As stated by Gartner, digitalization refers to using digital technologies to change a business model and provide new revenue and value-producing opportunities, and in business, this has proven to be almost essential for success nowadays. In order to remain competitive and up-to-par with consumer expectations, enterprises have begun adopting and leveraging an abundance of innovative devices and applications. This variety of new technology is rapidly reshaping the landscape of numerous industries, and none more so than the introduction of 5G.
While 5G has garnered much hype, offering high data rates, ultra-low latency, and high security, reliability, and scalability, enterprises have already been fixated on leveraging private 5G networks. These are cellular networks that are similar to a public 5G network, but allow the owner to limit access to its wireless spectrum and keep proprietary data on-site, enhancing security.
Despite challenges, such as lack of spectrum and unavailability of 5G-enabled equipment and devices, there is strong momentum around private 5G. According to a May 2022 report by the Global Mobile Suppliers Association (GSA), LTE 4G is used in 59 percent of private network deployments, but private 5G has grown to reach 20 percent in the past year. Furthermore, 5G private network deployments are expected to overtake LTE private networks by 2026.
While the growth can be attributed to private 5G helping fuel transformative new technologies, not just for consumers but also for businesses, infrastructure, and defense applications, it’s not the sole reason. According to the State of the Private 5G Networks, a report by PrivateLTEand5G.com, other reasons for private 5G’s rapid growth include mobile network operator (MNO) strategies, pay-as-you-go models for small and medium-sized enterprise (SMEs), and support from governments worldwide. PrivateLTEand5G.com is an industry publication dedicated to providing up-to-date information on significant Private LTE and 5G deployments in vertical markets as well as their commercial strategies around the globe.
MNO Enterprise Strategy
A variety of mobile carriers have begun positioning private networks as a crucial part of their enterprise business strategy for both large and mid-sized companies. Operators believe that, by the end of the decade, there could be around a million private networks, led by the manufacturing sector but also in logistics and warehousing, utilities, oil and gas, and healthcare. On top of this, operators now see private networks as part of their traditional B2B offerings and as a way to build new relationships with their enterprise customers.
“Specialized B2B service providers, like Hughes and Edzcom, continue to gain strength in the private networks space by breaking into new verticals and segments. On the other hand, traditional carriers are using private networks to broaden their equipment vendor base,” states the report. “The growing number of M&As involving B2B service providers on one side and new equipment/solution vendors on the other adds dynamism to the private 5G ecosystem.”
On top of this, mobile operators are increasingly combining their private 5G and Multi-Access Edge Computing (MEC) to offer a single integrated solution to enterprises. For example, UAE-based operator Etisalat (News - Alert) (recently rebranded as e&) announced plans to target the industrial IoT market with a range of managed cloud-based offerings for private 5G networks with 5G connectivity and specialized MEC applications. While manufacturing was already an industry favored for private 5G leveraging, packages like this will only help drive network adoption faster than originally expected.
SMEs and Pay-as-you-go
Mobile operators have begun seeking out partnerships in order to bring private 5G solutions to enterprises of all sizes, with some US operators specifically targeting mid-size and small businesses. Many operators see offering services to SMEs as an opportunity to expand their customer base and enter new markets.
But this isn’t the case with all operators, as Cable operator Comcast (News - Alert) is actually doing just the opposite. While they normally service mostly small business customers, Comcast uses its private 5G offering to break into large enterprise and government businesses and views private 5G as key to driving growth in its enterprise business.
However, the rest of the operators looking to break into the SME market have had the most success when offering pay-as-you-go models. This is a model where the user only pays based on how much they consume, not a fixed amount.
“Sensing that CAPEX investment could be a significant entry barrier for private 5G in enterprises, especially in small and medium businesses, many providers are launching 5G-as-a-service offerings. The trend had a major boost in 2021 with global IT solution provider NTT’s (News - Alert) launch of a globally available private 5G network-as-a-service platform,” states the report. “The trend has become stronger in 2022, with many providers providing an as-a-service offering.”
The report continued to explain that numerous operators, even major players, have begun offering pay-as-you-go and are finding success.
“Earlier in February 2022, networking vendor Cisco (News - Alert) also launched a subscription-based private 5G service offering. Cisco claims its offering lowers the entry barrier for private 5G by minimizing initial capital expense outlays to on-premises hardware (for example, the 5G radio access points) and implementation,” according to the report. “The software and service are all rolled into a monthly pay-as-you-go-and-grow financial model. This monthly subscription includes 24/7 service and upgrades/updates.”
Global Government Support
The final and maybe most important reason for private 5G growth is the support the network creation is getting from governments around the world, especially in China.
“A major factor in the tremendous growth of private networks in China – which accounts for more than 30 percent of revenue from private 5G networks – has been aggressive government support. Perhaps taking a cue from China, other governments are also doing more to encourage the development of private 5G networks,” explains the report. “A recent example is the German and French governments’ funding of four 5G projects worth €17.7 million. The goal of the projects is to develop a European ecosystem for private 5G networks using innovative methods. The French government has also recently announced a more liberal spectrum policy for enterprises allowing them to apply to access frequencies in the 3.8 GHz to 4.0 GHz band until the end of 2022.”
The report also explains how private 5G adoption is growing rapidly in other Asian countries as well.
“For instance, in Thailand, operators and other companies have formed multiple partnerships and alliances to enable the deployment of private 5G networks to support the country’s 4.0 smart industry initiative,” the report states. “Similarly, Japanese manufacturing group Mitsubishi Electric (News - Alert), which has formed a new Industry 4.0 alliance, [email protected] Alliance, has brought NTT Docomo into the team. NTT Docomo will provide a private 5G network for manufacturing companies to enable smart manufacturing solutions.”
Overall, the report found that private 5G networks are now at a pivotal point with the growing focus of key players on building on-ground capabilities to tap opportunities in the enterprise market. For MNOs who want to keep up with customer expectations and for enterprises who want to keep up digitally with the competition, private 5G networks are going to be essential, only furthering their swift growth. To read the whole report, click here
Edited by Erik Linask