Flipping the script for private wireless

by Martha DeGrasse 7/28//23

Private networks were a key theme for Verizon CEO Hans Vestberg as he spoke to investors and analysts this week on the company’s second quarter earnings call. After summarizing financial results, Vestberg said he wanted to focus on Verizon’s performance in three areas: mobility, private networks, and national broadband.

 

“The total addressable market of private wireless is expected to grow significantly, and Verizon is well positioned to capture meaningful share,” the CEO predicted, after reminding investors of Verizon’s recent wins with the U.S. Department of Veteran Affairs and Cleveland Clinic.

 

Later during the call, analyst Phil Cusick of J.P. Morgan pressed Vestberg for specifics, asking him how long it will be before private wireless becomes a billion-dollar business for Verizon.

 

“I don't think we should expect that it's a billion-dollar business this year, but that definitely over time, this is a very important lever for [CTO] Kyle [Malady] and his team for growth in the service revenue and actually doing even better with enterprises,” Vestberg replied, adding that his company has “a growing list of new customers coming in.” Vestberg said Verizon’s customers are using private wireless as a Wi-Fi replacement, and called out factories as an exemplary use case.

 

Private cellular networks are the new kids on the block when it comes to enterprise connectivity, where Wi-Fi and ethernet dominate. Most corporate IT managers do not think immediately of their mobile network operator when they look for better ways to connect and control devices and harvest the data they generate.

 

But when it comes to connecting smartphones to the internet, mobile network operators are of course the providers most companies consider. Verizon can leverage its thousands of enterprise relationships to sell private networks, but those conversations may be very different from discussions about replacing Wi-Fi in factories..

 

This point was illustrated at MWC 2023, when Verizon MD Jake Kornblatt, who manages the carrier’s global system Integrators and hyperscalers business, discussed neutral host networks alongside counterparts from AT&T and T-Mobile. The three carrier representatives explained how they had been asked to connect to CBRS neutral host networks developed by Meta for several of its corporate campuses. Meta’s Heather Marquez, executive manager, global technical operations, explained that the hyperscaler was intrigued by private networks, but was most interested in neutral host.

 

“We actually looked at private use cases as well and found that we had nearly a dozen private use cases that we could use CBRS for, but … the key driver was really around neutral host and figuring out how we could do something to complement our DAS solutions, maybe in our smaller offices,” Marquez explained during the MWC panel, which was posted on LinkedIn.

 

The Meta networks use shared RAN hardware, shared CBRS spectrum, and MOCN (multi-operator core network) gateways to connect users to the public carrier core networks. Some of the Meta CBRS networks are already live, and others remain in development.

 

The MOCN CBRS model has applications beyond big corporate campuses. It could also make sense in places like hospitals or distribution facilities. These often lack adequate cellular connectivity for urgent communications, and they rely on high-value assets which management may want to connect to a private cellular network for tracking purposes. But most of these potential customers are unlikely to take the initiative to develop their own networks, as Meta did. They will need help from partners, and Verizon is well positioned here as the biggest holder of CBRS spectrum among the top three operators. The carrier also has a growing edge business, which means it can complement connectivity with data analytics and application hosting. 

 

Like its competitors, Verizon has a successful history of constructing DAS networks and then opening them to competitors, and this model may be set to repeat itself with CBRS and MOCN. Verizon appears to have taken a step in this direction by partnering with Celona, which will combine CBRS spectrum and Celona’s 5G LAN technology with Verizon’s Onsite 5G portfolio.

 

The concept of a shared private network may sound like an oxymoron, but to enterprise customers the idea is likely to make perfect sense. Enterprises want reliable cellular connectivity, they often want dedicated spectrum for specific users, and they almost always want all public carrier networks to be accessible. Private CBRS networks built on a MOCN neutral host model could represent an important opportunity for mobile network operators, particularly Verizon.