Private LTE : The Service Provider Opportunity

Guest Blog by Ian Ross, Global Solution GTM Manager

In this second of a series, Ian Ross from our Mobility Solutions and Architectures team explores the Service Provider opportunity around Private LTE networks.

In my last blog I outlined the growing level of interest in private LTE networks; triggered when an enterprise has specific design, operational or performance requirements that can’t be met by public services.

On the surface this may look like a marginalisation risk for service providers, and within the context of legacy offers this would be right. However, while we see a growing interest from enterprises in some verticals in having their own LTE wireless infrastructure, Service Providers are far from precluded from a role in enabling these and in some markets are instrumental.

New markets require new offers

While virtualisation is lowering barriers to adoption, the drivers for Private LTE are the need for unique and defined network qualities: coverage, support for an uplink-rich traffic profiles, uptime and resiliency, high cell-edge throughput or absolute control over network Quality of Service (QoS) and Allocation and Retention Priority (ARP).

Adding a third pillar to SP mobility strategies is key to addressing these. Where the first pillar establishes public networks that suit the mass market, and the second carves out resources on them to protect customer access, they don’t address all the needs behind Private LTE. A third pillar – Services Providers building islands of independent mobile infrastructure including spectrum, RAN and EPC – is how the unique design, operational and performance requirements of enterprises can be met.

Service Providers gaining traction in these new markets are doing so by taking solutions-led approaches, consulting with their customers, assessing application and performance needs, tailoring physical network solutions and implementing and operating them around the needs of the customer. A private LTE reference solution, such as Cisco Premium Mobile Broadband, is used as a base but the Service Provider effectively builds tailored communications services as bespoke offers for each enterprise, coupled with the SP’s expertise in designing, deploying and operating their own networks, and bringing complementary services such as WAN carriage or roaming. The qualities of scale and repetition are lost, but would be anyway if the enterprise if they were to build a network themselves.

The value is in what you can’t see

Licensed spectrum is essential to LTE and in many markets enterprises are precluded from obtaining (or obtaining preferred) spectrum directly. While sub-leasing is always a topic of discussion, service providers are ideally positioned to monetise underutilised national holdings in remote areas, or as part of a larger relationship with regulators, develop a library of options that can be provided with Private LTE solutions.

Internal tension of the business strategy of selling spectrum in this way is expected, but it’s important to note that these Private LTE opportunities don’t readily exist in a traditional mobility business model. Additionally, the high value of these networks, the often remote locations, and the effective customer lock-in of the customer in terms of technology investment and long-term contracts, can provide exceptional spectrum ROI to a traditional business model. Naturally the value of spectrum varies dramatically between metro and remote markets, and depending on holdings, interest in meeting Private LTE demand. It also should be remembered that these networks are long-term prospects, so spectrum arrangements should be considered as extended-term.

Aligning commercial interests

Some alignment between Service Providers and enterprise business model preferences is to be expected. In some markets OPEX-centric lifecycle management services are acceptable and embraced, given network design and performance requirements are met. In other capital-centric markets, customers will be looking to front-load costs and secure asset ownership from the outset. The key is flexibility and adaptability.

In my next blog in the series we’ll take a look into what is need to make Private LTE work.

Have questions or comments? Tweet us  @CiscoSPMobility to learn more!