There is one bright spot amid all the doom and gloom about lower telco capex and its effect on vendor earnings.
The market for private cellular networking equipment saw revenues in the second quarter jump 60% year-on-year, according to Dell’Oro.
The research firm was at pains to point out that private networking is only a small part of the overall RAN market. In February, it predicted that cumulative spending on LTE/5G small cells for private networking will reach $1 billion by 2027. Admittedly that forecast doesn’t include macro cells deployed in private networks, but even if it did, it is highly likely the figure would still be a drop in the ocean compared to the tens of billions that are typically spent on RAN equipment every year.
Nonetheless, the likes of Ericsson and Nokia are under pressure to tap new sources of revenue growth as telcos, led by those in the US, rein in their macro RAN capex. The private networking market, irrespective of its relative size, is still a growth area.
Indeed, Dell’Oro expects total private wireless RAN revenues to grow at a 24% CAGR between 2022 and 2027, while public RAN revenues are set to decline at a 2% CAGR over the same time period.
“After multiple adjustments, the industry is now coming to terms with the fact that private wireless is a marathon, not a sprint,” said Dell’Oro VP Stefan Pongratz, in a statement. “With both the suppliers and the operators adjusting their near-term expectations, the industry is now more aligned and in a better position to meet these revised growth objectives. The results in the second quarter clearly show that the private wireless market is moving in the right direction.”
Any vendors or operators looking for clues as to what’s fuelling demand for private networking could do worse than check out a new report published by Spirent on Tuesday.
The network testing specialist commissioned consultancy STL Partners to canvas 200 enterprises in the manufacturing, financial services, transport and logistics, and oil, gas and mining sectors in order to find out why they might be interested in a private cellular network.
The top two reasons given were increased security and network reliability. According to the survey, this is due to sensitivity requirements around data sovereignty and intellectual property, and the desire for a network that is reliable enough to support mission-critical applications.
However, private networking is also a more complicated beast compared to public, Spirent warned.
“Private networks are emerging as a viable alternative to traditional enterprise networks, offering a wide range of benefits,” said Marc Cohn, Spirent’s principal strategist for private networks, in a statement. “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) enterprises have previously relied on.”
If the industry can get its act together, Spirent reckons the private networking market could be worth $7.7 billion by 2027.
Original article can be seen at: