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Upside Opportunities for Private Cellular Network Apps

In the past, most CIOs and CTOs would consider Wi-Fi infrastructure as the primary mode of delivering wireless local area network connectivity to their organization. Now, the development of fifth-generation (5G) cellular technologies has created alternative modes of wireless networking.

Moreover, the demand for private networks in the enterprise domain continues to rise. According to the latest worldwide market study by ABI Research, private cellular network deployments within the enterprise domain will generate equipment revenues of more than $64 billion by 2030.

While very large enterprises will likely drive the market for the next 10 years -- accounting for 50 percent of private networks by 2030 -- companies with annual revenues between $250 million and $1 billion will account for 40 percent of private networks by 2030, with their proportion expected to rise further beyond the forecast period.

Private Cellular Network Market Development

"These numbers underline the huge momentum that we see for private cellular networks as a key enabler for enterprise digitization," said Leo Gergs, research analyst at ABI Research. "As enterprises require highly customized deployment solutions, including deterministic & time-sensitive networking and are governed by strict regulations regarding data protection and network integrity, the deployment of a private cellular network will be their first choice."

While large manufacturers like Bosch, Mercedes, or Siemens certainly have the financial resources and the necessary expertise to manage and operate a cellular network on their own, typical enterprises with annual revenues below $1 billion do not have the resources nor capabilities.

Following a recent ABI Research survey among industrial manufacturers across key markets in Europe, North America, and the Asia-Pacific region, three out of five manufacturers would prefer their private network to be managed and operated by a third party.

To address this potential managed services revenue opportunity within mid-tier enterprises, the telecom service provider industry needs to develop appealing offerings that take into account the business realities of these less capable IT organizations.

Since many enterprises with revenues of up to $1 billion face some form of IT budgetary constraints, large upfront capital investments into wireless network deployment would serve as a true barrier to entry.

According to the ABI analyst assessment, in order to lower this barrier and promote enterprise cellular network deployments, the telco industry needs to rely less on traditional CAPEX intensive business models and instead develop OPEX-based wireless local area network (WLAN) offerings.

These new offerings will adopt a service-based approach to give the decision-makers some assurance of paying only for services they truly need. As a result, communication service providers must be prepared to grasp a unique upside growth opportunity for private cellular services within the enterprise domain.

Outlook for WLAN Applications and Growth

The need for the telco industry to adapt is underlined by a drastic change in the shape of the competitive landscape. The traditional mobile network operators are under attack. On the one hand, the dominant cloud hyperscalers are actively developing disruptive end-to-end solutions for enterprise connectivity.

"On the other hand, we see more and more specialized network operators like Ambra, Citymesh, and Edzcom, which reserve spectrum assets to provide private cellular for enterprises as a service-based offering. Considering this, network operators need to evolve their business models fast, to protect their slice of the cake from being eaten by anyone else," concludes Gergs.

Looking ahead, I anticipate that more business and IT leaders will seek ways to deploy ultra-reliable, high-speed, low-latency, power-efficient, and high-density wireless connectivity solutions for their organization. Furthermore, unlike a public 5G mobile communication network, each private 5G network will be customized for the unique attributes of the location and associated WLAN requirements.

That said, Wi-Fi networks are easier to deploy and relatively inexpensive compared to private cellular networks, making them more attractive where speed and economy are a higher priority. Private Wi-Fi networks are already utilized for numerous applications and use cases. Plus, wireless routers and access points that support new Wi-Fi standards, such as Wi-Fi 6, will offer many enhancements over prior technologies.

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