December 20, 2016 —
In Roman theology, Janus – the god of transition – is famously depicted as having two faces to represent the dichotomous nature of change which includes beginnings and endings, opportunities and threats, and wins and losses. This ancient perspective is still applicable today. As author and Fortune columnist Dan Lyons observes, “Transformation is hard – but not changing can sometimes be fatal.”
For the wireless industry, transition manifests as megatrends as well as sector-specific trends, and informs that successful outcomes are contingent upon organizations getting the right groups to focus on the right things at the right times.
Throughout this multi-part series, we have examined how 5G, Citizens Broadband Radio Service (CBRS), Public-Safety and E911 Location, and the Tier 2 Enterprise Market will impact the in-building wireless ecosystem in 2017 and beyond. Specifically, we have forecasted when each trend will be felt, and made recommendations on which key functional areas (R&D, Marketing, Sales) should be focused on them in 2017.
Our final trend is the Tier 1 Venue Market.
Opportunities Remain, But Competition and Market Penetration Is Higher
In-building wireless continues to be a vibrant industry for simple reasons that include the fact that the macro cellular network was never designed for indoor wireless use, buildings obstruct radio frequencies, and business cases exist to fund high-profile projects. To wit, a recent market study from ABI Research forecasts the worldwide in-building wireless market will more than double in revenue by 2020, with the market anticipated to top $9 billion by 2020.
The mainstay for the in-building wireless industry is large public venues such as stadiums and arenas, airports, subways, convention centers, shopping malls, casinos and resorts where it is economically advantageous to carriers and venue owners to empower wireless users to “sit and stay” as opposed to leave the facility to use their wireless devices. These venues, which are typically 500k square feet or larger, are known as the Tier 1 Venue Market.
DAS tends to be the preferred solution to address this market segment for both technical and business reasons. Not only does DAS effectively deliver coverage and capacity, but also efficiently uses spectrum, manages interference, scales for future capacity requirements, and adapts to technology changes. In addition, the ability of DAS to support multiple carriers on a single infrastructure is the lynchpin for neutral-host business models where ROI is achieved for the network owner through multiple revenue streams generated by carriers who pay monthly fees to participate on the network.
According to data collected by the U.S. Energy Information Administration (EIA) in its Commercial Buildings Energy Consumption Survey (CBECS), the Tier 1 Venue Market consists of approximately 8,000 buildings. Considering this rather small universe on which the in-building ecosystem has focused almost exclusively, Wireless 20/20 estimates this segment to be nearly 35 percent addressed.
Given both market penetration levels and the downtrend in carrier spending for in-building projects as a strategy to densify their networks, we observe that the Tier 1 Venue Market has transitioned from a growth market to a mature market.
Shifting Strategy for a Mature Market
As the Tier 1 Venue Market progresses to become a mature market, the in-building ecosystem will adapt and evolve go-to-market strategies in key ways:
Timeframes and Stakeholder Focus
Although the Tier 1 Venue segment has become a mature market, that does not mean it is no longer viable. On the contrary, it will continue to account for most of the U.S. in-building wireless spend for the next few years. That’s because the technology toolkit, business models and distribution channels are optimized, and value propositions are aligned with stakeholder requirements. Similarly, DAS will continue to be the optimal solution that gets deployed.
In 2017, R&D, marketing and sales will be actively engaged in the Tier 1 Venue Market. While innovation is not a key value driver in a mature market, it nonetheless remains critical. R&D should focus on reducing CAPEX and OPEX through a combination of hardware and software technology to simplify deployments, and enable virtual upgrades to the network and fewer truck rolls. Marketing should focus on developing differentiated value propositions and creating “champions” among distribution channels through education, lead generation, success stories and other co-marketing programs. Lastly, sales should focus most of its efforts on the Tier 1 Venue Market where account executives will still find the available opportunities to make their number in 2017.
In summary, maturation of the Tier 1 Venue Market is going to usher evolutionary and revolutionary change that can manifest as either opportunity or threat to participants within the in-building ecosystem depending on how they position themselves. Will your organization be prepared?
Mike Collado helps companies win mindshare and capture marketshare. He is a Principal Consultant at Wireless 20/20 and former Vice President of Marketing at SOLiD. He also serves as a strategic advisor for both industry and nonprofit organizations and is an author, blogger and frequent speaker at wireless industry events. Learn more about Wireless 20/20 and the WiROI™
CAPEX and OPEX network planning tool at www.wireless2020.com. Contact Mike at firstname.lastname@example.org.