The shine begins to wear off 5G private wireless
Verizon had high hopes for private wireless networking. The company had predicted that by now it would be well on its way to making billions of dollars from the sale of custom 4G and 5G networks dedicated exclusively to its enterprise customers.
Indeed, during 2021 Verizon execs pegged the total addressable market for private wireless at around $7 billion to $8 billion by 2025, according to FierceWireless.
But that's not how things have played out.
"A couple of areas where we are behind versus our expectation [are] the mobile edge compute and 5G private networks," Verizon CFO Matt Ellis said last month during Verizon's quarterly earnings call. "You're talking about the technology adoption there on a new technology. The adoption curve [is] a little slower than maybe we would have liked."
As a result, Verizon was forced to lower some of its financial targets for 2023.
But Verizon isn't alone. Other network operators have also been hoping for massive revenues from private wireless yet are struggling to make progress.
"Regarding private wireless, we agree that it is taking a bit longer than some had expected to move above the noise," wrote analyst Stefan Pongratz, of research and consulting firm Dell'Oro Group, in response to questions from Light Reading. He said revenues from private wireless 4G and 5G networks accounted for less than 1% of the overall radio access network (RAN) market in 2022.
Here we go again
According to one top AT&T executive, we've been here before.
"Private LTE, when it came on the scene, there was a lot of hype and anticipation that it was going to explode," explained Chris Sambar, AT&T's networking chief, during a recent call with the media. "A lot of that did not come to fruition."
Sambar said that in the early days of 4G LTE, network operators, equipment vendors and others hoped to entice businesses and other enterprise customers to purchase their own mobile network infrastructure in order to provide faster and more secure connections to their workforces.
"But at the end of the day, a business looking to put their own private 5G or LTE mobile network into their business, it's an expensive value proposition for a customer," Sambar explained. "They've got to be willing to either completely insource everything and run a mobile network and run a core network, and manage the edges of those networks and how they often interact with the public Internet ... or they need to insource some of it and piece out other parts of it. It's complicated and expensive."
Indeed, AT&T and Nokia in 2016 started selling private wireless 4G LTE services to utility operators around the country. As detailed by Light Reading, they gave up on that business in 2020.
But Sambar said AT&T is still working to develop products and services focusing on the private wireless networking opportunity. And he said the arrival of standalone 5G technology will add new features and functions to the company's offerings, which could spark new sales.
"I don't want to sound bearish, just more realistic," Sambar said. "There's opportunities for private 5G. But our competitor really blew that up as a great use case and a great growth opportunity, and I think they're having to back off a little bit on that now because they're seeing the reality of the market. Which is a little history repeating itself."
Looking to the future
"The issue with Verizon, AT&T and other operators is that they are struggling to carve out their role in the private network value proposition," wrote analyst John Byrne, with IDC, in response to questions from Light Reading. "Theoretically cellular spectrum plus mobile edge computing should enable lots of compelling low-latency, high-speed use cases, but there's a long and complex sales cycle that goes with that."
Byrne added: "And building transformative use cases requires input from multiple departments within the enterprise, not just the CTO's office. So it's not a surprise that the ramp up has been slow for many operators here."
Other observers agree.
"Private 5G will not take off," wrote the analysts at ABI Research in their predictions for 2023. The firm noted that the 3GPP's Release 16 5G specifications – which support some of the low-latency functions attractive to private wireless customers – are only now beginning to trickle down into industrial-grade devices.
"As only the large-scale availability of Release 16-capable chipsets will drive down device costs (and ease the private 5G value proposition), it is expected that 5G will begin to pick up only after the beginning of the following year ," the ABI analysts wrote.
Despite analysts' gloomy predictions, some vendors in the private wireless space are staying optimistic.
"As we move into 2023, there's no denying that both 4G and 5G wireless networking will continue to dominate private networks around the world," wrote Johan Bjorklund, the CEO of private wireless networking startup Betacom, in response to questions from Light Reading. "However, 4G will represent the lion's share of deployments through 2026 because it supports the vast majority of today's industrial IoT [Internet of things] automation use cases."
Bjorklund added: "5G is waiting in the wings as more devices are released and new ultra low-latency use cases are realized with Release 16. Only when we see these developments taking place in full force will we begin to see 5G surpassing 4G. The good news is that this will give enterprises time for 5G technology to mature and for the costs to come down."
Betacom is starting to see private wireless networking gain traction in locations like manufacturing facilities and airports, according to Bjorklund.
Nonetheless, there are other worrying signs.
Dish Network's Stephen Bye explained last year that private wireless networks represent Dish's biggest enterprise opportunity. He said Dish expects that market to grow to $30 billion by 2025 and believes it can capture a 20% share.
But Bye announced earlier this year that he's leaving Dish to take a job at Ziff Davis, which is primarily known for running publications like PCMag, Geek.com and IGN.
- Dish loses exec charged with finding profits in 5G
- How AT&T's utility dreams crashed and burned
- Verizon admits to miscalculations on 5G, edge computing and private networks
— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano