WiFi dominates connectivity in the enterprise, but mobile network operators are trying to present an alternative and will it into greater prominence with benefits that WiFi can’t match. Private, cellular-based networks will eventually tap into many of the technology leaps featured in 5G, including network slicing and dynamic spectrum sharing, but WiFi 6 — the next evolution in WiFi — is also on pace for widespread adoption in enterprises.
“With WiFi 6 and 5G what’s happening is that cellular is becoming closer to WiFi and WiFi closer to cellular in the sense that WiFi becomes a technology that allows you much more flexibility and power in managing the resources available. And with 5G you have the higher capacity that you typically have with WiFi,” said Monica Paolini, founder and analyst at Senza Fili.
Still, the technologies remain fundamentally different, primarily because WiFi is designed for use in an unlicensed environment whereas cellular is not, she explained.
WiFi 6, or 802.11ax, is also “the first generation of wireless LAN technology that promises to seamlessly interact with cellular,” said Tam Dell’Oro, founder and CEO of Dell’Oro Group. One of the factors that drives a compelling preference for WiFi connectivity in enterprises is that it is less expensive because traffic is not hogging the spectrum, she added.
The Proposition for Private Cellular
The propositions for private cellular networks in the enterprise environment are myriad and interest will be driven by specific requirements of each business.
Any decision to improve cellular penetration in enterprises will be triggered by new use cases that require cellular-level quality of service (QoS), operator plans that enable greater reliability on cellular, improved management and control plane integration between WiFi and cellular systems, and new spectrum or models that promote enterprise-owned equipment, according to Stefan Pongratz, VP at Dell’Oro Group.
“The United States is currently one of the few countries seeking to provide enterprises and industries with a new ownership model through the innovative CBRS band,” he said.
While network operators are shifting capex from 4G LTE to 5G to address indoor coverage needs in larger public buildings, the roughly “30% spectral efficiency upside between LTE and [5G New Radio] is not a trigger point to change the status quo for enterprises seeking to modify their connectivity solutions,” Pongratz explained.
“The main driver is on the supply side and the ability for operators to reduce cost-per-bit and differentiate on the packaging with larger data plans,” he said. To some extent that shift will enable professionals to reduce their reliance on unlicensed spectrum for smartphone connectivity at work, but larger screens in the enterprise will “continue to drive demand for both the licensed and unlicensed spectrum.”
Most of the early private cellular networks are based on 4G LTE, but 5G products and services are expected to hit the market soon. Nonetheless, there’s still a long runway ahead for private 4G LTE based networks. ABI Research predicts private 4G LTE networks will be a $16.3 billion market by 2025.
Complementary Connectivity for Private Networks
“Pretty much any enterprise that I can think of, and especially any enterprise that is considering private 5G, has a WiFi network already, and they are now going to remove it or change it” if there are plans in place to move to a private cellular-based network or upgrade to WiFi 6, Paolini said. Most WiFi-equipped enterprises will upgrade to WiFi 6 regardless of their plans for private cellular-based connectivity, she added.
“The pace of the upgrade is going to change depending on what the enterprises need and currently have,” Paolini said. As the range of tasks driven by cellular connectivity in an enterprise grows, so too will the need for private cellular networks, she explained.
“In some enterprises where you do have a lot of automation in production, what happens is all that functionality runs over wireline, and this is because WiFi cannot support those kind of functions,” Paolini said. Private cellular networks are expected to change that paradigm.
Deployment of private cellular networks is going to be more prevalent in enterprises that run mission-critical applications, especially those that have specific requirements for capacity, coverage, security, reliability, latency, or mobility, according to Paolini.
Now is the time for enterprises to start getting excited about the private radio access network (RAN) opportunity, according to Pongratz.
“It is still early days for private cellular IoT but the momentum is moving in the right direction, reflecting renewed enthusiasm driven by increased activity and demand for enterprise use cases that require cellular QoS to support new opportunities across multiple verticals,” he said.
Early findings also indicate that licensed and unlicensed spectrum would continue to work as complements where it makes sense, he added. “Clearly there could be some niche cases where enterprises could rely solely on one or the other, but in the vast majority of the cases we envision there is a role to play for both WiFi and cellular.”
Enterprises will push “applications with more stringent QoS toward the licensed spectrum and non-critical applications toward the unlicensed spectrum,” Pongratz explained.
However, a dual approach like this won’t be without challenges, Dell’Oro added. “The drawbacks for an enterprise to operate both 5G and WiFi are that the two systems are separate and would need different management applications. If the 5G network is managed by a telecom operator then there would be limits on how much it could be used,” she said.
Cost Considerations Impact Adoption Timeline
Most operators are still in the early stages of 5G deployments, but WiFi 6 access points are in the market now and have been shipping since late 2018. As such, Dell’Oro Group projects revenues for that equipment to grow by at least threefold in 2020.
The firm also remains optimistic about the growing opportunity for IoT in industrial environments, but 5G may not factor much into that growth in 2020. “Our forecast assumes the LTE platform is expected to suffice for the majority of the near-term vertical requirements, implying it is unlikely 5G NR IoT related capex will move above the noise in 2020,” Pongratz said.
“There is a significant gap between WiFi 6 and 5G NR when it comes to technology readiness, network deployments, device proliferation, and overall brand awareness for enterprise applications,” he said.
“It is one thing to compare technologies side-by-side and outline use cases in a specification, but the reality is that WiFi has been around for a long time and it remains the de-facto technology for enterprises,” Pongratz explained. “If the perception of the enterprises is that WiFi is their responsibility and cellular connectivity should be addressed by the operator, it will take some time to move beyond the early adopter segment.”
Pongratz encourages enterprises to get less bogged down in the costs associated with private wireless and focus more on the business case, potential efficiency improvements, incremental value, and potential revenue upside. “As we move toward more critical applications, this will become increasingly important — after all, a one-second latency connectivity delta for a utility provider could potentially prevent the next major fire and save billions of dollars in damages and, more importantly, it could save lives,” he said.