Private Cellular Networks: Current State, Use Cases, and Future Growth | GXC Meshup Episode 016

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GXC MeshUp
Private Cellular Networks: Current State, Use Cases, and Future Growth | GXC Meshup Episode 016
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In Episode 16 of GXC's Monday Meshup Podcast, hosted by Allen Proithis, we dive into the market value and current state of private cellular networks with Patrick Filkins from IDC. Explore the growth of 5G in private cellular, the established presence of LTE, and various use cases across different industries. Learn about the opportunities and challenges in Europe compared to America, and delve into the critical aspects of security, privacy, and the economic impact of private cellular networks. Join us for an insightful discussion on the latest trends and research in private LTE and 5G.ย 

A lot of it’s just TCO. Let’s deploy a wireless network that can connect fixed and mobile devices, and frankly, it performs to the level that we need it to in comparison to fiber and some Ethernet of the latter days.

Introduction to GXC’s Monday Mashup Podcast

Welcome to GXC’s Monday Mashup, a podcast that gives you an inside look at GXC, our private cellular network platform, GXC Onyx, and the latest industry news to enable a world where enterprises can trust wireless connectivity to be simple.


Allen Proithis: Hello and welcome to GXC’s Monday Mashup. I’m your host, Allen Proithis, and today; we have a wonderful guest who will give us a broad market view of what is going on in private cellular today. Joining us from IDC, we’re honored to have Patrick Filkins with us. Patrick, welcome to the show.

Meet Patrick Filkins from IDC

Patrick Filkins: Hey, thanks for having me. It’s great to be here. You know, I always tell people the only thing better than being an industry analyst or marketing and competitive intelligence expert is being able to tell people what you actually researched. I’m so happy to share this platform with you and have a good discussion today.

Allen Proithis: You mean you don’t have a private cellular magic eight ball, Patrick? Is that what you’re saying?

Patrick Filkins: No, sometimes, you know, you come up with some good insights that your clients will find valuable, and you need someone who wants to consume those.

Patrick Filkins’ Journey into Telecommunications

Allen Proithis: Well, it’s great to have you here, and I don’t envy your job because I view it as taking all these inputs from various sources, all with their agendas. Some would be from ecosystem players who are vendors on the supplying side. Some are from solution providers, and some are from actual end customers. Then, you have to synthesize all that to make some sense of it for your audience. So, how did you get started on this, and how long have you been with IDC?

Patrick Filkins: Yeah, sure. So I’ve been with IDC specifically for about six years, been in the industry doing marketing and competitive intelligence along the lines of telecommunications for over a decade. And where I could say I started was when we had a quick chat before this call. So, I started a second career when I was quite young, just out of college. I joined the military.ย And when I got into the military, you know, you can take different career paths. One of the areas that I excelled in and found very interesting was the intelligence-gathering aspect. So, use everything at your disposal to draw a picture for leaders to make decisions, use digital ISR, talk to people, and fall in love with it.

So when I wrapped up a stint with the military, I came back looking for, you know, what am I going to do with my next step in life? I had a good friend who was a vice president at a research firm called TBR, and I joined that firm, and off we went. So, I was able to marry some of the intelligence gatherings and maybe share a little about the background. I am also doing some communications work in the military. It all came together in a civilian career.

Understanding Private Cellular Network Infrastructure

Allen Proithis: Wow. That’s great to hear, you know, the transition. I think there are some jobs in the military that people see as direct applications, like logistics, and others that they don’t.

And it’s great that you found a path to leverage the skills that you value the most. So, you’ve been at IDC for six years. What’s your coverage area there?

Patrick Filkins: Yeah. So, my official title is Senior Research Manager, IoT and Telecommunications Network Infrastructure. I’m part of the worldwide network infrastructure team, and we have a small army of analysts looking at communications and networking from several angles. One easy way to think about it is cloud data center networking and enterprise campus networking.

Then you have the large service providers, like the mobile operators, cable companies, and wireline, who are building these uber-large macro networks. And I dovetail two of those. So I’m part of the telecommunications team looking at what the large service providers are deploying, but I also get to play around with this idea of the Internet of Things, right? What do we do with networks when we want to connect non-consumer devices in IoT? And this led me down the road of private network coverage.

So, I lead IDC’s worldwide coverage of private network infrastructure, but IDC is a big company. So, I have a lot of colleagues in Europe, APAC, and even specific countries. I’m doing a project right now for a specific Middle East country, just on private networks. So, I have a good colleague set around the world, and I get to bounce ideas off when we share information and draw a big picture, but I have the sort of envy of worldwide analysts. As you said, my job is to synthesize many of what I have learned.

