Both telecom service providers and large enterprises from different vertical industries are driving significant growth of private mobile network deployments within Australia, China, Japan, New Zealand, South Korea, and Singapore, according to the latest market study by ABI Research.
Together they will create a $7 billion market opportunity by 2025 within the Asia-Pacific region -- accounting for more than 65 percent of global private network revenues. By 2030, developed markets in North America and Europe will account for more than $16 billion -- representing 25 percent of global private network revenues.
"These findings show the great regional variability that we see for private network deployments," said Leo Gergs, research analyst at ABI Research.
Private Mobile Networks Market Development
Two primary factors are creating the drive for private networks. One, a 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 $4.5 billion in bids.
The second factor is that the demand for enterprise digitization is increasing sharply, driving new attention to the market.
There is a range of new players attacking the traditional telco industry when it comes to private networks. Hyperscaler cloud providers such as Amazon Web Services, 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 are deeply rooted in the industrial manufacturing domain and growing their product portfolios to include private cellular networks.
"One should not underestimate their capabilities," Gergs emphasizes. "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."
According to the ABI assessment, these developments show that the traditional telco industry is under immense pressure to gain a foothold in private mobile 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," says Gergs.
Outlook for Private Network Infrastructure Growth
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 concludes.
That said, I believe we could see mobile network operators offer their expertise to help large enterprise CIOs and CTOs deploy their 5G infrastructure. Very few enterprise IT organizations have the skills and experience to build wireless cellular networks. Therefore, it's more likely for IT teams to focus on their related cloud edge computing applications.