AT&T and Verizon are putting all the pieces in place to capitalize on what some believe could be an enormous business opportunity: building private wireless networks for enterprises and other organizations. According to Harbor Research, private IoT and 5G networks globally will have a total addressable market (TAM) of $208 billion by 2025.
Both Verizon and AT&T have been culling together partnerships with equipment manufacturers such as Nokia and Ericsson and cloud providers like Microsoft Azure to make it easier for enterprise customers to build a private wireless network. And the FCC's recent CBRS spectrum auction, which included enterprises and universities, has made it even more appealing for organizations to build private networks.
Executives from both AT&T and Verizon said that these private networks could be built using either 4G or 5G technology but they expect 5G will play a significant role.
Not only will enterprises be able to select which air interface technology to use, they will also have a choice of spectrum. "We expect this will move beyond just the CBRS spectrum," said Srini Kalapala, VP of technology strategy and global cloud at Verizon. In fact, Kalapala and AT&T's Robert Boyanovsky, VP of mobility and IoT, both said that they envision enterprises using licensed or unlicensed CBRS spectrum, or even the operator's own spectrum holdings, for their networks.
"We think 2020 is about the proof of the concept," Boyanovsky said. "Both enterprises and operators are trying to figure out what customers want and what the pricing models will be."
Verizon recently announced a deal with Microsoft Azure in which the operator will integrate its 5G Edge network with Azure edge services to support private 5G networks for enterprise customers. But Verizon's Kalapala said that the Azure deal isn't exclusive and Verizon could ink other cloud deals. "Enterprises have multiple cloud providers – and they also have preferences for what workloads they want to run with certain providers," he said, adding that Verizon wants to be able to work with companies and whatever cloud providers they might have. Verizon already has a partnership with Amazon Web Services (AWS) to use its Wavelength cloud computing platform in conjunction with Verizon's 5G Edge sites.
Verizon highlighted its private networking efforts with ICE Mobility, which is testing MEC [multi-access edge computing] with Microsoft Azure in its distribution facility. ICE Mobility packages and ships phones and other products to Verizon retail partners. ICE Mobility installed cameras that are connected to Verizon's 5G MEC network and those cameras help automate inspections to make sure that each package contains the correct order. ICE estimates that processing time is reduced by 15% to 30% by using this system.
Similar to Verizon, AT&T also has a deal with Microsoft to make its Azure cloud services available in AT&T's edge data centers. Boyanovsky said that by partnering with Azure, the company is able to help enterprises get lower latency services and allows them to store their data in the cloud.
Alliances with equipment makers
The other step operators are taking to ensure they get a piece of the private networking opportunity is to form partnerships with equipment makers. AT&T has announced partnerships with both Nokia and Ericsson. In Ericsson's case, the vendor will provide a localized cellular core, including hardware and software along with private SIMs and radio access network hardware and software. In Nokia's deal, the company will provide its digital automation cloud and its modular private wireless platform. AT&T has said it will work with both vendors to target different industry verticals.
Boyanovsky said AT&T partnered with Nokia and Ericsson so it could quickly implement private wireless networks and also because it wanted an offering that wasn't tied to any specific spectrum.
Verizon, meanwhile, announced that it has teamed with Nokia to offer private 5G networks to enterprises in Europe and Asia-Pacific. Kalapala said that many companies in other countries, such as Germany, are getting spectrum to deploy wireless networks and Verizon wants to be able to assist them in managing and maintaining those networks. Kalapala explained that Verizon counts a number of multinational companies as customers, and those companies often want consistency across the globe.
AT&T also sees the potential in offering its private networking services in other countries. Boyanovsky said that AT&T is already working with Nokia on such efforts, and that the operator has similar agreements with vendors to extend its IoT platform overseas.
Business models in flux
Because these deals are still in the early stages, business models are still being figured out. AT&T's Boyanovsky said he expects these deals to resemble a managed services contract rather than being based upon the amount of data used. "We have to stretch our thinking on pricing models," he said. "This is not the traditional model as a carrier."
— Sue Marek, special to Light Reading. Follow her @suemarek.