If U.S. carrier CEOs are worried about Amazon Web Services (AWS) staking a claim to the emerging private networks market, they sure aren’t showing it. 

AT&T CEO John Stankey and Verizon CEO Hans Vestberg this week largely dismissed AWS Private 5G as a competitive threat to their respective offerings and instead focused on what they believe sets their services for enterprises apart.

AWS Private 5G integrates small cell radio units, Outposts servers, a 5G core, and radio access network (RAN) software — all delivered and maintained by AWS. This alone makes AWS “one of the first companies to provide a packaged solution that includes the spectrum, radio, core, and compute platform, with the aim of easing adoption for enterprises,” analysts at Analysys Mason wrote in a research note. 

Many other details about the offering, including the hardware and software vendors involved, pricing, availability outside of the U.S., radio planning and design, and roaming remain unknown.

‘Not Fully Baked’

“It’s not fully baked,” said Daryl Schoolar, research director of worldwide telecommunications at IDC. “I think they’re very open to taking it wherever it will go.”

Although AWS emphasized initial plans to use unlicensed spectrum for a fully private service, it could also resell access to an operator’s spectrum, or let some operators resell the AWS service, Schoolar explained. 

“From my discussion with them, they aren’t locked into unlicensed spectrum. It’s just a place to start,” he said. “Licensed spectrum is key because not every market has unlicensed spectrum.”

Mobile network operators have long coveted a greater role and share of the enterprise market. The arrival of 5G, combined with an uptick of enterprises deploying private networks running on cellular infrastructure, provided an opportunity to break into the space.

Operators come to the table with core strengths in network infrastructure, deployment, and management. AWS, of course, provides enterprises the familiar cloud model with pay-as-you-go pricing based on consumption.

AWS Holds Packaged Strengths

This means enterprises “don’t have to buy a bunch of capacity on the core or on the network functions until they actually need it. So it should make it more economical to scale up, instead of investing in some hardened solution where you’re locked into capacity and features,” Schoolar said. 

AWS Private 5G customers will pay a monthly fee based on network capacity and throughput, according to Analysys Mason. “There are no per-device fees, nor are there upfront fees, unlike for other services that typically have both a capex and an opex element. The cost of the network equipment is covered in the monthly charge,” the analysts wrote. 

Because private networks are relatively new and enterprises aren’t sure how or where they’ll be used, this cloud-centric and network as an application model provides AWS with some advantages, Schoolar added. “Instead of buying all the infrastructure and having all that sunk cost, you can buy it as a service.”

While wireless carriers view private networks as a significant opportunity, Analysys Mason notes operators’ role in the market has been limited thus far. Operators are the primary contractors on fewer than 10% of private networks in the U.S., and less than a third of private network contracts worldwide, according to the market research firm.

“The AWS announcement may affect future revenue for operators, but it does not threaten their existing business,” the analysts concluded. 

AT&T, Verizon CEOs Dismiss AWS Private 5G

That explains Vestberg and Stankey’s muted reaction to AWS Private 5G. 

“It’s an add-on that they have. We can be part of it if we want to. We see it’s much stronger when you have licensed spectrum than shared spectrum,” Vestberg said at the UBS Global TMT Virtual Conference. 

“It is a broken out sort of cloud offering, but ultimately what we are doing is an integrated solution which we think is far more interesting for customers,” he added. 

Stankey highlighted two factors that he believes are contributing to growing enterprise adoption of private networks: 5G infrastructure performs better than WiFi in many instances, and the capabilities built into 5G software and infrastructure provide unique opportunities for businesses to grow.

“I don’t think somebody building around a network with CBRS (Citizens Broadband Radio Service) spectrum, and a thin spectrum portfolio, and regionally oriented networks is going to be good enough over time,” Stankey said at the same event.

“You need a strong national network. You need strong fiber capillaries to be able to pair it with,” he said. “That’s the card we need to play over the next couple of years, and I think we can win as a result of that.”

If Amazon decides to partner with U.S. carriers on this effort and use their licensed spectrum, it will have to use radios approved by each respective operator, Schoolar noted. 

“AWS itself is going to want to walk a fine line because they want to grow relationships with carriers. So going out and competing head-to-head with them, I’m not really sure how much AWS wants to do that,” he said. 

“I don’t think AWS sees this as a way to circumvent operators, except for possibly when it comes down to fully private spectrum and every part is truly private,” Schoolar added. 

Someone Always Loses, But Who?

Nonetheless, because AWS commands so much power and influence, the cloud giant is bound to negatively impact some businesses when it enters a new market. Analysys Mason expects AWS Private 5G to have more significant repercussions for network equipment vendors than telecom operators.

Most vendors don’t have the resources to replicate AWS’ packaged service, particularly with edge and cloud computing capabilities, the analysts explained. 

Schoolar takes a different view, although much remains to be seen. “I think probably operators could have the most to lose,” he said, adding that AWS could pit operators against one another by going exclusive with one operator per market.

To that same point, T-Mobile US, which doesn’t have a large enterprise business today, could benefit the most from AWS Private 5G considering its share of the market today, Schoolar explained. 

Finally, Dish Network holds a wild card in all of this, at least in the U.S. “If and when Dish ever gets up and gets rolling,” it could become a strong channel partner for AWS Private 5G, he said. Indeed, Dish Network was one of two partners mentioned in Amazon’s press release for the service.