In Business Model, Internet Access, Mobile

How big an opportunity is private 5G or private 4G networking, and for whom?

To the extent that all premises private networks have been most important and valuable for networking infrastructure companies, local area networks such as Wi-Fi or Ethernet LANs have not been a particularly big drive of revenue for public network connectivity providers. Some incremental revenue, yes, but nothing in the billions of dollars per service provider range. 

So it is that analysts at ABI Research now say “the telco industry needs to radically rethink their approach to enterprise 5G or miss out on the opportunity entirely.”

Perhaps a related issue is that many private 5G networks at present are “demonstration cases” by vendors trying to show the relevance of their solutions. Perhaps not so many are driven “bottoms up” by enterprises with a clear business objective and a perceived existing need. 

“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 their product offerings,” says Leo Gergs, ABI Research senior analyst.

“Most private network deployments in Germany are essentially sales-driven and only a few deployments are really used to enhance enterprise workflows and operations,” he notes. 

ABI Research argues that the “window of opportunity for enterprise 5G is closing.” The issue is “for whom” is the window closing, if it is. Some of us never believed private 5G networks would “mostly” benefit service providers. Instead, it has seemed–as it the case for other forms of private networking–to be an opportunity primarily for infrastructure providers. 

ABI argues that service providers need to reexamine the business model. Others might argue there is not such a compelling argument for a major service provider role. System integrators, for example, have always been important suppliers of enterprise private networks. 

There seems nothing so special about 5G private networks that makes public network service providers essential or natural providers. So maybe private 5G or private 4G is not that big an opportunity for public network service providers. 

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