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LTE remains the de facto technology for private cellular networks

According to TBR’s estimates, 5G represented 8%, on average, of benchmarked companies’ PCN revenue in 2020, with the rest being LTE. LTE remains the de facto technology for PCN, thanks to its maturity and vibrant ecosystem, which has been developed over the past decade. 5G for private networks, on the other hand, remains in its infancy, with key 3GPP Release 16 standards recently ratified, 5G spectrum gradually coming to market, compatible infrastructure commercialized and endpoint devices becoming available in the past year.

The endpoint device aspect of the nascent 5G ecosystem will begin to proliferate over the next couple of years, at which point 5G PCN implementations can be scaled commercially. In the meantime, most of the 5G engagements that occurred in 2020, with the notable exception of those in China, were focused on experiments and pilots, pending the commercial availability of compatible endpoint devices. China has a significant head start with private 5G, with Huawei and ZTE equipping leading entities in the country, particularly the government, with the technology as part of national digitalization-related initiatives. Other developed APAC countries, namely South Korea, Japan, Taiwan and Singapore, are following closely behind China in 5G readiness.

TBR’s Private Cellular Networks Vendor Benchmark tracks the revenue key vendors obtain from the sale of LTE- and 5G-related infrastructure (includes RAN, core, transport and services provided for that infrastructure) to governments and enterprises, including large, medium and small non-CSP (telco, cableco, webscale) businesses. The benchmark ranks key private cellular networks vendors by overall revenue and by segment. Global market share and regional data and analysis are also provided.

How leading vendors performed in the private cellular networks market in 2020

Private cellular networks, particularly LTE and 5G, have become a key growth area within the ICT ecosystem. Enterprises are investing in private cellular networks as part of their broader digital transformations and a broad array of vendors are capitalizing on opportunities in this space.

Join Principal Analyst Chris Antlitz for an in-depth, exclusive review of TBR’s first edition of its Private Cellular Networks Vendor Benchmark, during which will discuss the revenue performance of leading vendors that sell private cellular network solutions. Chris will also provide commentary on smaller but faster-growing vendors.

TBR’s Private Cellular Networks Vendor Benchmark tracks the revenue key vendors obtain from the sale of LTE- and 5G-related infrastructure (including RAN, core, transport and services provided for that infrastructure) to governments and enterprises, including large, medium and small non-CSP (telco, cableco, webscale) businesses. The benchmark ranks key vendors in the private cellular networks space by overall revenue and by segment. Global market share and regional data and analysis are also provided.

Don’t miss:

  • Which vendors are leading the private cellular networks market from a revenue perspective
  • Which vendors are growing the fastest and why
  • Which regions and verticals drove the bulk of private cellular networks investment in 2020

Mark your calendars for Wednesday, May 26, 2021, at 1 p.m. EDT,
and REGISTER to reserve your space.

Enterprise interest in 5G has greatly increased since the pandemic began, pulling forward adoption timelines

Global 2000 companies and governments will drive the vast majority of spend on private 5G infrastructure

Global 2000-sized companies and governments have the scale, financial resources and technical acumen to handle the complexity of 5G and realize its full benefits. TBR estimates over 90% of private 5G investment will stem from these entities through mid-decade, at which point network slicing, solution maturity and lower price points will enable SMBs to participate more pervasively in the 5G opportunity. TBR expects most SMBs seeking 5G will leverage public infrastructure for their needs as the cost and complexity of private 5G will be too much for many of these smaller companies to handle.

Leading enterprises intend to fundamentally transform their operations by converging IT and operational technology with 5G, edge computing, AI and machine learning, and IoT.

Manufacturers and governments are expected to be among the largest investors in private 5G networks through mid-decade.

Software upgradability of private LTE systems to 5G will enable some enterprises to accelerate their migration to 5G

A large portion of the global private LTE install base is software upgradable to 5G, which will hasten some enterprises’ move to 5G, but the timing of these upgrades will be contingent on 5G device readiness.

TBR expects leading enterprises will upgrade their private LTE systems starting in 2021 as compatible devices and 3rd Generation Partnership Project (3GPP) features from Releases 16 and 17 become available. This upgrade cycle is a key factor in why the private 5G market size will be able to scale in the early years of the forecast period.

