Private cellular networks growing in popularity

Thursday, 21 May, 2020

Private cellular networks growing in popularity

The popularity of private cellular networks is growing among enterprises globally, with initiatives in 15 countries currently, according to tech market advisory firm ABI Research.

This includes arrangements for enterprises to acquire spectrum from the regulator, as well as spectrum assets held by MNOs that focus entirely on providing private cellular networks for enterprises.

Either way, private cellular network operators are a growing threat to traditional telcos, said Leo Gergs, Research Analyst for 5G Markets at ABI Research.

“With the very economic pricing, we will see even more enterprises expressing interest, as the ecosystem for 5G connectivity matures,” he said.

“Specialist operators … will disrupt the market by offering business models to enterprises that follow an ‘everything-as-a-service’ (XaaS) approach,” Gergs added.

“Since all these specialist network operators have a system integrator background, they have the vertical-specific knowledge about requirements, pain points and deployment complexity.

“These specialist network operators, therefore, enjoy an incumbent advantage over traditional telcos in bringing connectivity to enterprises.”

While large enterprises might have the manpower and the necessary financial resources to manage the network on their own, “Globally, there are only round 10 million enterprises with more than 500 employees, while there are more than 700 million small and medium-sized enterprises with up to 500 members of staff, which will look for third parties to manage a private cellular network,” Gergs said.

“To realise this immense revenue opportunity with SMEs, network operators need to leave their comfort zone and offer appealing solutions to them, which are fundamentally different from the offerings in the consumer domain,” Gergs suggested.

These should centre around monetising services such as the provision of a particularly high bandwidth, certain low latency or the provision of additional capabilities like network slicing.

“All these costs should be captured in regularly occurring subscription fees to keep the amount of upfront financial investment as low as possible,” Gergs concluded.

These findings are from ABI Research’s Private Wireless Spectrum Tracker market data report.

Image credit: © Roth

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