The rarefied opportunity for telcos to reinvent themselves with private 5G, as more than just dinosaur utility pipes, is about to pass the operator community by, according to ABI Research. The window of opportunity, presented by spectrum liberalisation and stripped-back 5G systems, is “closing” for them, the firm reckons. Operators must pull-up their socks, quick-smart, or be caught at the start line as system integrators overhaul them with all manner of connectivity tech.
It is a somewhat alarming claim, especially so early in the game – although it is also one that is constantly sounded as a warning bell by market commentators across the industry ramparts. The message from ABI is that operators in Europe, at least, have already fluffed their lines, and enterprises are already looking for alternative connectivity solutions to make-real their dreams of Industry 4.0 – or whatever vertical-4.0 movement they are engaged with.
The basis for their crisis is that ‘vertical’ spectrum applications, available to enterprises on 10-year deals for the same outlay as a decent phone contract, have slowed in Germany, from around 80 in the first half of 2020 (40 per quarter on average) to “only” 20 in the second quarter of 2021 – representing an compound reversal of about 50 percent in the period. BNetzA, the German regulator, has so far issued 146 licences for local-area 5G in Germany.
Germany’s interest in private networks is fading,” says ABI. “[And] other European countries are lagging far behind.” It puts the number of publicly-disclosed private network deployments at 290, globally, including 40-odd official deployments in China. It discounts (the rest of) “several hundred” in China, which have not been disclosed. It might be noted others reckon on “a thousand-plus” deployments, in total, with the lion’s share in China, mostly hybrid networks pegged to public core infrastructure.
The other concern for ABI is that in Europe, headlined by activity in Germany, the private 5G agenda is being driven by vendor sales strategies, rather than by enterprise transformation strategies. “In China, almost all deployments are for real-life enterprise use-cases, motivated by demand. In Germany, most private networks are [sold] by system integrators or factory automation vendors to showcase 5G [and to] integrate their product offerings.”
Leo Gergs, senior analyst for private networks and enterprise connectivity at ABI Research, said: “The motivations behind private 5G deployments [are] alarming. Most deployments in Germany are sales-driven; only a few are really used to enhance enterprise workflows and operations. The fact that these sales-driven activities dominate the number of private networks in Germany is yet another warning sign that enterprise 5G still has a long way to go.”
There is a question, as well, about whether Industry 4.0 will even wait for industrial 5G, still to be properly specified in Releases 16, 17, and 18 of the 3GPP standardisation process. Gergs said: “The slow growth of private networks shows there is critical need to act now, as the window of opportunity for enterprise 5G is closing. Enterprises are waiting for the 5G capabilities that they have been promised for more than three years. As they realise that full support for URLLC and time-sensitive networking will still take years to mature, they are becoming growingly impatient and starting to look at technology alternatives.”
The claims, from ABI Research’s latest ‘private networks tracker’, state that European telcos, in particular, must “radically rethink their approach”. Gergs commented: “The telco industry must realize that the value proposition for enterprise 5G does not lie in the technology, but in the applications it enables. No enterprise cares about whether they deploy 4G or 5G, as long as it solves their pain points.”
The answer, it seems, lies in more liberal spectrum initiatives, with responsibility falling to both national operators and national regulators. Gergs said: “Spectrum liberalization initiatives, to allow enterprises access to license or share spectrum without going through a traditional operator, can be an important enabler. The fact that more of these initiatives are being implemented shows regulators’ willingness to create favourable conditions.”
He added: “But regulators can only do part of the job. It is now up to mobile operators, infrastructure vendors, chipset manufacturers, and system integrators to accept their responsibility and deliver on what enterprises have been promised from the beginning.”
See the follow-up to this article here: The ‘failure’ of private 5G – another telco bungle, or just industrial inertia? (Is the window really closing?).
Check out the latest Enterprise IoT Insights webinar on private 5G network management, and the emergence of private 5G enterprise NOCs, featuring Leo Gergs from ABI Research, alongside Vodafone and Radisys. A report on the same subject goes live next week.
