Private 5G networks remain a hotly contested multibillion-dollar market opportunity that continues to coalesce, but analysts have noted initial market solidification is skewing heavily away from traditional mobile network operators (MNOs) and toward vendors and system integrators (SIs).

MNOs have been talking about private 5G network opportunities since they first started about their 5G deployments. Verizon CEO Hans Vestberg told an analyst conference back in 2018 that private 5G was one of the many 5G network slices the carrier was looking to support with its then-proprietary 5G network deployment.

However, that market approach is still evolving for MNOs.

Sowmyanarayan Sampath, CEO for Verizon’s Consumer Unit, recently told an audience at Deutsche Bank's 32nd Annual Media, Internet and Telecom Conference that the carrier is indeed seeing private network traction boosted by the carrier’s ongoing 5G network updates.

“We used to do one or two deals a month,” Sampath said of the carrier’s private network business. “Now, we are doing significantly more deals a month, some high-profile deals in that space. There's continued growth in wireless in the space.”

However, other operators remain more cautious on the opportunity.

“Are private networks going to be the multibillion-dollar thing, or are they going to be a way to solve problems and take share on other connected devices?” T-Mobile CFO Peter Osvaldik asked attendees at Morgan Stanley’s recent Technology, Media and Telecom Conference. “The answer is probably a little bit of both, but it's still early in this regard and it's still early in terms of connected solutions beyond postpaid phones that are going to solve industry vertical problems.”

Analysts have noted that level of MNO uncertainty is understandable as at this point MNOs have only been a small part of the equation.

Alex Davies, Sr. analyst at Rethink Research, explained during a post-MWC Barcelona 2024 podcast that from conversations he had during the event, a vast majority of current private network deals do not include an MNO.

“The private opportunity, especially in things like industrial, manufacturing, and oil and gas, a lot of that stuff is viewed by the MNOs as an opportunity, but I think that's a very entrenched customer base, which is not going to be super receptive to the likes of Telefonica, Vodafone, knocking on the door,” Davies said. “They've committed to a private network for a reason, and I think the sort of grizzled operations tech guy is not going to be swayed by declarations of the capabilities of a public 5G network.”

That sentiment was echoed by Chris Antlitz, principal analyst for telecom at TBR Insights, who during a post-MWC presentation said that “in many cases, we're not seeing any telco in the value chain, not even for spectrum, depending on the country if there's private spectrum available.”

“From a telco perspective, uptake is relatively slow for private networks,” Antlitz said. “But if you look from a vendor perspective, for example if you look at Nokia, if you look at what they're making in revenue from private networks, they're growing at a double-digit rate. They're growing strongly and there's other vendors as well that are growing at a very strong rate, like a Huawei and even Ericsson to an extent.”

Nokia has indeed been viewed as the leading light in the private network space. CEO Pekka Lundmark recently told investors as part of the vendor’s latest earnings call that private networks have “been consistently delivering double-digit growth.” Nokia said it ended 2023 with more than 710 private wireless customers and they represented more than one-fourth of its overall enterprise sales.

Antlitz noted that this level of success shows market opportunities abound, but MNOs are so far not a necessary part of that opportunity.

“If you look at those players, if you go directly to source, the infrastructure, the source of the application layer, the source of the services provided to implement, manage support those environments, those players are performing much better than how the telcos are and that's an indicator of this disintermediation of the value chain that we see occurring for telcos,” Antlitz said.

“Just to be a little more succinct,” he added, “the vendors, the non-telco providers in the private network value chain, are outperforming where the operators are, and therefore if you look at it from a holistic standpoint, there actually is quite a bit of traction in the private networks market.”

This market split is generally tied to spectrum usage and transmission technology.

MNOs have angled their efforts on licensed spectrum and 5G technology, both of which they have a long history of working with and understanding. They can also package those as a proprietary platform that will allow them to squeeze the most financial opportunity from a deployment.

“I think you’re seeing that pivot with more customers moving away from CBRS [Citizens Broadband Radio Service] into licensed spectrum,” Scott Lawrence, SVP for global solutions at Verizon Business, explained in an interview with SDxCentral. “That’s where I believe we can truly bring a unique, differentiated experience to our customer because we can carry that beyond the borders or their enterprise footprint into the macro network and beyond.”

“And then you start layering capabilities like standalone core and slicing that gives you even more ability to drive unique use cases through edge compute and the slicing capability,” Lawrence said. “CBRS will have certain limitations into really unlocking the true value of what Verizon can bring, and that’s leveraging our licensed spectrum.”

Vendors and SIs have taken a more open approach toward private networks, which includes partnering with operators on licensed spectrum, tapping into the quasi-licensed CBRS spectrum, and being open to using 5G technology along with Wi-Fi and its unlicensed spectrum bands. This approach has meshed well with targeting specific industry verticals that might already have a legacy system in place and IT teams familiar with those technologies. The approach is also beneficial for diverse locations that may challenge traditional MNO deployment models.

“Our observation working with enterprises has been this: Wherever you go for that solution, it needs to be actually simpler and enterprise grade and enterprise friendly,” Masum Mir, SVP and GM for Cisco Networking and its provider mobility business, told SDxCentral in a recent interview.

“You’re taking a very carrier-centric, cellular technology to an enterprise environment,” Mir explained, “but we have to pay attention to removing the friction of enterprise operation. And one of the key areas on that front is coexistence with what they have in Wi-Fi that is so pervasive in an enterprise. That seamless coexistence with their Wi-Fi infrastructure and private cellular is a friction point that we see.”

Pushing past that friction point remains an important task for MNOs if they want a piece of what is expected to be a $9 billion market opportunity by 2028.

“There is still a lot of interest but it's not as hot of a topic I think as last year,” Monica Paolini, founder and president of analyst and consulting firm Senza Fili, noted in her own post-MWC presentation. “I think that’s just because we're going through the process of finally finding a way to get them to work. So, interest, but not as hot as it could be, or I think it should be.”