ENTERPRISE PRIVATE LTE AND 5G NETWORKS TO REALISE $7.3 BILLION IN ANNUAL SPEND BY 2026: KALEIDO INTELLIGENCE
MISSION-CRITICAL USE CASES IN MANUFACTURING AND ENERGY/UTILITIES DRIVING DEMAND, BUT ECOSYSTEM REMAINS CHALLENGING
07th July 2021, London, UK: Enterprise Capex and Opex spending on Private LTE and 5G networks is set to reach $7.3 billion annually in 2026, according to roaming and connectivity research specialists Kaleido Intelligence. This spending is set to grow at a CAGR of 55% between 2019 and 2026.
3GPP-based Private Networks offer considerable performance, security, reliability and mobility benefits over traditional enterprise Wi-Fi, while offering new application opportunities and performance upgrades over technologies such as TETRA. As such, they are ideal for deployments in mission-critical scenarios where high-performance, coverage and low latency are of utmost importance.
According to Kaleido’s new report, Private LTE and 5G Networks 2021, commercial interest in Private LTE and 5G has grown considerably over the past 3 years, driven by global regulatory activity to release dedicated spectrum alongside a growing requirement to deploy monitoring, automation and other broadband services in enterprise environments.
DEDICATED SPECTRUM HAS CATALYSED THE MARKET
Regulators across the globe have been considering, and in many cases, opened slices of dedicated LTE and 5G spectrum for enterprise IoT activities. The US is a notable example, via its dynamically shared CBRS scheme. Meanwhile, the UK, Germany and Japan among others have adopted similar approaches. The impact of these frameworks will see North America, Europe & Central Asia and East Asia & Pacific be responsible for 80% of Private Network site deployments in 2026.
Spectrum availability has opened the door for a plethora of players, including MNOs, MVNOs, carriers, network service providers and systems integrators as well as enterprises to enter the market. On the one hand, this liberalisation will herald a new era of mobile telecom services, with MNOs no longer the de facto gateway to the market. On the other hand, the needs of enterprises are complex, while their understanding of 3GPP network design and management is lacking. If the market is to see success, players must develop a deep understanding of enterprise needs and focus on broad industry collaboration to deliver best-in-class services.
MANUFACTURING AND ENERGY/UTILITIES SECTORS TO DRIVE DEMAND
The research found that enterprises in Manufacturing and Energy/Utilities (oil, gas, mining and utilities) will account for over 50% of Private LTE and 5G deployments in 2026, although the Capex-intensive nature of oil, gas and mining industries will mean that Energy/Utilities will lead in terms of overall spending. Collectively, these industries rely heavily on automation, sensing, robotics and even autonomous vehicles, driving demand for the reliability and performance offered by 3GG dedicated networks.
Steffen Sorrell, Chief of Research at Kaleido, commented: “Despite the hype, Private 3GPP Networks remain a capital-intensive endeavour which will constrain the bulk of overall growth towards certain verticals. Additionally, there is considerable work to be done – on the one hand, in terms of enterprise education, and deep ecosystem expertise on the other. Presently, we are witnessing the birth of Private LTE and 5G networks.”
REGULATION A CRITICAL FACTOR IN THE 5G ERA
Kaleido found that while 5G offers even greater performance over LTE in terms of throughput, latency and connection density, very few use case have reached the stage where 5G is a must-have. Indeed, between 85%-90% of Private Network sites can be accommodated by LTE, which is cheaper to deploy.
Meanwhile, a lack of broad 5G modem and RAN options present additional ecosystem barriers. While these will certainly be solved over time, Kaleido believes that the majority of Private Network deployments will rely on LTE connectivity until 2026
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