TBR’s Private Cellular Networks Market Forecast, which is global in scope, details private cellular network spending trends among enterprises and governments, particularly as it pertains to 5G. The report includes current-year market sizing and a five-year forecast of the private cellular networks opportunity by vertical, by provider type and by region.

Private 5G networks market will see strong growth as a broad range of industries and governments adopt the technology

The environment after COVID-19 will prompt enterprises and governments to take a hard look at how they can apply new technologies such as 5G to mitigate operational and safety risks. Leading enterprises in the U.S., Germany, Finland, South Korea and Japan will drive the first wave of private 5G network investment through 2021, giving way to broader adoption beginning in 2022 as key 3rd Generation Partnership Project (3GPP) standards are finalized, devices become available and the technology matures. The governments of these countries will also be key initial investors in 5G for civilian, first responder and, in the case of the U.S. and South Korea, military purposes. The Chinese government will also invest in private 5G networks.

Preliminary private 5G deployments are mostly exploratory in nature

Private 5G network spend in 2020 is primarily for exploratory purposes. The ecosystem is experimenting with different use cases, business models and value chain structures in a bid to test the technology and prove the business case as well as to formulate a plan on how best to go to market and which solutions to focus on commercializing.

One key feature of this exploration is ecosystem participants innovating in their own environments, such as RAN vendors applying their own 5G solutions in their factories and industrial companies coinnovating with their partners on pilots. This will help parse out reference cases that can prove the business case for 5G, and some of these pilots will result in commercial contracts.

TBR’s Private Cellular Networks Market Landscape deep dives into the market for private cellular networks, particularly as it pertains to 5G. This global report covers enterprises and governments that are investing in private cellular networks as well as all of the major vendors and some of the key disruptors (e.g., startups) that supply infrastructure in this space. The research includes key findings, key market developments, market size and forecast, regional trends, technology trends, vertical trends, use cases, and acquisitions and alliances that are occurring in the market. The report also provides lists of key companies in the private cellular networks ecosystem that play a role in the market.

Private 5G market will eclipse private LTE market in 2023 as enterprises leverage 5G as a platform for digital transformation

The private 5G networks market will see strong growth through this decade as a broad range of industries and governments adopt the technology

Though TBR expects the market for private LTE networks will continue to grow through the mid-2020s (at an estimated CAGR of 8% to $4.4 billion from 2019 to 2024), we anticipate it will be eclipsed by private 5G beginning in 2023. TBR believes the step up in performance of 5G versus LTE and critical features endemic to the 5G 3rd Generation Partnership Project standard, such as TSN and URLLC, will be key drivers of the migration to 5G as a foundational platform for digital transformation. Many enterprises that already have private LTE networks are likely to build migration to 5G into their road maps. The software upgradability of more recent LTE infrastructure provides a more seamless and cost-effective path to 5G.

TBR’s Private Cellular Networks Market Landscape deep dives into the market for private cellular networks, particularly as it pertains to 5G. This global report covers enterprises and governments that are investing in private cellular networks as well as all of the major vendors and some of the key disruptors (e.g., startups) that supply infrastructure in this space. The research includes key findings, key market developments, market size and forecast, regional trends, technology trends, vertical trends, use cases, and acquisitions and alliances that are occurring in the market. The report also provides lists of key companies in the private cellular networks ecosystem that play a role in the market.

To read about our most recent publishing of the Private Cellular Networks Market Landscape, check out Private 5G networks market will see strong growth as a broad range of industries and governments adopt the technology.

5G will be widely deployed across nearly all developed markets by the end of 2022; most emerging markets will be late adopters of the technology

Early majority

Though a viable business case for operators to gain revenue from 5G has yet to materialize (except for fixed wireless access), the primary initial driver of 5G deployment is realizing the efficiency gains the technology provides versus LTE.

Operators in developed markets have accelerated their 5G deployment timetables over the past year, primarily because 5G is a significantly more cost-effective solution to handle rising data traffic in their traditional connectivity businesses, but also to remain competitive in their respective markets.

