Private 5G networks are failing to reach scale, with the window of opportunity closing
Despite huge potential, private networks are failing to reach scale, and the window of opportunity for telcos is closing.
According to new research published by global tech advisory firm ABI Research, there are only 290 fully publicly disclosed private network deployments worldwide.
In China, the industry assumes there are several hundred private network deployments, but only 40 are fully publicly disclosed. Germany reports a total of 146 licenses granted to enterprises to deploy a private mobile network, with other European countries lagging far behind.
The research finds Germany's interest in private networks is fading. While the Bundesnetzagentur counted more than 80 new applications for local licenses in the second half of 2020, there were only 20 more applications in the second quarter of 2021. The fact that interest in private networks is slowing down indicates the telco industry needs to radically rethink its approach to enterprise 5G, or miss out on the opportunity entirely.
ABI Research says looking at the motivations behind the existing private network deployments confirms this observation. In China, for example, almost all private network deployments are for real-life enterprise use-cases motivated by demand. On the contrary, in Germany, most private networks are constituted by system integrators or factory automation solution vendors, aiming to showcase 5G capabilities and test solutions to integrate into product offerings.
Most private network deployments in Germany are essentially sales-driven, and only a few deployments are used to enhance enterprise workflows and operations.
"The fact that these sales-driven activities dominate the number of private networks in Germany is yet another warning sign that enterprise 5G still has a long way to go," says ABI Research senior analyst for private networks and enterprise connectivity, Leo Gergs.
"The slow growth of private networks shows there's a critical need to act now, as the window of opportunity for enterprise 5G is closing. Enterprises are eagerly waiting for the 5G capabilities they've been promised for more than three years.
He says as these enterprises realise that full support for URLLC and time-sensitive networking will still take years to mature, they are growing impatient and starting to look at technology alternatives.
According to Gergs, the telco industry must realise the value proposition for enterprise 5G doesn't lie in the technology as such, but in the applications it enables, as no enterprise cares whether they deploy 4G or 5G on their premises, as long as the technology solves their pain points.
Spectrum liberalisation initiatives, which allow enterprises access to license or share mobile network spectrum without having to go through a traditional mobile network operator, can act as important enablers in this context, and the fact that more and more of these initiatives are being implemented shows regulator's willingness to create favourable conditions.
"Regulators can only do part of the job," says Gergs.
"It's now up to CSPs, infrastructure vendors, chipset manufacturers, and system integrators to accept the responsibility and deliver on what enterprises have been promised from the beginning."
