Why Demand for Enterprise Private Networks is on the Rise?

With enterprise 5G maturing, the importance of private networks for the enterprise domain is growing. A private 5G network is a cellular network that comprises core network servers and cell sites to support the connectivity.

According to ABI Research, the demand for private network deployments will be driven primarily by heavy industry verticals. Industrial manufacturing and energy production (including mining, oil and gas, and logistics) alone will generate private network revenues of $32.38 billion by 2030, representing half of the $64 Billion overall private network revenues.

Earlier, Communication Service Providers (CSPs) built, operated, and owned mobile and fixed wireless networks. Now, as digital transformation shifts priorities within enterprises and industries, organizations started to find value in owning, managing and operating their own network, and that demand is growing. In light of this, CSPs too are considering ways to tap into the burgeoning enterprise and industry transformation opportunity.

Furthermore, in the wake of the COVID-19 pandemic, the interest of enterprises in 5G has greatly increased, pulling forward adoption timelines and ensuring that the software upgradability of private LTE systems to 5G. This will enable some enterprises to accelerate their migration to 5G.

The pandemic prompts enterprises and governments to pull forward and broaden the scope of their digital transformations, primarily for business resiliency and cost‐reduction purposes, but also for tapping into new market opportunities.

There is significant interest across verticals in leveraging 5G, as well as other new technologies such as Artificial Intelligence and Edge Computing, to adapt economies and societies to the new normal.

Many organizations are deploying private LTE today, and few are beginning to deploy private 5G in limited instances. While many of these verticals overlap in both use case and network needs, the market opportunity can be categorized into three segments:

Mission-critical: Verticals that require ‘always-on’ connectivity, addressable through redundancy and dedicated resource as well as the clear need or desire for mobile site connectivity. Loss of connectivity would likely result in significant negative business or operational outcomes.

Industrial: Verticals whose primary focus is a process and industrial automation for Industry 4.0. It also generally involves providing high-capacity and ultra-reliable low-latency communication (5G URLLC) either with time-sensitive networking (TSN) or as an alternative.

Traditional enterprise or ‘Business-Critical’: These are verticals that require deterministic wireless networking beyond traditional Wi-Fi, but where redundancy and automation needs are lower. These include ‘business-critical’ applications, where the loss of connectivity could result in loss of revenue.

While use cases span from small office building settings to complex smart city environments, common factors currently driving private network demand are:

Private LTE ensures guaranteed and secure connectivity and supports a wide range of applications – ranging from push-to-talk (PTT) group communications and real-time video delivery to wireless control and automation in industrial environments, given the authority over wireless coverage and capacity.

Organizations are making sizeable investments in private LTE networks across the critical communications and industrial IoT (Internet of Things) domains – including public safety agencies, militaries, utilities, oil & gas companies, mining groups, railway & port operators, manufacturers and industrial giants.

In developed countries such as the US, Germany and Japan, enterprises are diving into private 5G network investment, which is expected to grow as key 3GPP standards are finalized, devices become available, and the technology matures.

Private LTE infrastructure will solve mission-critical networking challenges. However, the barrier to consumption will remain high, limiting adoption to organizations possessing in-house competency and access to a dedicated spectrum.

With more spectrum being made available for enterprise uses, coinciding with the arrival of commercial 5G, interest will grow towards using private LTE/5G solutions as a basis for connectivity across a multitude of mission-critical, industrial and traditional enterprise organizations.

Enterprise Private Networks is a rapidly growing space, and we will be witnessing some exciting new deployments and use cases in the coming years.

- Authored by Sanjay Raina, Regional Director- India & South Asia at Mavenir