Despite the challenging year, 2022, the long-term forecast for private cellular networks in the enterprise domain remains positive. As recently published forecasts by global technology intelligence firm ABI Research highlight, the revenue opportunity for private cellular networks is forecasted to grow from almost US$7 billion in 2023 to more than US$96 billion by 2030 – with integration services accounting for almost 50% of these revenues.
The market is driven by 4G LTE deployment until 2030 when 5G connectivity will constitute most private cellular network deployments. Previously this infliction point was expected in 2027 – 2028. However, the persistently immature ecosystem around industrial grade 5G devices prevents 5G from unfolding its whole value proposition for enterprise connectivity, decreasing the attractiveness of 5G for enterprise cellular networks.
“These numbers underscore the size of the opportunity that there still is for private cellular networks within enterprise verticals – despite a bumpy first few years of slow market uptake,” says Leo Gergs, Senior Analyst for Private Networks and Enterprise Connectivity at ABI Research. “At the same time, the early years of enterprise cellular have been an important reality check that the telco industry needs to take seriously to preserve the opportunity.” Based on discussions within the industry and different enterprises, ABI Research identifies three critical lessons on private cellular networks and enterprise connectivity for the telco industry.
Private Network Deployments are primarily driven by outdoor use-cases
As long as enterprises are still waiting for industrial-grade chipsets that enable essential use cases like ultra-reliable low latency communication (URLLC) and Time Sensitive Networking (TSN) (which requires compatibility with 3GPPs Release 16), the value proposition of cellular connectivity – and 5G particularly – for enterprise deployments remains to be under pressure. The year 2022 showed old battle lines between Wi-Fi and specifically 5G reappearing, as the most tangible value proposition for enterprises seems to be that in comparison to Wi-Fi, private cellular (specifically 5G) will be able to bring connectivity to vast and remote coverage areas. A private cellular network will connect these outdoor sites (e.g., oil or gas fields, airfields, or shipping ports) much more efficiently than other wireless connectivity technologies (like legacy Wi-Fi). “Suppliers of private networks should therefore look beyond the obvious manufacturing environment as targets and start looking towards sites with large outdoor areas if they haven’t done so already,” according to Gergs.
High customization remains necessary for private network deployments
As ABI Research forecasts, integration services will account for almost 50% of private cellular network revenues by 2030. Gergs explains, “This underlines that a private cellular network for enterprises is a highly customized deployment that requires a high degree of expertise in integration and orchestration capabilities. Consequentially, system integrator capabilities will remain pivotally important for the success of private cellular deployments. Partnerships with established System Integrators in the enterprise domain like the recent announcement of ENEA, IBM, and Casa Systems will only begin a swamp of new partnership announcements in the coming years.”
The Telco Industry needs to appreciate macroeconomic conditions in designing pricing models
Above everything else, the telco industry must understand that enterprises are primarily motivated by economic concerns when deciding on a private cellular network deployment. “Importantly, this needs to go much further than removing high upfront investment and moving to a service-based offering,” Gergs emphasizes.
The industry needs to provide more flesh to the ‘Everything-as-a-Service’ buzzword. “Particularly in economic uncertainties, enterprises demand reliable partners that provide binding answers as to what exact capabilities they aim to monetize and how,” Gergs concludes.
These findings are from ABI Research’s Private Cellular Network Forecasts market data report.