Exploring Global Coverage and Use Cases for Private Cellular Networks

Allen Proithis: So, well, Patrick, I mean, just IoT alone is about 10,000 different use cases. And then, a network by itself is useless without the things that attach to it. It’s just a vehicle to get the data from those end devices. And so that’s a big patch we have there. So, your patch is global, the connectivity layer combined with the things that connect to it for the enterprise. So, how do you describe the current state of maturity of private cellular?

Patrick Filkins: Yeah, that’s a really good question. And I’ve answered this question many times now. So my answer is I’d like to think it hasn’t changed too much. So, the way that we generally define private networks at IDC is, for lack of a better term, a standalone.

It can be a single-tenant type of infrastructure or network built for a specific tenant or an enterprise or industrial customer, right? So, it’s a network that’s dedicated to a single entity. If you take that definition, you can look backward into certain areas like private LTE that have been around for years now. You’ve seen utilities deploy private LTE.ย Again, this is a specific type of network that is only sometimes deployed by a large service provider. It’s deployed just for that entity. So when I look at that, it’s, on the one hand, a mature sort of market. But, of course, now we have 5G, right? We’ve had 5G for a few years now.

So all the stakeholders in the market are taking 5G and pointing that at the enterprise and saying, hey, here’s this new wireless standard that can do some different things, maybe some better things in some respect. And that is still quite new. And when I look at the market today, it’s still very LTE-dominated, if you use my definition, right? If you look at 5G in a vacuum, it’s growing quickly, but it is still a nascent technology.

The Role of 5G in Private Cellular Networks

Allen Proithis: Well, it’s interesting how you describe private cellular as a mature space. And I agree that the technology is mature because LTE has matured for a decade. The application of it, though, we’re now seeing the greatly accelerating adoption curve.

And I always try to remind people how long it takes these technologies to go from basic stuff to market-leading or just high market penetration. For instance, the first commercial cell phone call was made in what, 79?ย However, the basic technology for cellular patents was back in the mid-40s. And we didn’t get 50% smartphone penetration until maybe a dozen or so years ago. So it does take time, but talk about 5G for a second.ย Because 5G, to me, is one of the most abused marketing terms in the world. And so we’re seeing a massive level of confusion, but tell us what you see going on with 5G? Why are people starting to ask more about it on the enterprise side? And what are you seeing out there in terms of the interest?

Patrick Filkins: Yeah, again, the big question. So, I mentioned that LTE has been around for a while, but you’re right from a use-case perspective. It was mostly, and today it still is; if you’re using LTE, it’s just connectivity, right? You may be moving from analog to digital, connecting fixed points. It might not be about connecting mobile points or fixed points, but then 5G comes along. And the big thing about 5G is that you have to understand that, yes, there’s a new air interface, right? There’s a new way that the system works, but it also runs on a much wider spectrum. That’s the idea.

When you do that, you start using traditional low band, right? You have a lower band spectrum. You have a mid-band and high band. You’re creating a network that can address many more potential use cases. And that’s the idea. You don’t hear a lot of companies; they have their care about it, and they do not care about it. And there has always been traditionally, when we have video traffic come online, it’s a big bandwidth issue. And so 5G, again, was about new spectrum in as much as it was about a new G. So when you do that, you change from the old days of private LTE in the mid-2000s to now, what can we do with this?

New applications that you can do over a wireless network. Then you start to talk about 5G as something like wireless fiber. And so when you do that, the gears start to turn, the IT, the network managers start to say, OK, if I’m reaching levels of parity where I can get a reliable wireless network that helps me address potentially a different set of use cases or a higher demand set of use cases, well, let me look at this. You could even make a quick analogy to Wi-Fi. Back in the day, your Wi-Fi-connected laptops, and here and there, you started connecting devices all over an enterprise campus or a footprint using wireless. And there’s certainly, from a business perspective, savings there. You don’t even have to talk about the potential use cases. You may deploy a campus network that’s better than TCO. And I see that in the market today as well. So yes, we can discuss some more avant-garde use cases. But today, to me, a lot of it’s just TCO.ย Let’s deploy a wireless network that can connect fixed and mobile devices. And frankly, it performs to the level that we need it to in comparison to fiber and some Ethernet of the latter days.

Regional Differences in Private Cellular Network Adoption

Allen Proithis: Well, I love that wireless fiber comment you made. That’s a great way to think about it with 5G. And, of course, the size of that fiber depends on the amount of structure you can get, which brings us to an interesting question because I’d love to dive into the use cases but finish on sort of the 5G thing.ย 

When you go to Europe, and I just returned from a trip to a few countries last week with different customers and partners, there is no conversation about LTE. It’s just 5G, 5G, 5G, and real 5G. OK? It’s not marketing 5G. In the U.S., it tends to be 90% plus LTE, although we’re starting to see real 5G get more traction here.ย How do you explain the difference in approaches between the U.S. and Europe?

