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Monday, December 28, 2020

Why Industrial Markets Lead 5G Private Network Growth

Commercial wireless communications have evolved rapidly over the last decade. Also, private cellular connectivity differs between enterprise verticals. Exploring the various applications and industry use cases provides an important indication of where infrastructure deployment will occur next.

With fifth-generation (5G) wireless technology maturing, the importance of private networking solutions for the enterprise domain will continue to grow. Looking ahead, the growing demand for private network deployments will be driven primarily by heavy industry verticals.

Industrial manufacturing, energy production (including mining, oil and gas, and logistics) alone will generate private network revenues of $32.38 billion by 2030, representing half of the $64 Billion overall private network revenues, according to the latest worldwide market study by ABI Research.

Private 5G Network Market Development

"These findings show the importance of private networks, particularly for automating mission- or even life-critical use cases, that require the highest possible network reliability and availability and are characterized by a high degree of network integrity to prevent data from leaving the enterprise premises," said Leo Gergs, research analyst at ABI Research.

According to the ABI assessment, enterprises that require network slicing capabilities to separate mission-critical from non-mission-critical use cases within the same physical network will turn to private networks.

Two main factors are causing a surge in private network infrastructure growth. First, there is a huge rise in demand for automation and enterprise digitization. What has started with Industry 4.0 is now exacerbated by the aftermath of the global COVID-19 outbreak.

Enterprises in industrial manufacturing, logistics, and oil and gas are now accelerating their digitization plans to reduce their dependency on manual labor availability and increase the resilience of their business operations against sudden disruptions to supply chains.

The second factor is the addition to the demand-side effect. The market for private network deployments will also benefit from a supply-side effect. The freeze of Release 16 gives enterprises the much-needed reassurance of 5G capabilities for enterprise-grade connectivity, which allows chipset and module manufacturers to grow the device ecosystem for compatible hardware.

The maturing device ecosystem, in turn, drives down prices per module and therefore makes the deployment of a private 5G network more cost-efficient, which will spur additional interest from enterprises.

While private network operators such as Ambra, Citymesh, or Edzcom are threatening traditional mobile service provider market share by monetizing managed services other than connectivity, cloud computing hyperscalers are launching their private network offerings in co-creation efforts with local incumbent telco players.

Outlook for Private 5G Network Applications Growth

In addition, software vendors such as Athonet, or Quortus benefit from emerging trends toward network virtualization, which allows them to offer a virtualized core network either through System Integrators or to enterprises directly.

"These breathtaking developments show the amazing pace at which this market is evolving. Against this backdrop, it is important that all players in the enterprise connectivity domain develop a durable business strategy to profit from this rising market," concludes Gergs.

I anticipate that we'll continue to see more edge computing service launches in the coming weeks and months, as enterprise CIOs and CTOs build a business case for new network infrastructure investments -- including on-premises solutions that integrate with public cloud service components.