Private 5G Network Opportunity Being Missed?

Some of us have always seen private 4G and private 5G networks through the prism of local area versus public wide area networking. Which is to say that private networks are always important to different parts of the networking ecosystem. 

Private networks are really important for sellers of infrastructure products, less so for suppliers of WAN services. The huge growth of Wi-Fi has huge importance for semiconductor suppliers, systems integration firms and premises networking gear. 

Obviously all that use of Wi-Fi also creates needs for WAN networking, but indirectly. The new wrinkle is that 5G private networking creates potential new markets for sellers of public infrastructure and related services such as network design, installation and maintenance. 

It has been less clear that private 5G networks represent a big revenue growth opportunity 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. 

Maybe service providers should not waste too much effort trying to change that state of affairs.