Patrick Filkins: This year was the first year I could bring good numbers to bear that backup. I would say the U.S. is still very LTE-rich in its private network. Why in Europe? And Asia Pacific. An easy way to think about it is some of the spectrum availability. So when you said you went to Europe, I’d ask back, so where were you?ย Suppose I look at some countries that have taken a very aggressive posture on providing 100 megahertz or close to that of spectrum for enterprises to license, and again. In that case, part of being an analyst is finding out what it is basically: how do you create a good watering hole or a good driver? Where are the drivers for spend in private networks going?

And clearly, one of the big correlation points is spectrum availability. So, to name a few countries, Germany has allocated quite a bit of spectrum in some very Goldilocks mid-band for enterprises and industries; good on them. The government and the industry got online and said, hey, we agree. Let’s do this for the enterprises and the industrial companies for our industrial base and look at the results. So, you see quite a bit of private and industrial networks in Germany. You could extend that thinking to France and others in Western Europe. So that’s a big catalyst for 5G we’re seeing, certainly in the industrial base. The U.S., I don’t have enough time on the podcast today to dissect the U.S. dichotomy, but it’s really around CBRS.

You have the CBRS spectrum sharing where you have some lightly licensed; you have incumbent users in my prior job who are running naval ships doing radar, perhaps interfering in some of that. So we’re seeing in the U.S., it’s quite a bit of LTE. Much of that has to do with simply the unlicensed GAA band in the U.S., which makes it easy for LTE usage where you do have some enterprises.ย This is where you might not necessarily be critical of the CBRS band, but I can tell you that I do see some industrial companies akin to those, say, in Germany, who are manufacturers. They’re more interested in licensed spectrum, but that’s not to say in the U.S. You might see a long tail here where companies that use things like unlicensed GAA and LTE for a longer tail in the market may drive more of that. That’s something that we’re picking up now in the private networks market and worldwide differences.

Key Use Cases for Private Cellular Networks

Allen Proithis: It’s funny, actually, in no particular order; the places in Europe we’re seeing, especially a lot of activity, would include Germany, the UK, and the Netherlands right now.ย There are certainly other places, but the way you can get spectrum there changes because we know some people who’ve been grabbing chunks of spectrum for our network there, and it’s been a pretty straightforward process.ย They have made some changes, though, in the U.S., very, very recently in the last few weeks around CBRS availability near the ocean. It’s amazing if you see some of the charts showing how it’s pulled back and how restrictive it was initially.

I understand people want to be careful when they roll out a new thing. Still, much more flexibility has appeared regarding how spectrum is granted in CBRS, which is good. It’s funny, we’ve not seen much talk in the U.S. yet about licensed spectrum being used for private networks, because also the power settings you get, you can manage it well to avoid interference with each other. But before we go down that rathole, let’s discuss use cases.ย And I know we all love a good radio wave propagation conversation, but in terms of use cases, what we see out there a lot is that, typically, there’s one particular problem. They want to keep their data off a public network. They want to ensure that the corporate app works on the tablet inside and out. They have some other connectivity problems with scanners inside.

Typically, it starts with something on the simpler, lower data side, but as soon as they get that going, it’s like, wow, I can do computer vision. Oh, I can do video surveillance. Oh, I can do these other things. It’s the progress we see, especially in the U.S., but also in Europe, to some extent, even though they’re starting with more spectrum.ย How do you see the use side in terms of what the trigger point is for the use case for network adoption? And then where does the expansion go?

Patrick Filkins: I think you nailed it. I would say that there’s a specific use case for connectivity, but I think you think a little bigger than that. So, how would I describe it?ย Many systems integrators are helping bring this technology, which is no surprise. You have a lot of brownfield enterprise industrial companies who are looking at, oh, there’s this new tool that I could use to help solve a problem. So, the systems integrators are the ones helping make that happen. So when they deploy, they have a broader picture of what an enterprise is trying to capture, right? An integrator may be asked to come in from, say, from a high level around digital transformation. I have 35 new applications I want to deploy. Some I want to deploy in the cloud. Some I want to deploy on-premise.

An integrator will know which tools to apply to that. So for some of those tools, for some of those applications, and I’ll use one as an example because it’s resonated with me for several years now, a large auto manufacturer who has all sorts of close ties in the U.S. with a large service provider was having an issue in their production where they would roll out a new vehicle. Every vehicle has a SIM in it. Every vehicle today has 5G capability. And so their production volume was, as soon as they rolled out a new vehicle, their production volume was, for lack of a better term, public, right? It was running on a public network. And so they said, OK, that’s trade knowledge we need to keep internal, but we still want the benefit of some of that public connectivity, but we need a private network.

