Enterprises prefer private 5G networks over network slicing
Large enterprises are wary of network slicing within public 5G networks because of potential security risks. But SMBs see network slicing as a viable 5G option.
As consumer 5G ramps up, enterprises face the task of determining their realistic next steps to procure and deploy 5G networks for their businesses.
Providers started building out consumer 5G networks in late 2018, but commercial production for enterprise 5G isn't expected to kick-start until 2021, according to Chris Antlitz, principal analyst at Technology Business Research (TBR). As devices and chipsets mature and meet standardization requirements, enterprise 5G deployment will accelerate.
"Enterprise 5G is about a year behind the consumer market in terms of chipset readiness, infrastructure readiness, business model readiness -- all that stuff," Antlitz said. But enterprises can still evaluate their business case and existing infrastructure to gauge how 5G can improve their business operations.
As enterprises and SMBs assess 5G, they'll need to consider their deployment options. One option is to build and control a private 5G network using their own spectrum. A second choice is to procure a network slice from a provider's public 5G network. The decision depends largely on trust, the technology's maturity and cost.
Despite the amount of innovation and progress with 5G, the technology is still immature and expensive. For example, a factory overhaul to implement 5G for industrial automation could require an initial investment of hundreds of millions of dollars, Antlitz said. As a result, near-term 5G business customers will be the world's largest companies that can afford the high price tag and have resources to plan and build their own private networks.
Companies such as Airbus, Ford, John Deere and Whirlpool have already deployed or plan to deploy private 5G networks, looking to capitalize on 5G's ability to transform business operations, build business resiliency and reduce costs through automation, Antlitz said. By 2030, TBR expects more than 1,000 business and government organizations will have deployed private 5G networks. Meanwhile, SMBs will use 5G for communications until price points drop and the technology matures, he said.
The private 5G network market is expected to pick up in 2021 to 2022, due to enterprise investments in 5G New Radio, 5G core and transport.
Large enterprises favor private 5G networks
While private 5G networks are costly, they enable enterprises to customize their 5G buildouts to meet application requirements, more finely manage infrastructure and secure data on premises. These capabilities are especially important when considering the three following major enterprise 5G business cases:
national security;
economic competitiveness, such as industrial automation; and
public safety, such as telemedicine and remote learning.
They want closed systems that they control and that are completely separate from the public infrastructure.
Chris AntlitzPrincipal analyst, TBR
Security, privacy and trust are major requirements for each of these business cases. While 5G is one of the more secure cellular generations, touting advanced encryption capabilities, it's still vulnerable to breaches. As a result, many enterprises are wary about sharing a network slice in a provider's public 5G network, preferring to control their own private network, Antlitz said.
"They want closed systems that they control and that are completely separate from the public infrastructure," Antlitz said. "One of the key reasons for that is trust. They don't trust network slicing isn't going to have a breach or some other problem."
By building and maintaining their own 5G networks, enterprises hope to avoid a situation in which valuable data -- such as a secret soft drink formula, for example -- gets breached when it resides in a slice of public 5G infrastructure.
But building these private networks requires extensive planning. Enterprises must procure or sublease spectrum from a range of options, including Citizens Broadband Radio Service, millimeter wave, low-band and unlicensed spectrum. They must also consider network design, geographic coverage and roaming, software and equipment upgrades, and connectivity replacements.
Network slicing still a critical gateway to 5G
Despite enterprise wariness about privacy and security, network slicing will remain an attractive option for SMBs and enterprises. By 2025, TBR expects providers will offer network slicing via public networks as a cost-effective 5G option for SMBs because companies pay only for what they use.
Additionally, many IT teams might not have the resources or expertise to build and support the infrastructure required for a private 5G network, which includes 5G New Radio, a 5G core and transport using fiber or microwave, Antlitz said. By using a provider's public network, customers can consume 5G services backed by a service-level agreement, while avoiding the hassle of procuring spectrum and maintaining the network.
TBR indicated network slicing via a public network is better suited for wide area networking -- compared to a more contained LAN environment -- making network slicing a "critical gateway" to 5G for smaller companies over the next few years, Antlitz said.
