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Webscale Alternatives to MNO/MSO Wireless Emerge |
NEWS |
As discussed in our recent ABI Research Executive Foresight, “5G Emerging as Competitive Arena for Mobile Broadband, Cable, and Fixed Wireless,” Multiple System Operators (MSOs), or cable companies, are entering the wireless space. The ecosystem is changing, with another group of emerging competitors vying for a share of the lucrative revenue from mobile subscribers—the longtime sole purview of the Mobile Network Operator (MNO).
One of the first signposts that tells us that we stand at the verge of this change is the emergence of the United States Citizens Broadband Radio Service (CBRS), marketed as OnGo. Generating much interest from MNOs and MSOs, the OnGo technology is also attracting interest from webscale giant Amazon.
Amazon announced that a collaboration with ARRIS’ Ruckus (an OnGo small cell and Wi-Fi access point vendor), Federated Wireless (a CBRS Spectrum Access System operator), and Athonet (a cloud-based Evolved Packet Core (EPC) vendor) will be used to deliver a cloud-based private LTE network based on OnGo. This might be testament to Amazon’s grand ambitions in using the technology. The three companies are targeting developers, independent software vendors, telco operators, the public sector, and enterprises—parts of the ecosystem that may be interested in a low-cost, rapid deployment of private LTE for industrial Internet of Things (IoT) applications. Applications include real-time wide-area surveillance, security, smart meters, remote data transfer, critical communications, and other use cases.
Will Private LTE Bypass the MNOs? |
IMPACT |
Amazon itself is planning OnGo for its own use. According to reports in the press, the company (operating through a subsidiary, Chrome Enterprises) sought permission from the FCC for a Special Temporary Authority (STA) for an experimental permit for six months (From December 10, 2018 to June 10, 2019) to operate OnGo equipment at three Silicon Valley locations. These locations are adjacent to two Amazon buildings— the company’s Lab126 research division and one of its largest fulfillment centers. Amazon plans to use these three facilities to test up to 450 prototype devices. This proof of concept trial includes 150 fixed transmitters and 300 mobile units at the three locations.
Amazon’s expansive, high-tech distribution centers, using robots and automated picking systems, are a natural fit for testing OnGo technology.The entry of Amazon could disrupt and threaten the private OnGo and private LTE plans of MNOs and MSOs and should serve as a wake-up call.
The MNO role in private LTE is blurred, with several of them paying lip service to private LTE and OnGo so far. This raises the possibility that consortia like the Amazon/Ruckus/Federated Wireless/Athonet partnership could eventually bypass traditional operators altogether. Equipment vendors have realized that private LTE is evolving to a meaningful market and are heavily marketing and selling equipment to enterprises, shipping ports, mining operations, and other sectors.
The Rise of the Alternative Network Provider Will Transform Mobile Wireless |
RECOMMENDATIONS |
The broader implications of this intersection of webscale companies and new technologies will give rise to a new type of network provider, which we call the Alternative Network Provider (ANP). This Executive Foresight discusses four examples and shows how this trend will transform the business of offering mobile wireless services.
While OnGo is a uniquely U.S. technology, other U.S. webscale companies are attracted to wireless including Alphabet/Google’s Google Fi (formerly Project Fi). Google Fi is a Mobile Virtual Network Operator (MVNO) service running on the networks of Sprint, T-Mobile, and U.S. Cellular. Google Fi is unique since it automatically chooses the best network, with a single subscription, depending on signal strength and speed. As a “Wi-Fi first” service Google Fi automatically transitions between Wi-Fi and cellular networks and now covers more than 200 countries worldwide. Google Fi can leverage Alphabet’s webscale Information Technology (IT) network to allow a subscriber secure access to 2 million Wi-Fi hotspots worldwide through a Google Virtual Private Network (VPN).
Alphabet’s project Loon is building a network of high-altitude balloons to create an aerial wireless network with a purpose of bringing Internet connectivity with 4G-like throughput to rural and remote regions worldwide. This “connect the unconnected” initiative is similar to Facebook’s Telcom Infra Project (TIP) goals.
Facebook’s TIP is an industry consortium collaborating on next-generation access, backhaul, core, and management technologies that go toward creating an end-to-end network. The goal of TIP is to create significant gains in cost and operational efficiency for both rural and urban wireless network deployments. TIP believes that this approach will afford operators more flexibility in building networks by unbundling open-sourcing systems and components. ABI Research discussed these topics last year in the ABI Research Executive Foresights, “The Quest for the Perfect VRAN” and “Delivering a “White Box” Future for the Basestation.” Potentially disrupting what has been, until now, a closed equipment ecosystem.
A good example of the disruption this can cause not only with equipment vendors but with network operators can be found with Japan’s Rakuten. Webscale giant Rakuten (Japan’s answer to Amazon) has operated as an MVNO since 2014, leasing capacity on NTT DoCoMo’s network and offering service as Rakuten Mobile. In 2017, Rakuten Mobile began planning a new end-to-end, fully virtualized, cloud-native, 5G-ready nationwide mobile network for commercial operation by October 2019. Rakuten’s goal is to have 10 millionsubscribers and 95% population coverage by the end of 2025. This ambitious twelve-month buildout without a significant Total Cost of Ownership (TCO), at only US$ 5.4 billion (JPY 526.3 billion) over 5 years is only possible because Rakuten’s network is fundamentally different from traditional networks—its network will be fully virtualized and automated.
ABI Research believes this intersection of new wireless technologies and webscale IT will fundamentally transform the mobile wireless equipment and service provider landscape with agile, rapidly scalable, cost-effective, and high-performance mobile services and challenge conventional MNOs.
So, what does the future hold for the webscale ANP?
Some initiatives may fall short of their original goals. A good example here is Google Fiber, which was drastically scaled back by the company because the project failed to transform the broadband market. Even Project Loon remains in the testing phase having failed to scale up commercially.
The webscale ANP uses mobile connectivity to underpin its primary business–in Rakuten’s case its e-commerce--and Google Fi allows Google to raise advertising revenue from its main websites. In the Amazon/Ruckus/Federated Wireless/Athonet OnGo partnership for private LTE, we may be witnessing the start of a new era in mobile communications. At ABI Research, we believe that sectors including commercial real-estate, health care, hospitality, industrial, enterprise, and transportation will come to realize the advantages of owning and operating their own private networks. For equipment vendors this is a potentially lucrative market much larger than the traditional MNO equipment market as these sectors leverage the underlying connectivity in private LTE for competitive advantage.