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Report: private 5G window could quickly close on telecos

Telecommunication companies might soon see their opportunity to leverage private 5G networks pass them by, per ABI Research, Enterprise IoT Insights reports. ABI Research claims that this golden opportunity, which spectrum liberalization and stripped-back 5G systems helped create, is quickly closing for telecom companies. It’ll be up to operators to take advantage of private 5G availability while they can before system integrators take the lead on them.

ABI’s claim is considered somewhat surprising given that private 5G is just getting started, Enterprise IoT Insights reports. However, market commentators throughout the industry have warned that something like this could happen. Operators in Europe are already adjusting their lines, while enterprises are searching for new connectivity solutions to keep their dreams of Industry 4.0 alive.

The issue stems from the fact that “vertical” spectrum applications have slowed in Germany. Approximately 80 were available during the first half of 2020 (about 40 per quarter), compared to just 20 in the second quarter of 2021, marking a 50% decline. German regulator BNetzA has issued 146 licenses so far for local 5G in Germany. Further issues come from Germany’s “fading” interest in private networks, according to ABI.

The firm noted that other European countries were also falling behind. It estimates that there are about 290 publicly disclosed private network deployments worldwide. That includes approximately 40 official deployments in China, with potentially “several hundred’ undisclosed deployments.

Vendors take the lead in Europe

ABI’s other concern is that vendor sales strategies are driving the private 5G agenda in Europe, rather than enterprise transformation strategies.

“In China, almost all deployments are for real-life enterprise use-cases, motivated by demand,” the firm said. “In Germany, most private networks are (sold) by system integrators or factory automation vendors to showcase 5G (and to) integrate their product offerings.”

“The motivations behind private 5G deployments (are) alarming,” added Leo Gergs, senior analyst for private networks and enterprise connectivity at ABI Research. “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.”

Meanwhile, there’s still a question about whether or not Industry 4.0 will wait for Industrial 5G, Enterprise IoT Insights reports. It’s yet to have been properly specified in Release 16, 17 and 18 of the 3GPP standardization process.

“The slow growth of private networks shows there is critical need to act now, as the window of opportunity for enterprise 5G is closing,” Gergs said. “Enterprises are waiting for the 5G capabilities that they have been promised for more than three years. As they realize 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.”

ABI Researches recent “Private Networks Tracker” said that European telecom companies have to “radically rethink their approach.”

Applications are key

“The telco industry must realize that the value proposition for enterprise 5G does not lie in the technology, but in the applications it enables,” Gergs said “No enterprise cares about whether they deploy 4G or 5G, as long as it solves their pain points.”

The solution could possibly be found in more liberal spectrum initiatives, where national operators and national regulators share the responsibility.

“Spectrum liberalization initiatives, to allow enterprises access to license or share spectrum without going through a traditional operator, can be an important enabler,” Gergs said. “The fact that more of these initiatives are being implemented shows regulators’ willingness to create favorable conditions. 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.”

Joe Dyton can be reached at joed@fifthgenmedia.com.

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