Mainstream adoption

TBR expects most Tier 1 and some Tier 2 and Tier 3 wireless operators will have begun deployment of 5G by the end of 2022. This will be driven by the need to add capacity to support growing data traffic and to tap into new revenue opportunities brought on by emerging use cases for the network that materialize in the 5G era.

TBR expects new, economically supported use cases for the network will arise around 2022, which will drive the next wave of 5G investment.

Excerpt from TBR’s 1Q20 5G Telecom Market Landscape

Ericsson’s focused strategy and strong 5G position yield results

TBR perspective

Ericsson’s recovery continues into its third year, evidenced by revenue growth and expanding margins, trends that TBR expects to continue in 2020. A strong 5G position with respect to both RAN and mobile core is a significant driver of this improvement as Ericsson’s early technology bets and increased investment in Networks unit R&D are spurring CSP adoption of Ericsson’s competitive 5G portfolio. Ericsson has notched high-profile wins in 5G and grown its market share at Huawei’s and Nokia’s (NYSE: NOK) expense thanks to ERS, which offers an attractive total cost of ownership and a powerful baseband unit. As restructuring progresses, Ericsson will shift from an emphasis on cost reduction and efficiency to a disciplined growth mindset, evidenced by the recent acquisition of Kathrein’s antenna business and an effort to poach LTE customers from rivals for 5G upgrades. With China deploying 5G en masse in 2020 and the next wave of adopters expected to roll out through the early 2020s, Ericsson has the ability to wring a few more years of growth and market share gains from this cycle.

TBR views Ericsson’s turnaround as a success, but multiple headwinds will take shape over the next few years, such as vRAN; the rise of disruptive startups like Altiostar, Mavenir and Parallel Wireless; and uneven CSP spending. TBR believes Ericsson has baked 5G market share gains in China into its 2020 guidance. These gains are likely to come at Nokia’s expense.

Long term, Ericsson is hoping that emerging businesses including IoT Accelerator, Edge Gravity and eModo scale up. The company needs to succeed in an area outside of RAN and core to maintain share, but Ericsson is not currently preparing to expand its addressable market in terms of enterprise verticals.

Ericsson (Nasdaq: ERIC) hosted its annual Industry Analyst Forum in Boston, bringing along a range of executives to provide an update on the company’s corporate strategy, which includes continued restructuring, particularly within Digital Services, as well as infusing AI and automation across key product areas and selective expansion in emerging technology areas. 5G, however, was the dominant topic due to Ericsson’s market share gains spurred by the Ericsson Radio System (ERS), which is optimized to meet the cost-conscious needs of communication service providers (CSPs). Similar to last year, the tone of Ericsson’s 2019 analyst day was upbeat as the company continues to execute its focused strategy — now in its third year — which is driving improvement in its financial metrics. Following the main session, analysts could attend three tracks — Building the Network Platform, Automation in 5G Operations, or New Business Opportunities for Service Providers (i.e., IoT, private cellular networks and fixed wireless access [FWA]) — and then participate in one-on-one speed meetings.

Timely clearance of mid-band spectrum is essential for U.S. to remain at forefront of global 5G race

TBR perspective

Significant progress has been made on 5G ecosystem development since the 2018 5G Americas Analyst Forum held last October, as commercial mobile 5G services have been launched by the four U.S. Tier 1 operators, as well as in Uruguay by state-run operator ANTEL, over the past year. However, the infancy of the 5G era in the Americas has been somewhat underwhelming due to tepid smartphone adoption, the limited range of service on millimeter wave spectrum, and lack of coverage outside major metro areas.

The U.S. is at risk of falling behind other countries, especially South Korea and China, in the global 5G race. 5G adoption is growing at a more accelerated rate in South Korea, as the country gained 2 million 5G subscribers within the first four months of commercial services being offered and reached 3 million 5G subscribers as of September. South Korea’s rapid growth is being driven by its widespread 5G coverage, which is expected to reach 80% of the population by the end of 2019, as well as operators heavily subsidizing 5G devices to offset high smartphone prices. Conversely, China will make a strong entrance into the 5G market by launching commercial services in 50 major cities in the beginning of October, with plans to deploy 100,000 5G sites by the end of 2019.

