How can MNOs ‘win’ the $64 billion private networks opportunity? Trust

13 Jan 2022

5G 5G Connectivity network slicing Mobile PRIVATE NETWORKS Digital Identity and Security Review

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In the 4G era, ‘OTT’ companies built profitable services on top of networks that carriers paid billions to build. Now, as the 5G era looms, ‘hyperscalers’ want to monetize the potentially lucrative private network space. What can the MNOs do?

There are more than a few reasons why mobile network operators should be targeting the 5G private network opportunity.

In fact, there are 64 billion.

According to ABI Research, demand for private network capability from multiple industry verticals could generate revenues of $64 billion by 2030.

These are astonishing numbers – and they can obviously help MNOs repay the $750 billion they are projected to spend on acquiring licences and building out new 5G infrastructure.

But the rules of the game are changing. The regulation governing spectrum access is a patchwork – and this has allowed newcomers to bid in auctions for the right to run 4G and private 5G networks. In Germany the telecoms regulator issued 123 licences while the UK regulator OFCOM received more than 1200 applications.

A similar dynamic is also playing out on the technical side. Specialized system integrators are aware of the huge potential returns and are now competing with the telcos. These new entrants include disruptive equipment manufacturers and so-called ‘hyperscalers’ such as AWS, Microsoft and Google.

This market evolution might sound familiar. It has happened before. In the 4G era, carriers built costly data networks only to see OTT firms such as Facebook, Google, Spotify and Netflix grow wildly profitable on top of them.

However, in the 5G era the situation is more nuanced. 5G mobile infrastructure is different from previous cellular generations. While 3G and 4G were built on hardware-based network functions, 5G is ‘cloud-native’. In other words, the network functions that would traditionally be delivered by hardware are instead run as software applications on remote servers. It’s a new way to run a network, and it will require operators and hyperscalers to collaborate closely.

Telcos and hyperscalers are now preparing for an explosion in demand for private networks. As this new market for develops, virtual networks will face many of the same cybersecurity issues that have impacted traditional IT infrastructure. In this new era, MNOs will deliver a critical component: trust

But before we dive into that, let’s re-cap exactly what a private network is.

What is a private mobile network?

5G mobile infrastructure is different from previous cellular generations. While 3G and 4G were built on hardware-based network functions, 5G is ‘cloud-native’. In other words, all the network functions that would traditionally be delivered by hardware run as software applications on remote servers.

The move from hardware-based to software-based infrastructure brings with it many possibilities.

One of the most exciting is the ability to ‘slice’ the network.

Network slicing lets an MNO offer parts of its core network to private enterprises. In effect, this means organisations can run their own MNVOs walled off from the public network.

So private networks, whether 4G or 5G, provide a ‘single layer of communication’ inside a company’s perimeter. They can process voice, data and video on the same signal to help make companies more productive and employees safer. In this sense, 4g/5G private networks can replace more limited connectivity technologies such as TETRA or Wi-Fi.

Although it is possible to run a private network on 4G, analysts believe 5G private networks will be the catalyst for an explosion of innovation. Companies will be able to take advantage of the speed and low latency of 5G to become radically more efficient and create new services. And they will do so inside a cloud-based private network that – in theory – offers more data security and privacy.

Industry experts believe private networks will evolve in three distinct flavours:

•   Isolated or private networks used mainly for off-grid installations. These sensitive/critical infrastructures could include mines, offshore windmills and more.
•   Archipelago or hybrid networks that combine private and public coverage.
•   5G with a dedicated slice for a specific location. Here, an MNO will share its 5G spectrum with private enterprises. In effect, this means organizations can run their own MNVOs walled off from the public network.

Who is deploying private networks now?

According to the Global Mobile Suppliers Association (GSA), there are already 311 private mobile network deployments in existence.

These early adopters comprise some of the biggest companies in the world. They are usually in verticals that deal in sensitive information and have strict regulatory protocols: power generation, mining, aviation etc.

One recent example is EDF. The power company teamed up with Thales and Ericsson to bring secure cellular connectivity to its nuclear energy sites across France. EDF’s motivation was to improve the resilience of the telecom infrastructure and allow their employees and partners to have remote access to all required resources via secure terminals.

Another is HubOne, a subsidiary of Aéroport de Paris (AdP), which is currently developing a private network covering Paris-Charles de Gaulle, Paris-Orly and Paris-Le Bourget airports. The 4/5G network will serve more than 120,000 people across about 1,000 companies of differing sizes and sectors. HubOne says the high-speed network will offer “new services to optimize the fluidity and security of critical operations and improve the customer experience.”

Private mobile networks: The challenges facing CTOs

It’s easy to detail the many benefits of a private network to an enterprise. But there are obvious dangers. Consider the task facing the CTO given responsibility for deploying one. He or she has to secure a network that will have access to highly sensitive assets: inventory statements, production flows, digital twins, employee records, customer data etc. etc.

Protecting these assets is critical. And it requires collaboration. Why? Because many private networks will be ‘hybrid’ – they will use both private and public cloud resources, which increases the chance of data ‘leakage’. This widens the attack surface and the potential exposure to cyber risk.

How can MNOs prevail in the competitive private network space?

While it’s true that MNOs will face strong competition in providing services to private networks, they have a number of advantages in their favour.

Mobile operators have decades of experience in cellular user authentication (via the SIM). Their track record is exemplary – certainly, when set against the rampant identity breaches in the cloud IT space. And MNO’s expertise in authentication will be even more of an advantage in a ‘zero trust’ 5G world.

MNOs also know how to encrypt sensitive data at rest and in motion – and apply different encryption schemes to match the nature of the information.

At Thales, we work closely with telcos on the technology that delivers user ID, authentication, key management, root of trust, data encryption and more.

To summarize, we believe MNOs can help enterprises to run safe and trustworthy private networks in three ways:

• Identify private network users – whether they are employees, things or software – and grant them the correct access.

• Connect devices when they are turned on for the first time and then using the private network profile across different operating conditions.

• Protect all data flows coming in or out of the private network.