 16 and 17 feature sets; and Release 16 features only started to come available to equipment makers last year; 17 will come this year. So there is a time lag in manufacturing; and an issue, as well, because of the focus on smartphones. Device makers have now started to produce CPE units because of growth in fixed-wireless access. We are only now starting to see any proper focus on industrial devices.”
There is a rush of interest in RedCap for industrial IoT, he notes; but again, it is a future technology, which does not hold enough immediate value for manufacturing companies, generally, to scale their private 5G experiments into loaded multi-site systems. “RedCap is not really going to be available in the market for another year, at best. So manufacturing is stuck in trial-mode, to a greater extent – just because of the availability of technology,” he says. And because of the difficult terrain in manufacturing, also; all good for test companies, it would appear.
“I mean, one of the big challenges is the cost to get these networks up and running, and to make sure they deliver the performance required. Because they are being deployed in so many different environments. And even if you have a blueprint configuration, you can’t guarantee the radio will perform as it should – once it is in a factory, with all these metallic surfaces and moving parts. So how do you test that? There is a big demand at the moment to make sure all these devices and applications get the right level of service.” Which, again, we will come back to.
The point is manufacturing is a hard-sell for private 5G, still. But meanwhile, and with the anti-complexity trend, it has found its mark in other climes. “The most growth over the last 12 months has not been in manufacturing, but in seaports, public venues, and the government and defense sector. And it has mostly been to provide coverage to large campus areas, going both indoors and outdoors.” This is echoed in a recent webinar about the state of private 5G in 2024, where Douglas was flanked on a panel by ABI Research, Future Technologies, and iBwave.
“The whole market is nascent, still,” he says; but shoots of growth are not coming in manufacturing.
3 | Clearer outcomes – linking KPIs to SLAs
Okay, so; as referenced above, the most telling progress in the private 5G space, beyond the resizing of macro networks for micro environments, is with testing of bundled performance software. In other words, the supply-side is engaged with the buying-side in earnest at last about ‘business outcomes’ and ‘business value’. In other words, it is no longer just selling technology, but rather looking to ‘solve’ problems, together with its enterprise customers and its solution partners. But for this, and to get paid, it needs to prove it can hold up its end of the bargain.
As such, the private 5G community is working with the likes of Spirent to test how to match network KPIs – as delineated by business applications, as dictated by business outcomes, as determined by business problems – to vendor SLAs. “We’re starting to see this desire to map KPIs to SLAs,” says Douglas. “The vendor community has realised over the last couple of years that the language, the value engagement, they’ve had with enterprises has not been what enterprises expected, or could understand. Because enterprises don’t care about radio networks; they care about business outcomes, related to operational efficiencies and productivity gains, and things like that.”
He goes on: “That value discussion has completely changed. It is about how you map those outcomes back into the network. That’s where the bridge is, and what we are seeing more and more. Which is why these SLA-oriented use cases are emerging – where business outcomes are mapped to network KPIs, and SLAs sit in the middle.” Interestingly, he says the disjunct previously was not just about a failure of language on the part of vendors; the buyers, on the enterprise side, struggled to articulate accurately and reasonably what they wanted from 5G, as well.
He explains: “We ran a survey [with STL Partners] about 18 months ago to figure out what enterprises would pay for these SLAs, and the thing we found was that a lot of them have really unrealistic views about the network performance they actually need. It was clear that a lot of industrial enterprises, particularly, didn’t have any real evidence that they needed this kind of heightened network performance. It was just a gut feeling, where they were asking for five-nines reliability, when the baseline was a best effort network that could barely do two-nines.
“And it went the other way, too; a lot of telcos, for instance, were pushing these incredibly low latencies; when most enterprises don’t need latencies anywhere near as low. What they really want is a window of latency, or reliable latency, so they can guarantee a service does not go outside of a median latency range – which networks can deliver already today; just not very consistently. So that exercise identified a gap between what is expected and what is needed. And there aren’t really any clear guidelines; but there is a period now where it all has to be tested.”
He adds: “The problem is a lot of their existing networks are best-effort, and they don’t have clear metrics in place. So they don’t necessarily know what they need. And the telcos haven’t been very good at educating them. I mean, I would almost argue that telcos should go in there and tell them exactly what they need from their networks. They should take the lead. Because if they wait for an answer, they’ll get the wrong one – and the whole process will slow down. But again, it’s just an infancy thing; where the market is right now. I am not worried; it won’t stop the growth.”
