In the face of the bleak atmosphere surrounding reduced telco capex and its impacts on vendor profits, private cellular networking presents a glimmer of hope. According to a recent research by Dell’Oro, Q2 revenues for the private cellular networking equipment market soared by a staggering 60% year-on-year.
Dell’Oro emphasizes that private networking still constitutes a small slice of the overall Radio Access Network (RAN) market. Earlier this year, Dell’Oro speculated that spending on LTE/5G small cells dedicated to private networking will touch $1 billion by 2027. Even if this estimate were to include macro cells used in private networks, the total sum would likely pale in comparison to the astronomical amounts spent on RAN equipment annually.
Despite this, telecom giants such as Ericsson and Nokia are feeling the heat to explore new avenues for revenue growth as telcos, especially those in the US, curtail their macro RAN capex. Independent of its proportionate size, the private networking market remains a thriving sphere.
In fact, Dell’Oro anticipates the entire private wireless RAN revenues to surge at a 24% CAGR from 2022-2027, while public RAN revenues are projected to diminish with a 2% CAGR during the same timeframe.
Dell’Oro VP, Stefan Pongratz, expresses, “After multiple adjustments, the industry is now coming to terms with the fact that private wireless is a marathon, not a sprint…The results in the second quarter clearly show that the private wireless market is moving in the right direction.”
A newly-launched report by Spirent provides an insight into the factors driving the demand for private networking. After polling 200 enterprises across varied sectors, STL Partners found the top reasons to be enhanced security and network reliability. This is attributed to the dire need for data sovereignty and intellectual property safeguards, and the prerequisite for a steadfast network to sustain mission-critical applications.
Nonetheless, Spirent raises an alarm, asserting that private networking entails more complexity than its public counterpart. Marc Cohn, Spirent’s principal strategist for private networks, asserts, “Private networks are emerging as a viable alternative to traditional enterprise networks, offering a wide range of benefits…but the disaggregated private networking ecosystem, wide range of domains, technologies and diversity of user cases result in much greater complexity than the traditional wide area networks (WANs).”
Spirent contends that if the industry can manage the challenges, the private networking market could be worth a robust $7.7 billion by 2027. With such prospects, private networking provides a beacon of optimism underpinning the distressed telecom industry. With diligent solutions to address the highlighted complexities, its growth trajectory can be incredibly promising.
