September 22, 2016 —
Anyone who has read my articles or seen me present in the last 24 months has likely heard my opinion that the “middleprise” represents a once-in-a-decade opportunity for new leadership in the in-building wireless market.
That’s because the middle enterprise – which refers to venues having between 100k and 500k square feet and consists of hotels and hospitals as well as education, retail, corporate and multi-tenant high-rise buildings – is a market segment whose indoor cellular requirements to-date are either unresolved or underserved.
It’s also because the in-building wireless ecosystem, led by DAS OEMs and VARs, has focused for the last 10 years on a market sweet-spot: “Tier 1” venues having more than 500k square feet such as mass transit and stadia.
To be fair, the in-building wireless industry has indeed lit up middleprise buildings, but only because one or more wireless operators funded (directly or indirectly through a third party neutral host) a coverage enhancement solution to be deployed. However, these projects represent the exception and not the rule based on a recent white paper published by WIA which finds that, “Carriers for the most part are unwilling to fund the vast majority of mid-tier market buildout.”
Unlocking the middleprise, therefore, requires new thinking with respect to the technology toolkit and business models, among other things. In addition, since carriers are unlikely to address the middleprise, it is incumbent upon other wireless industry stakeholders – specifically, OEMs, SIs and VARs – to better engage the venue ecosystem, which includes architecture and engineering firms as well as property owner and property management companies.
So what is the status of the middleprise market?
Markets are akin to slot machines… Pragmatic Marketing advises that, for a market to be real, it must possess three characteristics: (1) the problem is urgent; (2) the problem is pervasive; and (3) the market is willing to pay to solve the problem. Until recently, the “reels” for the middleprise slot machine have not aligned. But I’m now starting to observe signs that the three necessary market conditions are beginning to align and that the middleprise is getting real.
Earl Lum at EJL Research counsels that financial, legal and regulatory drivers – particularly ones in which the “pain” is acute – are strong motivators for the middleprise venue owner to take action to address in-building wireless coverage. In a presentation last year at DAS Congress Europe, Lum identified LEED construction, public-safety mandates, tenant expectations for wireless as a utility, life and death legal liabilities, lost revenues and BYOD as some of the key drivers.
Certain verticals are exhibiting pain that is urgent enough to take action.
At a conference hosted this summer by DASpedia, the ICT director at Texas Christian University revealed that multiple student dormitories and student buildings – middleprise buildings – are constructed each year on his campus and that middleprise solutions are needed now. He underscored his plea through a confessional story about a parent whose frustrations over the inability to reach her TCU-enrolled student reached the desk of the university chancellor.
Higher education is not the only vertical feeling pain. Wireless connectivity is increasingly influencing hotel reviews on sites such as TripAdvisor. Similarly, WiredScore, which certifies commercial high-rise buildings based on the fastest and most reliable internet connections, tracks both wireline and wireless infrastructure including cellular and public safety. In addition, the New York Times last year examined the significance of cellular coverage for residents.
The message is clear: wireless coverage is part of the decision-making process for potential guests and tenants.
The authors of Tuned In define a market as being pervasive when there is a wide market opportunity.
Research from John Celentano at Skyline Marketing Group identifies that there are approximately 8,000 Tier 1 venues in the United States. Of the middleprise (or “Tier 2), Celentano says, “There are a lot of them.”
In fact, there are 128,000 commercial buildings – consisting of corporate enterprise, hospitality, education, healthcare, shopping malls, industrial sites, either as standalone buildings or multi-building campuses – based on the reliable and publicly-available data from the Energy Information Administration (EIA), a branch of the U.S. Department of Energy.
Celentano recently published an updated forecast for the middleprise in which he writes, “We estimate the demand for cellular IBW systems will grow from an estimated $400 million in 2016 to more than $1.4 billion in 2021, at a compounded annual growth rate (CAGR) of 29 percent.”
Additionally, if we were to spitball a Serviceable Available Market or SAM for Europe based on an assumption that the number of middleprise buildings – most of which are in the U.K., Germany and France – is about one-third of that for the U.S., we could be looking at a $2 billion market by 2021. That’s a pervasive market.
It has been presumed that the middleprise venue owner will not pay to solve the in-building wireless problem. The thinking has been, “If a smartphone doesn’t work indoors, it’s up to the wireless operator to fix it.”
In an article I wrote last week summarizing key themes from CTIA Super Mobility 2016, a panel of OEMs and third party neutral hosts correctly observed that carriers are not going to come to the middleprise and fund solutions. The panelists expressed frustrations, however, that these middleprise venue owners are unwilling to open their wallets.
That’s not accurate, according to Joe Madden at Mobile Experts who writes that, “Enterprises are willing to spend this money now, but nobody is showing up at their door with the right product and with all of the mobile operators lined up to support it” and, of course, “at the right price.”
Most of us believe that a multi-operator solution is the best approach for the middleprise. But such a solution that possesses the characteristics identified by Madden isn’t currently available to the venue owner – “It’s a unicorn,” concludes EJL’s Lum.
Locked or Unlocked?
It was with great interest that I read a blog post recently penned by Art King at SpiderCloud which challenges the seemingly binary view that the middleprise must be addressed via a multi-operator solution or continue to go unserved. King cites examples in the university and enterprise verticals in which ICT directors have decided not to wait for a multi-operator “unicorn” and, instead, opted to deploy small cells today in the middleprise environment in order to solve part of their in-building wireless problem.
And it’s not just small cells. I spoke with OEMs and VARs at CTIA who similarly shared that signal boosters are increasingly being considered and deployed in the middleprise to enable a single operator.
That’s not to say that DAS and small cell OEMs are not innovating multi-operator solutions for the middleprise. One vision, according to Madden, may resemble a “hybrid” of “small cells with baseband processors as signaling sources for distributed antenna systems.”
Given these market trends, I believe the middleprise is not locked. Rather, the middleprise is beginning to get real… The need is urgent, the problem is pervasive and the market is showing a willingness to pay to solve it. Jackpot!
Mike Collado helps companies win mindshare and capture marketshare. He recently served as Vice President of Marketing for SOLiD where he led corporate marketing, product marketing and marketing communications. Contact him at firstname.lastname@example.org.