4 | Faster returns – for bottom-line gains
All of this – simpler systems, newer verticals – is being combined in the market with clearer thinking, it seems. The business of private 5G is quicker, all of a sudden, in terms of both the sale and return, says Douglas. “In many cases, we have seen really rapid returns-on-investment. We saw a number of end users – our customers’ customers – with an ROI in six months on a small set of targeted use cases. So you don’t need hundreds of use cases anymore to justify why you are doing it. With a low-cost implementation and a couple of use cases, the return can be very quick.”
It is partly down to cheaper systems, perhaps; but Douglas contends that the biggest breakthroughs have come as the supplier market has limbered-up, and got match-fit in the Industry 4.0 game over the last 12 months. He says: “Enterprises have had this day-one impression that cellular is really expensive. And maybe it’s a historical thing; where they’ve engaged previously, and come away with this idea that cellular is five or six times the cost of Wi-Fi. Which just isn’t the case. And I don’t think the vendor community communicated that very well.”
He adds: “Maybe because the operator community, in particular, wasn’t at a stage, and in a good place, where it could demonstrate how to achieve the ROI. It is much better at that now – because the ecosystem is working better, and these lighter-weight offerings are in the market.” Really, ROI is the proof point for all the other trends and progress discussed in this piece, including about boxier sales and easier venues, and about mapping use cases to KPIs to business outcomes to SLAs. “It bodes well for the future, and how the market scales,” he says.
He tells an incidental story about “a number of customers” trying to stand-up high-definition video streams with “Wi-Fi and LTE, and even satellite”; trouble with the uplink, he says. In the end, they switched to private 5G (“with a bit of machine learning, a little tinkering”) and it was a revelation. “They could identify faults and issues, and make three-to-five percent in productivity gains. Which translates to substantial savings.” But the key, as above, is to be clear on the KPIs, as well – to make the ROI stick.
Douglas comments: “That was one use case with a couple of cameras inside a factory connected to two small cells and an on-prem core network with a machine learning app on it – plus a specific set of KPIs around throughput, latency, and reliability that showed they could deliver those use cases, and see the right benefits in terms of productivity gains and service uptime. And it was a very lightweight deployment. So there are opportunities there.”
5 | Happier teams – but a total blind spot
Something that was striking at MWC 2024, when discussing channel strategies in the vendor market, was the total absence of the kind of alpha sales talk that afflicted the industry just 12 months prior. Not a single mobile operator talked about ‘priming’ the sales channel; most talked about a mob-handed approach with vendors, integrators, and hyperscalers; some even acknowledged a lack of deep familiarity with enterprise clients, and said they would likely stand behind big integrator-consultancy firms when squaring up on Industry 4.0 with big multinational customers.
It seemed like a striking volte-face. Douglas is not quite having it. He responds: “That whole prime-thing was a bit of an illusion, to be honest. Most engagements involve operators and integrators, side-by-side at the same level. One might shake on the top-level contract, but there are lots of equal partners at the table. And really that ecosystem was already established; I think you’re just seeing more of it. Maybe some of them are backing off, in terms of shouting about leadership and domination. But they’ve realised this is a big market, and there’s enough to go around.|
He goes on: “And the operators have a role, sometimes forgotten, because it all comes down to spectrum access. And in many cases, these deals cross into countries where there isn’t any spectrum for enterprises – so it remains heavily dependent on operators, globally. But, yes, it is a team sport. The only real weakness is with the application ecosystem; that’s the gap. None of the players have been able to foster a developer community to serve each vertical with bespoke applications. Which means it becomes a sort-of custom job, every engagement.”
Indeed, the great opportunity for the whole telecoms sector is about “ecosystem linkage”, particularly with a relatively untapped market for business content – and to deliver in the enterprise space what it failed, so fantastically, to deliver in the consumer space. Douglas has spoken already about the excitement within Spirent to cross into different markets, but he is speaking for the whole sector. “The private networks market really needs an app store for each vertical,” he suggests. “The problem is that developers have been left out in the cold, a little bit. Which is unfortunate.”
Douglas goes: “It is really just about engagement with developers, in each vertical. But the telco industry is not very good at that. It develops these great networks, and thinks everyone will just develop stuff; and they don’t. I’m intrigued to know how the network API initiative goes. At the same time, as more private networks are deployed, that ecosystem will develop. It’s a problem just with the maturity of the tech, right? Because it’s still not finished. And if you’re going to develop something, you want it to scale globally.
He closes: “But I’m reasonably positive. 2024 will be a turning point because a lot of Release 16 / 17 equipment will come online, and because of this ripple effect from mega markets like China, which is probably 18 months ahead of North America, if not even two years ahead.”
For more from Stephen Douglas and Spirent on this topic, check out the recent RCR Wireless webinar on the state of the private 5G market, and also look out for the editorial report on the same subject at the start of next month (April 2024).
