ABI Research says the appetite for private networks in APAC will be driven primarily by Australia, China, Japan, New Zealand, South Korea, and Singapore. Together they create an almost US$7 billion market opportunity (accounting for more than 65% of global private network revenues) by 2025. By 2030, developed markets in North America and Europe will have followed and account for more than US$16 billion (representing 25% of global private network revenues).
“These findings show the great regional variability that we see for private network deployments,” said Leo Gergs, research analyst for 5G markets at ABI Research.
What’s fueling demand for private networks
ABI Research says the rising number of national spectrum liberalization initiatives are allowing enterprises access to licensed mobile network spectrum without having to involve a communication service provider for their spectrum assets.
Initiatives like CBRS in the United States, spectrum sharing in the UK, and the site-aside of licensed spectrum in a growing number of European countries give enterprises the opportunity to deploy a deterministic network that minimizes the risk of unauthorized access.
“As these arrangements guarantee enterprises the opportunity to customize the network performance to fit their needs exactly, it is no surprise to see that the auction of CBRS Priority Access Licensees (PAL) has raised more than US$4.5 billion in bids,” said Gergs.
The second factor is that the sharp increase in demand for enterprise digitization, driving new attention to the market.
“There is a range of new players attacking the traditional telco industry when it comes to private networks,” said Gergs.
Telcos under threat by new players
Hyperscalers like Amazon Web Services (AWS), Microsoft, and Google are rapidly advancing their telco ambitions in the private network domain. At the same time, vertical-specific players are working to integrate private cellular networks into their existing enterprise offerings.
In addition to System Integrators, industrial automation vendors like Bosch Rexroth, Siemens, and Phoenix Contact, are deeply rooted in the industrial manufacturing domain and growing their product portfolios to include private cellular networks.
Gergs warned not underestimate their capabilities. “Recent announcements of Siemens setting up a private 5G network to cover 1.4 million m2 at Germany’s largest exhibition ground in Hannover gives a hint to just of how capable these industrial automation vendors are to serve their specific verticals,” emphasized Gergs.
These developments show that the traditional telco industry is under immense pressure to gain a foothold in private networks for the enterprise domain.
“While new players have the power to disrupt the private network's market with new innovative service-based business models that resonate well with enterprise requirements, traditional CSPs keep trying to force enterprises into the last decade’s CAPEX-intensive business models.”
Leo Gergs
The telco industry needs to radically rethink its approach to successfully target the immense enterprise private network opportunity.
“They need to embrace spectrum liberalization initiatives and consider flexible business models that can be adjusted to address heterogeneous enterprise requirements. As a first step, and as much as possible, telcos should move away from a focus on short-term profitability and embrace a long-term monetizing strategy that does minimize the amount of necessary upfront investment,” Gergs concluded.
