Private Wireless Spectrum for Enterprises: What Can We Learn from Front Runners Germany and the United Kingdom?

Looking at discussions across different enterprise verticals, there is a ubiquitous interest in the deployment of private cellular networks. A recent survey conducted by ABI Research identified that 92% of manufacturing enterprises, for example, are currently investigating the use of private cellular networks (both 4G and 5G) on their factory floors.

In order facilitate private network deployment, Germany and the United Kingdom were among the first to enable enterprises to acquire mobile network spectrum, either by spectrum sharing (in the United Kingdom) or by setting aside licensed spectrum for enterprise usage (Germany), as both launched their initiatives in late 2019.

Early numbers of regulators Ofcom (the United Kingdom) and the Bundesnetzagentur (Germany) regarding applications show a somewhat timid approach: while Ofcom has awarded only one license for Shared Spectrum Access (and 10 more applications), the German Bundesnetzagentur has received 25 applications for spectrum on the 3.7 GHz band from enterprises. These numbers hint at a discrepancy between initial interest on the one hand and reluctancy to commit to private cellular networks by investing.  It is important for Mobile Network Operators (MNO) as well as network infrastructure vendors to react to the concerns leading to this discrepancy to preserve the massive revenue opportunity that lies in the enterprise adoption of cellular connectivity.

To be able to give actionable recommendations for how to spur interest in cellular spectrum for private network deployment, it is important to understand the reasons behind this timid interest, as this is a result of a number of underlying Decision Forming Factors (DFF):

• Ecosystem Immaturity: At present, the ecosystem for industrial cellular chipsets and modules in the United Kingdom, Germany, and other places in Europe is still very immature, with not even a handful of chipset manufacturers developing either 4G/LTE or 5G modules for use in industrial environment. As a consequence of this immature ecosystem, module costs are still relatively high, and enterprises will wait to see more industrial modules becoming available, which will drive down prices. While ecosystem immaturity is an issue for all cellular connectivity technologies, this is even more the case for 5G: since enterprise verticals crucially rely on the 3rd Generation Partnership Project (3GPP)’s Release 16 (to be frozen in June 2020) to standardize relevant capabilities, chipset manufacturers are not even able to start working on industrial 5G modules, as they are still waiting for crucial standardization work to be completed.

• Missing Understanding of a Clear Business Case: In addition to external factors (missing standardization work and device ecosystem), from talking to enterprises it becomes apparent that even though there is a hype around 5G and private wireless networks in the enterprise verticals domain, there is no profound understanding of how cellular network deployment can actually lead to the desired efficiency and quality enhancements that have been promised to the enterprises. In addition, enterprises begin to realize that operating their own cellular network is far from being a no-brainer, but rather requires substantial personal resources and implies non-neglectable Operating Expenditure (OPEX), which puts a burden on Small and Medium-sized enterprises (SMEs) especially.

• Heterogeneity of Spectrum Allocation Policies across the Globe: Large enterprises like ABB, Bosch, Mercedes, or Siemens operate a multitude of manufacturing sites in different countries and continents across the globe and therefore require pan-national and even pan-continual connectivity. The current landscape of regulations and arrangements allowing enterprises to deploy a private cellular network, however, looks rather fragmented: only 15 of the 190 countries have opportunities for enterprises to deploy private networks, while the process of application differs even between these 25 countries. While some countries—like Germany, France, Japan, and others—have set aside licensed spectrum for exclusive enterprise use, others—like the United States with Citizens Broadband Radio Service (CBRS), or the United Kingdom, for example—adopt a spectrum-sharing approach, in which unused spectrum can be awarded to enterprises. Moreover, these arrangements apply to different frequency bands, which makes pan-continental connectivity even more difficult to achieve.

Having laid out the reasons behind enterprises’ timid interest in private cellular network deployment, MNOs as well as network infrastructure vendors and telecommunication regulators, need to develop a consolidated and targeted approach that addresses all of the enterprises’ concerns:

• In line with what has been recommended previously in the ABI Insight What Does 3GPP Release 17 Have in Store for Enterprise Verticals? (IN-5723), 3GPP needs to provide enterprises with a reliable release timeline, which should adapt release cycle time that enterprises can keep up with. Recent rumors about a potential delay of Release 16 to Q1 2021 (due to the detrimental impact of COVID-19 on the industry) show, however, how difficult this is to achieve.

• To provide enterprises with a clearly conceivable application scenario of how to utilize the benefits of cellular connectivity, network operators as well as infrastructure vendors need to streamline their efforts to educate the market. To make the abstract efficiency and quality enhancements more tangible to enterprises, this should include a Return on Investment (ROI) as well as a Cost of Inactiveness (COI) element. Furthermore, MNOs need to be aware that enterprises realizing the resource intensity of network operation strengthens operators’ value proposition toward enterprises, particularly SMEs. In order to capitalize on this reemerging opportunity, MNOs should embrace the fact that enterprise can acquire their own spectrum in certain countries and use this as an additional spectrum asset to offer their network management in an Everything-as-a-Service (XaaS) approach.

• Facilitating private cellular network deployments needs a strong and mature device ecosystem, which needs either a common organization/partnership or a link between enterprise requirements and chipset manufacturers’ technology know-how. While in the United States the CBRS Alliance is the driving force behind ecosystem development, in Europe and elsewhere System Integrators (SIs) are in a powerful position, as they are the crucial link connecting enterprise requirements with the technology know-how of module and chipset manufacturers. To facilitate private network deployments, SIs need to step up to their responsibility and act as transmitters between the enterprise implementers and the telco industry.

• From a regulatory point of view, globally harmonized spectrum allocation regulations are needed for large enterprises that are looking to connect production sites in different countries or on different continents with each other. One possible way to do this is by univocally accepted standardization body, such as 3GPP, to reserve certain frequency bands for exclusive enterprise use. For this to happen, MNOs need to dismiss their radical opposition against setting aside spectrum and need to understand it as the unique chance to present their MNO value proposition to enterprises, especially SMEs.