By Caroline Gabriel

It has become a cliché that the best return on investment in 5G will come from brand new revenue streams in the enterprise and IoT. Yet early deployment are heavily focused on conventional consumer use cases, which bodes badly for the business case. At this year’s Mobile World Congress, SCF will demonstrate how small cell networks are already proving the case for many IoT services, even in 4G, and so reducing the risk of moving ahead with new 5G applications.

This will be critical to the operators’ ROI case for 5G in the short to medium term. Growth in revenues from consumer mobile broadband is slowing in many markets, and new 5G-enabled services like virtual reality will mainly serve to slow the decline. Yet many MNOs, especially in Europe, have acknowledged that they are finding it hard to make a strong business case for new industrial and IoT applications such as smart manufacturing or intelligent transport, despite clear demand from the industries themselves.

This risks a backlash among enterprises which are hoping to use 5G to improve their own processes and services; as well as putting the best potential source of new MNO revenue in jeopardy. The key will be to prove the case for the new services using existing, trusted technology, giving enterprises and operators some quick wins, and a smooth path to true 5G.

Many IoT use cases are regarded as ‘5G’ because they rely on capabilities which are only fully supported by the new standards – and mainly by the upcoming Release 16, rather than the initial, broadband-focused release. These include ultra-low latency, high availability, and very high density both of access points and devices. However, it is not true to say 4G cannot support these capabilities at all – 5G just greatly enhances them. So enterprises can start to deploy IoT applications using existing technology and then upgrade them using 5G when that is commercially deployable.

This evolution strategy is particularly well-supported by small cell networks. Many enterprise and IoT systems will rely on specialized and localized connectivity – networks that can be configured and secured by the enterprise and its partners to meet particular requirements such as enhanced privacy or low latency. Using the main mobile network will not deliver these specific, often business-critical, characteristics.

A locally controlled ‘subnet’ of small cells, managed by the enterprise or a neutral host partner, is therefore an increasingly attractive option, spurring the rebirth of private cellular networks. These become even easier to deploy when enterprises and specialist service providers can access their own spectrum, enabling them to go ahead with industry-focused HetNets even if the case does not work well for a spectrum-owning MNO.

In the USA, the decision to support shared access to the 3.5 GHz CBRS band will be a major catalyst for these enterprise and IoT subnets, and will initially support LTE rather than 5G. The biggest deployments in CBRS spectrum are expected to be for indoor, enterprise small cells (68% in the first three years, according to Rethink Technology Research forecasts). This is why SCF is delighted to be collaborating with CBRS Alliance to investigate multi-operator solutions in the 3.5 GHz band, defining indoor solution architectures for densification, and exploring the international opportunity for Spectrum Access System-coordinated shared spectrum. This type of approach allows LTE to be deployed in shared bands without the need for an anchor network in licensed spectrum – so providers with no licensed airwaves can still roll out 4G small cells.

CBRS is a very US-specific scenario but one which will be influential elsewhere if successful, and will help to prove the case for enterprise applications in shared spectrum, and so build confidence among regulators and operators elsewhere in the world.

It is important to SCF that the USA’s CBRS experiment is successful as that will encourage others. So far, shared spectrum for small cells has made slow progress in Europe and other regions despite some LAA trials in 5 GHz. The 3.5 GHz band is more interesting than congested 5 GHz, because it will be used for 5G in most parts of the world and its relative high frequency lends itself to indoor small cell networks. As we see in consultations by regulators in Germany, the UK and elsewhere, there is interest in making some portion of the C-band (3.4-4.2 GHz) shared, or earmarked for neutral host or industrial applications.

Because of its European location, and specific program for governments, we expect MWC to host some important conversations about the adoption of flexible spectrum policies to encourage enterprise and IoT services. Most of those policies will center on midband or high frequency spectrum, since there is sufficient capacity to allow for separate allocations for industries – and these are inherently well-suited to small cell deployment.

Progress on the regulatory and technology front must be accompanied by innovation in business models, if we really are to see enterprise and IoT networks taking off in the next few years. Neutral hosts and vertical market service providers will be important to support roll-outs where a strong case for MNOs is hard to make. SCF forecasts predict that, by 2025, 40% of non-residential small cells will be deployed and managed by neutral hosts or vertical market SPs, and 18% by enterprises themselves or their integrators. Most of these will be indoors and for industrial apps such as IoT.

To ensure such predictions come true, and the enterprise potential of 5G can  be fulfilled to the maximum, SCF will use MWC as a springboard for a whole year of work items and partnerships focused on enterprise and IoT use cases, and will be launching a new group at its Atlanta plenary in Aril to include business, operational and interoperability aspects of IoT.