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Enterprise private LTE, 5G networks projected to realise more than $7bn in annual spend by 2026

Study finds mission-critical use cases in manufacturing and energy/utilities driving demand for dedicated comms networks, but ecosystem remains challenging

The rapid uptake and future lucrative potential of private LTE and 5G networks has been shown clearly in research from Kaleido Intelligence, which has observed that Enterprise Capex and Opex spending on such infrastructures is set to grow at a compound annual growth rate of 55% between 2019 and 2026, generating $7.3bn annually in 2026.

In setting out its Private LTE and 5G networks 2021 report, Kaleido said 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, Kaleido regards them as ideal for deployments in mission-critical scenarios where high-performance, coverage and low latency are of utmost importance. It added that commercial interest in private LTE and 5G has grown considerably over the past three 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.

Looking at drivers for the private network uptake, the analyst said dedicated spectrum has catalysed the market with regulators across the globe considering, and in many cases, opened slices of dedicated LTE and 5G spectrum for enterprise internet of things (IoT) activities. It cited the US as 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 and Central Asia and East Asia and Pacific be responsible for 80% of private network site deployments in 2026.

Kaleido also believes that 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. It says that 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.

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In addition to liberal regulatory regimes, the analyst found that certain industries were driving demand. Enterprises in manufacturing and energy/utilities (oil, gas, mining and utilities) were forecast to account for over half of private LTE and 5G deployments in 2026.

That said, the report added 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.

Kaleido also found that while 5G offers even greater performance over LTE in terms of throughput, latency and connection density, very few use cases 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.

“Despite the hype, Private 3GPP Networks remain a capital-intensive endeavour which will constrain the bulk of overall growth towards certain verticals,” said Kaleido chief of research Steffen Sorrell. “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.”

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