Private LTE/5G networks have received increasing attention in recent years as they complement or replace existing technologies and pave the way for more applications and use cases. The number of global deployments is growing rapidly, according to Analysys Mason, which forecasts a compound annual growth rate of 65% between 2021 and 2027.

Additionally, spending (capex and opex) on these networks is expected to reach $7.7 billion, growing at a CAGR of 48% over the same period. While this number may seem high in absolute numbers, it is modest compared to public network infrastructure spending, likely because the requirements associated with private LTE/5G networks remain complex, hindering market growth.

According to Analysys Mason, private network solutions are currently very customized and complex, which limits scale gains. Those that have adopted them are usually large organizations that have the resources to buy and operate them. Additionally, the current cost of private networks is prohibitively high for the average business, not to mention that there is still very little understanding of private cellular networks in the SMB sector.

The Analysys Mason report highlights: "We believe that spending on private networks is likely to grow faster beyond the forecast period, but only if vendors address the challenges of getting solutions into the wider market."

Manufacturing has been an early adopter of private 5G networks. It is estimated that in 2021, more than 50% of the industry's private networks are already using 5G, and by 2027, this proportion will grow to nearly 90%. Analysts at Analysys Mason say companies, especially in the manufacturing space, are deploying 5G to enable better automation by investing in new applications. "They believe 5G will be the technology best suited to meet requirements such as low latency in the future," the report highlights.

However, the adoption of 5G for private networks is not the same globally. The majority (73%) of publicly disclosed deployments in North America use LTE. In fact, AWS's most recent private network product is LTE-based, despite the product name being "Private 5G." Furthermore, according to Analysys Mason, many early use cases using CBRS to share spectrum, such as in education, do not require 5G capabilities. Western Europe and emerging Asia-Pacific (mostly China) are estimated to have higher private 5G adoption rates than North America, and 41% and 46% of private network deployments in these regions, respectively, use 5G.

Detailed LTE/5G private network

Private LTE/5G networks are cellular networks designed for organizations and are typically deployed in a single location, such as a factory or mine with its own edge computing assets. They can also be used for long-distance needs, such as power companies that need to monitor their transmission networks. In addition, there are hybrid deployment models, which are also used in public mobile networks.

Private networks can use four main types of spectrum, three of which are licensed. One is the industrial spectrum used by some countries, such as Germany and Japan, which allocate specific frequency bands for industrial use. Another type is shared spectrum, where there are frequency bands shared by various stakeholders. A third case of licensed spectrum is public spectrum, where mobile network operators allocate parts of their frequency bands for commercial use. Finally, there is unlicensed spectrum, designated by regulators for free, non-exclusive use, subject to regulatory rules.

According to Analysys Mason, organizations are adopting private LTE/5G networks for several benefits:

• Operational efficiency: Digital transformation projects require greater speed and availability.
• Convergence of IT and OT: Convergence of these two domains requires high-bandwidth and low-latency networks to ensure more automation.
• Privacy: Private networks provide increased security for data privacy, ensuring more control and visibility.
• Cable replacement: Private LTE/5G networks may be a more cost-effective alternative to expanding fixed networks.
• Replacing legacy networks: Some current networks are approaching the end of their useful life, and cellular technology is a viable alternative.
• Wi-Fi limitations: Wi-Fi networks have limitations in terms of mobility and reliability.

What challenges do private LTE/5G networks pose?

• Cost: For example, the deployment of private LTE/5G networks can be more expensive than Wi-Fi networks. This solution needs to lower prices to appeal to a wider audience, not just large enterprises.
• Complexity: The deployment and management of private LTE/5G networks is complex.
• Slow pace of change: In many areas, the pace of change is slow. This is the case in factories, which have an estimated lifespan of 20 years, which could limit the rapid adoption of private LTE/5G networks.
• Immature business model: The current model is based on a traditional capex/opex mix. Evolving to an opex or SaaS-based model can help address addressable market growth for private LTE/5G networks in new business areas.
• Market Fragmentation: Demand varies by industry and company size, making life harder for solution providers. Developing scalable solutions remains a challenge.
• Skills: There is still a lack of skills in network design and implementation and system integration.