The development of mobile private networks (MPN) is a key evolution in the telecommunications sector. Thanks to the availability of frequencies by local regulators and the increased capabilities of 5G (low latency, high bandwidth, customization), companies could now deploy their own connectivity infrastructures. Consequently, operators face a risk of disintermediation, where equipment suppliers and cloud platforms attempt to bypass them to offer their solutions directly to enterprises. The consequences for mobile operators are numerous and impactful : they must therefore adapt their strategy to defend their positioning and maintain their revenues.
Context: The Disintermediation of Operators
Disintermediation arises from several dynamics:
- Increased competition: The emergence of new players specialized in private networks can intensify competition. Integrators and cloud providers are positioning themselves in the market and offering mobile private network solutions that combine infrastructure and cloud services. Additionally, the virtualization of 5G network functions and Open RAN have allowed the emergence of new equipment manufacturers, other than the current leaders in the public mobile network.
These offerings can allow companies to rapidly deploy connectivity solutions without going through operators.
- Regulation: Direct allocation of frequency spectrum to companies is now possible in some countries. This can represent a threat if operators fail to adapt quickly.
- Rise of packaged solutions: The emergence of plug-and-play solutions in this market presents several opportunities. They enable companies to quickly deploy private networks without having to manage technical complexities. Often preconfigured and ready to use, they eliminate the need to go through an operator to manage the infrastructure.
Challenges for Operators
Disintermediation leads to several consequences:
- Loss of traditional revenues: Operators may see a decrease in their market share if companies choose to manage their own private networks or turn to specialized providers.
- Marginalization of operators: Traditional operators may find themselves marginalized, with their role limited to providing the basic infrastructure necessary for the connectivity of private networks. This would represent a loss of added value for operators, who would see their influence and revenues diminish in favor of new dominant players.
- Strategic reorganization: Operators must adapt to B2B challenges in the face of an increased competition. It is also crucial to optimize costs and enhance customer service. A client advisory approach is also necessary to meet the specific needs of businesses.
Opportunities for Operators
Despite these challenges, operators have significant assets to leverage in the MPN market:
- Expertise in network management: Regardless of the size of the companies that have adopted private mobile networks or their skills, it is recognized that the expertise of operators in network management, particularly in terms of coverage, quality of service (QoS), and security, surpasses that of these companies.
- Utilization of established infrastructures: Thanks to their existing infrastructures (towers, fibers, data centers), operators can offer hybrid solutions by providing a private slice on their public network. These solutions can sometimes be technically and economically more relevant.
Strategies for Adaptation
To remain competitive, mobile operators must adopt a proactive approach. Here are the main strategies :
- Strengthen the technological ecosystem: Transitioning from competition to partnership constitutes a visionary strategy for traditional operators wishing to effectively position themselves in the mobile private networks market. This approach not only strengthens their offerings but also creates a collaborative ecosystem beneficial for all stakeholders. By establishing a collaborative ecosystem with equipment and cloud service providers, operators can integrate advanced connectivity solutions with strong cloud capabilities. This allows them to offer various use cases and services tailored to each sector, such as Industry 4.0, logistics, energy, transportation, and healthcare. Furthermore, operators can stimulate innovation and reduce costs by pooling research and development efforts with technology partners.
- Offer turnkey solutions: By providing turnkey solutions, operators enable companies to simplify the adoption process. This is achieved through complete integration, rapid deployment, and simplified maintenance while optimizing costs.
- Leverage regulation to differentiate: Operators are best positioned to master the regulatory frameworks for managing spectrum licenses. They can thus use their expertise to assist companies in simplifying procedures.
- Develop sector-specific Use Cases: To stand out in the market, it is essential for operators to develop specific use cases for each sector of activity. This approach also offers the opportunity to leverage the dynamics of a diverse ecosystem, integrating innovative startups that develop cutting-edge technological solutions. This allows operators to meet the concrete needs of clients and demonstrate the added value of Private Mobile Networks.
Conclusion
Once enterprises have the right to use frequencies, they can design, deploy, and operate MPNs. Experience shows that most companies, no matter how powerful and competent they are, agree that operating a network remains the operator's expertise. Operators are therefore compelled to reassess their strategic positioning and initially take on a role of consulting and engineering before resuming their role as operators. As a consulting and engineering firm, SOFRECOM provides operators with all its expertise to help them take this strategic turn.
