The Middleprise: A Big and Complicated Market Opportunity

  • Post on September 11th, 2015

SOLiDThe “middleprise” is a once-in-a-decade opportunity for new market leadership within the in-building wireless (IBW) ecosystem.

Defined as venues between 100,000 square feet and climbing to 500,000, the global middleprise build-out represents a $20B, that’s a B for billion dollar market, of which less than 2% has been tapped.

middleprise

The middleprise landscape includes hotels, hospitals, colleges, retail, multi-level class A office towers and their cadre of stakeholders. Property owners and managers, the commercial real estate community as well as the developer community including architects and engineers, will all play significant roles in shaping how wireless service is designed, turned up and who pays for it.

Directly and indirectly, big trends within the wireless industry are buoying the middleprise opportunity such a BYOD, Internet of Things (IoT) and, of course, 5G. The common denominator is the wireless “data tsunami” that AT&T’s John Donovan described earlier this year as meeting the 100,000 percent increase in wireless traffic. Grabbing marketshare of the 20B worth of in-building wireless technology revenue is achievable now to those players agile and innovative enough to take the plunge into the middleprise.

That said, achieving success is not going to be a cakewalk. New markets require new approaches.

The challenges and opportunities can be grouped into four areas: design and infrastructure; compliance with public safety fire code mandates; the technology and product toolkit; and what may be the biggest hurdle – funding and ownership business models.

Design and Infrastructure

Solutions within the middleprise must be flexible to support multiple services – specifically, multiple operators – including multiple bands to address legacy, current and future frequencies. For example, a hotel fails its guests by enabling service for just a single carrier. Instead, the ideal infrastructure needs to provide a converged network where a single backbone serves multiple services including commercial cellular, public-safety and IP (WiFi). This optimal approach enables the infrastructure to stay in place while the end pieces get swapped out to avoid expense rip and replace.

Middleprise solutions need to be intelligent to make it easier for the venue to design, commission, optimize and manage the network. Networks have to become self-defined and self-organizing. They also need to become smaller, lighter and greener. Because a middleprise venue does not have significant space for base stations and head-end gear, equipment must get smaller and/or be hoteled at a centralized and off-site location.

Combined, tese success factors contribute toward reducing Total Cost of Ownership (TCO).

Public Safety Communications

Public safety is going to play a major role in middleprise build outs. Exactly how remains to be seen because the International Code Council (ICC) and National Fire Protection Association (NFPA) will set about writing and publishing new model codes and standards for in-building wireless public safety communications in 2016 and 2017, respectively. But we believe that the codes will become more stringent in requiring support for public safety communications in both new venues in order to obtain a Certificate of Occupancy (CO) and, likely, existing and previously grandfathered venues that get renovated.

Whereas multiple stakeholders such as the venue, wireless operator or third party neutral host (3PO) may fund a commercial cellular in-building wireless network, the cost of complying with an unfunded public safety mandate will undoubtedly be borne by the venue. Over time, we anticipate the emergence of creative business models to potentially provide tax shelters for investments in public safety networks as well as incentives akin to the significant tax credits and/or insurance breaks venues receive for deploying fire sprinkler protection systems.

 Funding and Ownership

The middleprise represents a key shift in the business model for in-building wireless networks, specifically the funding, ownership and operation. It also informs of the complexity in solving for these market challenges.

In-building wireless networks in large venues have traditionally been funded and owned by a wireless operator or 3PO. However, these business models, which are often optimized to generate revenue through advertising, and elevate subscriber goodwill and loyalty, don’t correlate within the middleprise.

Perhaps it is the business model that more clearly delineates between the large venue and middleprise market segments: the middleprise is the point where operators or 3POs won’t fund or own the in-building wireless network. For them it becomes a pure analysis of the ROI and because of the variety of middleprise venues, this downsizing threshold will vary based on the size (horizontal) and/or industry (vertical). Horizontally, certain venues within the top end of the middleprise may get funded by a carrier or 3PO. Vertically, certain venues based on industry type, venue use and potential strategic advantages, may similarly get funded by a carrier or 3PO.

middleprise2

Across the middleprise, the venue will most likely play the lead role in funding and owning the network. Both TCO and project management will be pivotal in the new middleprise business model paradigm. The total solution cost will likely need to be sharply reduced to around $1 per square foot. Similarly, the venue owner must be able to successfully enable carriers to plug-in to the network. To offset the complexity of funding, ownership, and operation models, we expect new stakeholder roles to emerge to orchestrate those activities.

Toolkit Approach

Although the wireless industry has suggested a toolbox strategy that consists of DAS, Small Cells and WiFi will be used to enable wireless coverage and capacity inside venues, the middleprise is where we will truly see this approach play out. Yet, the decision path for determining the right tool in the middleprise will be complicated.

Generally speaking, DAS is ideal for large venues while small cells are better suited for smaller buildings. But just as the venue size (horizontal) and/or industry type (vertical) influence the business model, these factors also affect the technology solution. Both the size of the venue and industry impact whether a DAS or Small Cell solution is optimal. For example, a 300,000 square foot building might at first glance not lend itself to DAS, but when discovered that it’s a hotel whose guests may subscribe to any of the four major wireless operators, DAS is likely a good solution.

DAS

In practice, the right technology approach for the middleprise is determined case by case and may leverage multiple tools in the same venue. Consider a property such as the Anatole in Dallas: DAS might be deployed for the guest rooms and lobby areas; small cells for the conference rooms and atrium areas; and WiFi throughout for data capacity. It’s kind of like Legos in that we’ll use what’s needed to build the network.

Ultimately, the middleprise will drive technology innovation because conventional DAS and Small Cells are not optimized to solve for the unique challenges within this market. DAS is evolving to look more like a Small Cell in terms of cost and deployment ease while Small Cells is going to look more like DAS to support multiple bands. Multiple tools – and not a single, silver bullet – are required within the middleprise.

The Bottom Line

Not since the early days of in-building wireless has there been such a big market opportunity that’s largely untapped. Representing a total addressable market (TAM) potential of $20B, the middleprise is complicated with challenges to the technology and product toolkit as well as funding and ownership business models. Look for innovation, new market entrants and ultimately new market leadership within the in-building wireless ecosystem to emerge through the genesis of the nascent middleprise market.

Mike Collado is Vice President of Marketing for SOLiD, a manufacturer of RF Amplifier, RF Radio and Optical Transport solutions that help keep people connected and safe in a rapidly-changing world. He leads the company’s go-to-market strategy as well as market positioning, product launch and thought leadership initiatives. Mike is an author and frequent presenter at conferences on emerging wireless trends.