For many years, the in-building wireless industry has coveted the mid-sized enterprise or “Middleprise” market opportunity. After all, the vast majority of cellular users are found not in large public venues such as stadiums or airports but, instead, in buildings used for offices, hotels, hospitals, retail, education, manufacturing, residential and more. Recently, moving downstream has become a strategic imperative spurred by wireless operators funding fewer projects, as well as saturation and commoditization within the large venues segment.
The Middleprise growth hypothesis has chiefly been informed by a total addressable market or TAM having multiple times more buildings than large public venues, and an outlook that wireless is an essential utility for buildings, akin to electricity, water and HVAC. However, the Middleprise has not lived up to this vision.
Like a waterhole in a shimmering desert, the Middleprise is – at times – not what it seems to be. Fortunately, certain Middleprise mirages are coming into focus. Here is clarity to five foundational misinterpretations:
The Middleprise is defined by building size
The ecosystem originally differentiated the Middleprise from the large public venues market by size: specifically, 100,000 to 500,000 sqft. Pragmatically, the delineation is really funding. If wireless operators will fund a coverage solution, it’s not a Middleprise building. In contrast, it’s Middleprise when wireless operators will not fund cellular enhancement and the onus, instead, is on the building owner or third party. Therefore, a carrier-unfunded 700,000 sqft. hospital is a Middleprise building while a carrier-funded 350,000 sqft. retail building is not. Takeaway: the Middleprise definition is based on funding, not building size.
The addressable market is huge!
With a universe of approximately 128,000 buildings according the Department of Energy’s Energy Information Administration’s (EIA) Commercial Buildings Energy Consumption Survey (CBECS), initial models projected the addressable market to be in the tens of thousands. However, only a small subset of these buildings – specifically, Class A and LEED-certified buildings – require cellular enhancement in the foreseeable future and may likely be willing to invest to deploy an in-building network. Rationally, this market comprises an estimated 5,000 to 7,500 buildings. Takeaway: the Middleprise market remains underserved but is significantly smaller.
Tenants won’t lease buildings having poor cellular coverage
The wireless industry has cited Fourth Utility, BYOD, mobility and millennial preference for an untethered environment all as bellwethers that will compel Middleprise building owners to deploy in-building wireless solutions to safeguard against lower leasing rates or, worse, vacancies. But low commercial real estate vacancy rates imply cellular coverage is not uniformly a primary selection criterion compared to traditional considerations such as location and physical amenities. This outlook is sobering because market momentum is predicated upon a problem being urgent, pervasive and something for which stakeholders are willing to pay to solve. More concerning is any recently-signed standard, multi-year lease effectively defers or minimizes the requirement for a potential in-building wireless investment. Takeaway: the Middleprise is an early-stage market in which connectivity – not cellular – is the key driver.
Buildings owners / wireless operators won’t pay
Given these key stakeholders tend to be diametrically opposed over which party is responsible to pay for cellular coverage in enterprise buildings, it has been assumed neither building owners nor wireless operators are willing to pay. Conditionally, both are funding projects. Building owners are reactively and proactively deploying cellular solutions to attract and retain tenants as well as gain competitive advantage. Similarly, operators are funding projects, joining networks or providing RF sources at certain buildings for myriad strategic, financial, public perception and affiliation reasons. Takeaway: the Middleprise lacks a repeatable go-to-market process.
5G Is a Middleprise catalyst
It is postulated that 5G, which will use high radio frequencies that neither propagate nor travel as well as lower frequencies to deliver significantly increased wireless capacity and speeds, will drive demand for indoor cellular connectivity in the Middleprise. Yet, business use cases, such as enhanced broadband for immersive experience, massive IoT for smart buildings, and ultra-reliable and low-latency connectivity for human-to-machine and machine-to-machine interaction, suggest adoption and rollout will first focus on large public venues and highly-niche Middleprise applications over the next five to seven years. Takeaway: the widespread requirement for in-building wireless in the Middleprise is still developing.
Much like Tuckman’s four stages of team development (e.g., storming, forming, norming and performing), markets similarly undergo life cycle stages. Clarification of the Middleprise mirage is a necessary and positive sign for an in-building wireless ecosystem eager to unlock this market segment.
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