Would you be willing to pay $5 to conduct your next video call over a 5G link if you were assured that you’d experience no glitches or interruptions? Many people would say yes. Enterprises are the prime targets, because they have clear reasons to pay a premium price for wireless connections.
A new forecast for network slicing shows tremendous growth over the next five years as these premium use cases percolate through the market. A few operators have already started (Deutsche Telekom, Far Eastone, Swisscom and others). T-Mobile is showing some great demos but has not launched a true commercial service yet.
Actually, I’m encouraged that T-Mobile USA will be able to launch commercial network slicing soon. Last week’s election cleared the dark cloud of net neutrality off the table, at least for the next four years, so we expect the American operators to start moving forward with offerings that drive up revenue. T-Mobile is in position now. The other American operators still need to develop their standalone core networks to full nationwide coverage.
Wide range of use cases
Network slicing is just one form that this kind of private cellular service will take. Dozens of system integrators are now developing managed service offerings, with private LTE or private 5G networks that are dedicated for enterprises. A wide range of business sectors are moving into private cellular: from education and energy to manufacturing and retail.
In some cases, the managed service will involve installing and maintaining a small on-premises mobile network. In other cases, the private cellular network can be fairly widespread, with campus level coverage or coverage of multiple branch offices.
The fragmentation of this market (many vertical sectors, different sizes of customers, different computing and radio requirements) means that no single company or business model will sweep the whole market. There’s room for new entrants to thrive here. It’s encouraging that, despite the gloom of the “Winter of 5G,” we see such strong growth for private cellular equipment.
It's not Wi-Fi. In other words, enterprises are learning that it’s not simple to buy some radio units and set up a network. The business model is starting to align with the model of high-end Wi-Fi systems, with sharp system integrators leading the way and morphing into managed service providers.
In the end, network slicing is going to be a significant portion of the private cellular market (my estimate is about 40% of managed services in 2030), and it will be focused on business areas where the operators have advantages. Broadcast television is one of the early winners, with guaranteed uplink bandwidth anywhere, anytime. Retail (including big chains with thousands of stores) and pop-up events will be a big use case, as well as drones delivering packages.
Basically, any business that is willing to pay for premium data connections and needs a widespread network will gravitate toward the mobile operators and a network slice.
Business areas with localized operations that want to keep their data within their building may opt for a dedicated private network. Both business areas are going to grow strongly, but the strongest growth element in our forecast is in network slicing.
Joe Madden is principal analyst at Mobile Experts, a network of market and technology experts that analyze wireless markets.
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