Somewhere there’s an alternate universe where service providers are so effective that they dominate the enterprise communications market.
In that world: What cannot be delivered remotely over fiber, wires or wireless—a pervasive, shared communications grid—is installed on site and managed remotely by service provider engineers. Small businesses and large enterprises requiring wired or wireless communications look to these large service providers because they deliver all required services at the lowest cost, with high reliability and national reach. At the end of the month, a single bill covers all services consumed.
+ Also on Network World: IoT-dedicated networks beginning to rollout +
In this universe it is considered stubborn and futile and rather backward for an enterprise to attempt to build a private network.
It is a credible and compelling vision. Service providers have all the tools to drive private networking out of the market. They bring economies of scale in equipment purchasing, technical expertise and bundled services, as well as a very low cost of capital.
But for all their sanguine prognoses, service providers, going all the way back to Centrex in the 1980s, have never captured more than 10 percent to 20 percent of any enterprise networking market. This alternate universe, sometimes tantalizingly close, has never intersected with our own.
But now it’s back again—and with a better chance of success than ever.
A rise in WLAN contracts
The immediate signs are an uptick in managed wireless local area network (WLAN) contracts. It is more attractive today than in many years to purchase WLAN service (per-user, per-month charging) from a service provider versus building a private network. Several trends contribute: cloud and software-defined networking (SDN), the coming IoT revolution, licensed-unlicensed convergence and internet-based services.
The move to cloud-controlled architectures means there is less equipment on site, installation is more standardized and less complicated, and there’s better remote management and troubleshooting. An enterprise network can be managed, reconfigured and upgraded from a remote operations center, especially with SDN architectures, and the promise of orchestration favors those who can federate with many disparate networks. Centralization to off-site data centers and network operation centers (NOCs) favors service providers’ operational models, exercising multi-tenant features to serve many customers from a common network base.
Meanwhile a large class of IoT applications requires ubiquitous, outdoor operation. And for this there is no substitute for wide-area service provider networks, whether LTE variants like NB-IOT from 3GPP or unlicensed options such as LoRa and SIGFOX. Perhaps the largest IoT population today is connected cars, which exclusively use the cellular network for communications. Other applications, such as utility meter reading, will go the same way, given favorable pricing and straightforward provisioning. If we concede that some enterprise IoT applications will require ubiquitous, wide-area communications, then service providers have to be part of the mix. Why not give them the whole network?
The new small cell product lines from cellular equipment vendors combine both licensed LTE and unlicensed Wi-Fi radios in a single unit. The licensed radio must be controlled by the operator, the spectrum licensee. And to provide effective service, the small cell must be mounted indoors, which requires the cooperation of the venue owner, the enterprise. This implies that if small cells are to be successful, the enterprise must develop a direct or indirect relationship with a service provider, extending from sales and RF planning to ongoing management and operations. Operators can be slow to react to market requirements, but they will come to realize that their ambitions in the small cell market depend on dealing directly with enterprises.
Other trends support service providers’ moves into managed services for the enterprise. As cellular operators recognize that the consumer market in developed countries has flattened out, they will embrace new product lines to continue growth. Some are already moving into internet "properties," including search, advertising and multimedia content. This move "up the stack" will extend to security and other services applicable to the enterprise market.
Given some expertise in running a cloud-based Wi-Fi hotspot network, familiarity with IoT data networking, a roadmap that includes small cells as an indoor cellular solution, and sophisticated internet services in their portfolio, it’s not surprising that service providers conclude they are well-placed to offer comprehensive wireless communications as a service to enterprise customers. All that’s missing is a focused sales channel. And while this is a significant challenge, cellular equipment vendors are already aligning with enterprise WLAN vendors for this push.
Can the traditional service provider weaknesses—inflexible procedures, cumbersome move-add-change processes, and lack of technical expertise—be overcome by the developments above, driving a successful entry into the managed WLAN market? Time will tell whether this alternate universe can finally intersect with our own.
This article is published as part of the IDG Contributor Network. Want to Join?