The satellite and cellular wireless industries have long progressed along parallel tracks that rarely intersected [see here]. However, this could change in the next few years [see here]. Both satellite and cellular technologies are evolving to improve performance and reduce cost through technological innovations and new business models. In our recent paper, we analyzed the cost model of remote enterprise private wireless networks with satellite backhaul. We also addressed recent developments in both the satcom and cellcom networks where satellite communications is seen as another access technology of a hierarchical cellular network. Here, I like to provide an additional perspective because cost is only one part of the equation: what matters most to the enterprise is the return on investment. Putting such deployments into context helps to appropriately frame the RoI.
Enterprise vs. Consumer Segments
Our analysis addresses remote enterprise deployments where there is less sensitivity to cost than in consumer applications. In developing markets, the consumer willingness to pay could be as low as a couple of dollars per month. In these markets, technology alone cannot solve the cost challenge. Rather, we need a comprehensive strategy that includes, for example, appropriate regulation, taxation and business models in every segment of the value chain.
Enabling Opex-based Business Models
Our cost estimates are based on a capex model. However, the virtualization of network elements provides new deployment and cost models. It is possible to centralize some core network elements and amortize their cost among multiple deployments. Other network elements would be distributed to the enterprise location to meet the key performance indicators. One could implement a scalable opex-based model instead of the traditional capex-based considered in our paper. Opex-based models could benefit enterprises with multiple remote locations. They also provide an added reason for greater harmonization between the satcoms and cellcoms. Such models are being tested but not yet implemented in scale.
Satellite Business Models
As satellite services are evolving to account for greater share of Internet and managed services, new business models are getting better aligned with end-user requirements. Satellite companies provide layer 2 managed services where they manage the space, teleport and remote equipment and provide guarantees on delivered Mbps. This lowers capex and consequently the barriers to adoption of satellite services. Managed services could extend even further to include other parts of the end-user network.
Localizing Data with Edge Computing
While the cost of satellite capacity is eroding making it more affordable to the enterprise, digital transformation is adding to the data requirements [see here]. With enterprise workloads being split between the cloud and on-premise, edge computing solutions – local deployment of computing and storage – are necessary to balance workload deployment across different clouds. Edge computing helps to optimize the utilization of satellite transport to minimize the cost of the deployment. This is not new: there are companies that targeted this market segment, but many failed to succeed commercially. Perhaps they were early to market coming at a time when cloud service were just taking off. The question is whether now is a different time given the great success of cloud services and evolution of both satcom and cellcom networks.
The Enterprise RoI
Enterprises look to account for the real benefits of technology quantified as an increase in productivity. The role of private networks in driving productivity depends on the use case and the vertical market. There are different examples of this, such as the following examples in service today:
- Enabling container tracking and data transfer via ship-borne wireless networks.
- Allowing remote monitoring and surveillance of high-value assets in remote areas.
- Monitoring of large segments of pipeline and providing field connectivity to staff visiting remote areas.
- Deploying private networks to automate ports and optimize the process of loading and offloading ships.
LTE and 5G private wireless networks are not the only solutions enterprises can deploy. Many other technologies exist. Some of these technologies even provide lower cost points, or integrate better with the enterprise. The technology selection decision needs to meet different requirements that include but not limited to performance, benefits, cost and security. We analyzed the RoI for multiple use cases and scenarios, which I’ll expand upon in future articles. [Contact me if this is of interest.]
Good paper and useful analyses