And that was the root cause of it. And then to your point, after that, they started to look at things like vision as a sensor and computer vision, which became sort of a step. We can also do that in our production lines. So it started from a privacy standpoint, and now they’re looking at it from a much broader standpoint. So, hopefully, that added to what you said.

Predictions for the Future of Private Cellular Networks

Allen Proithis: Well, yeah, I agree about privacy. People, especially in the age where you need all the data that you can pull in for future AI applications, it’s massive data. People don’t realize how expensive AI can be in data collection, computing, and GPU; good luck getting in the order line for GPUs right now, right?ย However, it starts with keeping that data off public networks because people are concerned about privacy. The other thing I’d throw out to you, Patrick, is the economic side. We were working with some people in the automobile space, and when those cars come off a boat or a factory and need a software update, that’s a 40 or 50-gig update before it gets shipped to a dealer.

And if you were to do all those updates on a public network, you would probably go broke because you’d be sending so much data across that thing, even if you had coverage in the place where you want it. The economic part is that once you have a private network, it doesn’t matter how many SIMs or devices or how much data you send over it within the boundaries of the spectrum you have available.

Patrick Filkins: Yeah, that’s certainly another point there. And it begs the question, what is the role of a telecommunications operator or communication service provider in this? Because they certainly see a role for themselves in it as well.

Investing in the Private Cellular Network Ecosystem

Allen Proithis: If people are concerned about privacy and security, you probably don’t want to put the consumer walking in an area on the same network you’re using for your industrial IoT data. So you can see a bifurcated approach, like Wi-Fi long-term, which is how I see it. Butย Patrick, having said that I know we’re getting out to the end there. So, given that you are paid to have a crystal ball, tradition forces me to ask you, what are your biggest predictions for the next year or so in private cellular?ย It feels like the wave is coming on now, but it’ll be different, of course, in different verticals and geographies. But what are the top things you expect to happen over the next 12 months in the space?

Patrick Filkins: Some people might see this as unimpressive, but I don’t see it that way. I think LTE 4G still has much more staying power than people realize. It depends. It’s on a case-by-case basis. So one prediction is that LTE will certainly be a stalwart in this space for longer than people realize. With that said, in certain regions, I expect today’s adoption pattern, which you’re saying in Europe and APAC, to be outpacing, say, North America and 5G. So, if you’re selling 5G equipment, that’s probably your best bet to focus on that, not to say North America won’t eventually catch up. From, I guess, a competitive angle, I think you’ll see some of what I would call enterprise-centric companies who already are selling, you know, Wi-Fi 6, 6E, you know, 7, trying to drive that ecosystem, be bringing private cellular networks as part of their offerings.

And that helps the traditional enterprise approach. So you’ll have more enterprise legacy companies bringing private networks as a part of an offering. And that’s a great thing for market growth. So my crystal ball, I think you said 12 months, you know, let’s say 24 months. That’s the split.

Final Thoughts with Patrick Filkins

Allen Proithis: All right. Final question. Lightning round. You have a million dollars to invest somewhere in the private cellular ecosystem, not a specific company name. Still, you invested in the network, solution, deployment, and SI sides. Where would you put your million dollars personally?

Patrick Filkins: Oh, great question. I always bet on the apps. So, you asked something else. If I had to look at it from a more traditional, you know, solutions infrastructure side, who’s going to be doing well there, I would say any company with the strongest integration story. And what do I mean by that?ย Companies are not interested in one of the hurdles they get to when they talk about private networks: how does it integrate? How does it work with what I already have? I’m not interested in re-skilling my entire workforce for a new, necessarily new technology that, by the way, should accomplish a similar ask that I already get from some of my networking. So, I made it day one and prepared my internal staff to master it quickly. So, if you’re a solutions provider and have that, then you have my money.

Allen Proithis: Excellent. We’ll arrange a transfer here for you, Patrick, later in the day. So thank you for that. I always joke. Everybody talks about this highly, but if you can’t just use it out of the box, it’s like saying your house is at Home Depot. You have to put it together and don’t get value as an enterprise out of putting pieces together. You get value out of applying it to your business. And that’s the trick for everybody to succeed, frankly. But Patrick, we’ve kept you here for a while. Thank you for this very exciting conversation. We value your perspective as it’s informed by many different sources participating in the space. So remind our audience, where can they find you?

Patrick Filkins: Yeah. Again, Patrick Filkins. I’m on idc.com. I’m speaking all over the place. A lot of private networks, pretty easy to find. So, just on idc.com.

Allen Proithis: Excellent. Patrick Filkins, IDC. Thank you again so much for joining us today.

Patrick Filkins: Great.


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