Private Network Operators Serving as Specialized Competitors to MNOs as Private Networks Grow in Industrial Markets

Private network operators are becoming competitive alternatives to traditional Mobile Network Operators (MNOs) in the private network market, reports global technology intelligence firm ABI Research. Private network operators own spectrum solely for private networks, often targeting one specific industrial market like oil and gas, utilities, mining, or manufacturing. Their vertical-specific expertise is an impressive differentiator to mobile operators focusing mostly on consumer connectivity.

“Private network operators apply industry-specific knowledge when purchasing spectrum, ensuring it meets their target industry’s coverage and Quality-of-Service (QoS) concerns,” says Lizzie Stokes, IoT Networks & Services Analyst at ABI Research. “Their singular devotion to their industries is attractive to Industrial IoT (IIoT) customers that often have unique communications needs.”

Traditional MNOs like Verizon and Vodafone have historically had an advantage in acquiring spectrum, often winning at spectrum auctions due to their influential role in serving consumer smartphones. However, as more IIoT customers adopt private cellular networks, users are increasingly partial to niche operators with spectrum assets tailored to their coverage and performance requirements. For example, utility customers often require wide-area coverage, low latency, and resilient connectivity in remote areas. Anterix, a popular private network operator that solely caters to utilities, procured a low-band spectrum so its customers could balance capacity and coverage in remote geographies. Whereas traditional MNOs are motivated to serve populated areas to reap returns from consumers, private network operators’ decisions are entirely driven by the needs of industrial customers, leading to business choices that would otherwise be seen as uneconomical to traditional operators.

Acquiring spectrum to match the needs of an industrial market can be a precarious and limiting strategy. Spectrum is a costly asset that traditional MNOs can afford by supporting millions of high-throughput consumer devices. Private network operators must package their spectrum offering with more profitable, specialized private network services to avoid relying completely on one asset. While current private network operators, like Anterix, Ambra Solutions, Citymesh, Tampnet,  and Globalstar have found profitable target markets or advantageous regulatory environments to succeed, many within the industry do not believe more private network operators will enter the market. Industry experts believe owning a spectrum's cost and regulatory burden is too high. New private network operators might also struggle as more countries release national spectrum schemes (similar to CBRS in the United States) that provide customers an alternative to traditional and private network operators when sourcing spectrum. Some private network operators believe they can still distinguish themselves from nationally available spectrum initiatives by continually investing in spectrum not commonly offered by regulators, like low-band spectrum.

“Though the business model of these non-traditional spectrum providers might be too niche to be profitable beyond their target markets, their existence proves that specialization is an important competitive advantage in the private wireless market,” says Stokes. "Specialized operators will continue to emphasize their verticalized expertise as spectrum deployment models diversify."

These findings are from ABI Research’s The Role of Private Network Operators in Industrial IoT Markets application analysis report. This report is part of the company’s IoT Networks and Services research services, which include research, data, and analyst insights.