The greatest barrier to the U.S. competing at the forefront of the global 5G race is its current lack of mid-band spectrum as global operators across all major regions have already been allocated a significant amount of mid-band licenses to support initial deployments. Offering 5G services across a mix of low-band, mid-band and high-band spectrum is critical to provide optimal coverage. Though deploying services on millimeter wave spectrum is necessary for U.S. operators to realize the fastest 5G speeds, the licenses are limited by the short range of coverage they provide.

Conversely, low-band spectrum will provide the coverage range necessary for operators including AT&T (NYSE: T) and T-Mobile (Nasdaq: TMUS) to deploy nationwide 5G services in 2020, but the spectrum will not yield significantly faster speeds compared to LTE. Mid-band spectrum provides the best of both worlds, speed and range of coverage, and the acquisition of mid-band licenses will play a pivotal role in the Americas’ position in the global 5G market as well as how individual operators compete for 5G market share in their respective countries.

Nearly 200 industry analysts and representatives from well-known telecom operators and vendors convened at the 2019 5G Americas Analyst Forum to discuss the state of the developing 5G market in North America and Latin America. The event featured an opening presentation from T-Mobile CTO Neville Ray regarding 5G leadership in the Americas, a fireside chat with Federal Communications Commission (FCC) Commissioner Michael O’Rielly, and a choice of 26 roundtable discussions focused on key 5G topics including IoT, edge computing, 5G network infrastructure and technologies, regulatory considerations, and private cellular networks. 

Global CSP commercial IoT revenue will reach $68B in 2023

Portfolio expansion and the launch of LTE-M Narrowband IoT networks contributed to global communication service provider (CSP) commercial IoT revenue rising 25.6% year-to-year in 2018.

Global CSP commercial IoT revenue will rise at a CAGR of 24.9% through 2023 as 5G use cases cause revenue growth acceleration starting in 2020.

To compensate for the low average revenue per user generated by IoT connections, CSPs will increasingly rely on value-added services to spur IoT revenue growth.

5G-related investment fuels vendor growth; greenfield 5G and Industry 4.0 opportunities emerge

U.S. cable operators and Dish Network are exploring building out their own 5G networks

Rakuten’s mobile broadband network deployment demonstrates that vendors must be aware of new opportunities to deploy 5G networks for customers that do not currently own mobile broadband networks. In November Dish Network selected Ericsson to supply a radio access and core network for Dish’s Narrowband IoT (NB-IoT) network, which is expected to be completed in March 2020. Dish, which has been closely watching Rakuten’s build-out, is also contemplating a nationwide 5G network, on which it could spend up to $10 billion. Cable operators Comcast, Charter and Altice, which are currently mobile virtual network operators (MVNOs) of Tier 1 mobile operators, are contemplating greenfield 5G network builds as well.

Industry 4.0 will drive demand for cellular connectivity within the enterprise, but not for a few years

TBR’s research suggests that Industry 4.0, which includes mass 5G adoption globally, will not ramp up until between 2022 and 2025, at which point business cases will be proven, justifying an increase in market spend on ICT infrastructure. Cellular technologies, namely LTE and 5G, have better uplink and security capabilities, and lower latency than Wi-Fi, all of which are necessary as enterprises begin to use network technology for mission-critical workloads rather than “best effort” communications. Certain vendors, namely Nokia, Huawei and Cisco, are better positioned than others to capitalize on this trend as they sell both directly and indirectly into enterprises, as well as through communication service providers (CSPs). Ericsson, in contrast, plans to go to market almost exclusively through CSPs, which will place it at a disadvantage as many large enterprises will want private networks.

TBR’s Telecom Vendor Benchmark details and compares the initiatives and tracks the revenue and performance of the largest telecom vendors in segments including infrastructure, services and applications as well as in geographies including the Americas, EMEA and APAC. The report includes information on market leaders, vendor positioning, vendor market share, key deals, acquisitions, alliances, go-to-market strategies and personnel developments.