By Heiko Perkuhn, Managing Consultant at Detecon International GmbH, with contributions by Managing Consultants Dr. Britta Cornelius and Dr. Daniela Drube
If telcos develop and market campus networks as products, they will fail. If they sell them as solutions, they will succeed. Does this sound a bit simple? Probably. And yet the success of marketing campus networks depends on telcos approaching from the right angle when addressing their clientele.
5G campus networks are the subject of conversation everywhere, especially now that spectrum has become available for industrial use in several countries. The technology offers real potential for new use cases and cost savings for established ones. The clientele that wants to mine this potential, however, must be approached from the right angle. If telcos understand the motivation of their potential new customers while simultaneously finding a way to reap the benefits from the value-added chain themselves, the 5G campus business will become a strong pillar with long-term commitment that complements the ongoing transformation towards services and private communications.
5G opens the door to new opportunities on the global connectivity market
5G offers many new opportunities for revenues, and campus networks are among them. But it cannot be taken for granted that the established telecommunications providers will succeed as a matter of course.
The natural inclination might easily be to assume that a company whose core business is the deployment and operation of mobile networks would have few problems in setting up networks for specific customers on the latter’s own premises. But a closer look reveals that the challenges lie hidden in the details:
- On-premises core networks must be scaled down significantly
- Who owns the hardware — the provider or the customer?
- What SLA aspects are most important: MTTR, MTBF, mean availability?
- How can many small RAN and core networks be operated efficiently? How can the need for field service be minimized?
- How should SIM cards be managed?
- How should the campus network be integrated into the customer’s current IT environment?
- How should services be provided on the site, and how should the service partner be managed?
Campus networks are a customer-specific business
Some of these aspects are covered by suppliers offering dedicated, packaged solutions for campus networks comprising scaled-down and less complex core network equipment and the appropriate RAN solutions.
But telcos must not fall into the trap of regarding private cellular networks as a smaller version of the mobile network they are used to building and operating.
Value-added chain with four phases for setting up and operating campus networks
Since private networks lack some of the assets a telco can typically expect to have in traditional business, exploiting the existing value-added chain is more of a challenge. The customer may have acquired the spectrum and own the equipment, and there are no SIM card subscriptions for the use of the public network. This leaves services as the source of the revenue stream. The process of setting up and running campus networks can be broken down into various phases, and value is created in each of them:
- Consulting + Pre-Sales
- Deployment Planning
- Deployment
- Operations
Market approach: Value proposition and personae
Private cellular networks have been a niche business for quite a while, e.g., providing mines, harbors, oil rigs, etc., with wireless communications infrastructure. Such networks have been set up and operated by specialist companies (among them, Edzcom, Syniverse, Infrastructure Networks). With the advent of 5G and the need for telco operators to find new revenue streams to pay for their investments, this business has found its place on the agenda of telcos as well. The most promising approach to acquiring 5G campus business with typical industry customers is to begin by attracting their attention with an enticing value proposition: a network under their own control that can be set up rapidly, is not too complex, does not require huge investments up front, and provides valuable insights on propelling their production into an Industry 4.0 world.
Detecon, in collaboration with Deutsche Telekom, has analyzed the customer landscape and by drawing on interview results, has identified six segments that can be portrayed as “personae”: The Inquisitives, the Testers, the Corporate Network Strategists, the Business Strategists, the Project Planners, and the Professionals.
These “personae” should not be seen simply as “segments”; rather, they represent a dynamic mapping that may change over time as markets mature. The same customer can evolve from one persona into another. Private cellular networks with no connection to the public mobile network of a network provider are most interesting for the “Business Strategists” and the “Corporate Network Strategists”; the former because they are looking to support a road map of future use cases, the latter because they have a concrete use case in mind. Alternatives for this type of customer would be Wi-Fi networks. In Germany, for example, SMEs represent the biggest group of potential future users of 5G campus networks from a telco point of view.
The challenges for the provider are manifold:
- Clearly point out the technological advantages of 5G
- Offer a competitive price. Even if cost savings in the long run are a good argument, the upfront price must nevertheless be appealing
- Achieve a short deployment lead time
- Offer competitive cost of operation
- Convincingly demonstrate how a telco’s USP is an advantage over what other providers can offer
- Have a competitive edge to set itself apart from other telcos – be it edge cloud partnerships, collaboration with application providers (in the AR/VR field, for instance), or a convincing promise of the best service from the local presence of field technicians at any site
A good strategy, although it is a challenging one, is to develop a modular structure of the offer — start with a small, simple offering that can be scaled up according to demand.
Operational approach to campus network operations: How much “rollout” is possible?
There are apparently two schools of thought when it comes to the operation of campus networks.
- The assumption is that the wireless site on a customer’s premises is simply another site in the operator’s network and requires the use of exactly the same kind of equipment found in the rest of the wireless network. The connectivity to the OMC is set up as with any other site. The processes are the same ones used for any wireless network rollout. A core network on the customer’s premises, however, must be handled differently. The addition of 50 to 100 very small core sites cannot be monitored and maintained in the same way as the existing core sites. Specifically, on-premises maintenance is not possible with the same staff.
- Every campus network is regarded as a unique, isolated network. This view corresponds to the treatment of LAN/Wi-Fi enterprise networks. Operation and maintenance can nevertheless be centralized, but require a set of processes and tools that differs from those for the public network. There is more freedom in choosing the wireless equipment as it does not have to match the equipment in the public network.
The second approach is more feasible for the current, immature market phase in particular, characterized as it is by many customers who want to test and explore the technology and are not absolutely sure if and how they will use it. The term “rollout” will probably never be completely appropriate for this kind of business as it will always be more solution than product.
Our conclusion: Campus networks are a solution business, not a mass product
When telcos play to their strengths, they have a competitive advantage that puts them in a position for success. They own spectrum that can be added to any spectrum dedicated to the industry, a clear benefit they can offer. Industry customers want private networks because of their sense of being in control. Another valuable asset of telcos is their undisputed experience in planning, deploying, and operating networks. However, they must also do some homework. The market is young, evolving, and dynamic; telcos should quickly determine their most promising customer segment and focus marketing resources on this group. Internally, this business should be anchored at the appropriate points in the organization, from sales and product development to planning and operations. Most importantly, campus networks must be regarded as a solution business, not a mass product.
