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The private network market defies the downward trend in the RAN industry.

The private network market defies the downward trend in the RAN industry.

Amid the prevailing concerns about reduced telco capital expenditures and their impact on vendor profits, there is a solitary bright spot.

In the second quarter, the revenues for private cellular networking equipment surged by 60% year-on-year, as reported by Dell’Oro.

While acknowledging that private networking constitutes only a small portion of the broader RAN market, the research firm emphasized that private networking remains a growth area. Despite predictions indicating cumulative spending on LTE/5G small cells for private networking could reach $1 billion by 2027, even including macro cells in private networks, this figure would still pale in comparison to the typically massive annual spending on RAN equipment, which often amounts to tens of billions.

Nevertheless, the likes of Ericsson and Nokia face pressure to explore new avenues for revenue growth as telecommunications companies, especially in the US, curtail their macro RAN capital expenditures. Irrespective of its relative size, the private networking market remains a sector with growth potential.

Dell’Oro anticipates that total revenues from private wireless RAN will achieve a 24% Compound Annual Growth Rate (CAGR) between 2022 and 2027, in contrast to an expected 2% CAGR decline in public RAN revenues during the same period.

Stefan Pongratz, Vice President at Dell’Oro, commented, “After various adjustments, the industry is gradually accepting that private wireless networking is a marathon rather than a sprint. With suppliers and operators aligning their short-term expectations, the industry is better positioned to meet these adjusted growth objectives. The results from the second quarter vividly illustrate the positive trajectory of the private wireless market.”

For any vendors or operators seeking insights into the factors propelling demand for private networking, a newly published report by Spirent could provide valuable insights.

Spirent, a network testing specialist, engaged consultancy STL Partners to survey 200 enterprises across sectors including manufacturing, financial services, transportation, logistics, oil, gas, and mining. The aim was to understand the drivers behind their interest in private cellular networks.

The top two reasons cited were heightened security and network reliability. These stem from data sovereignty and intellectual property sensitivity requirements, as well as the need for a reliable network to support mission-critical applications.

However, Spirent cautioned that private networking is more complex compared to the public counterpart.

“Private networks are emerging as a viable alternative to traditional enterprise networks, offering a wide range of benefits,” noted Marc Cohn, Principal Strategist for private networks at Spirent. “But the disaggregated private networking ecosystem, wide range of domains, technologies, and diversity of user cases result in much greater complexity than the traditional wide area networks (WANs) enterprises have previously relied on.”

If the industry manages to streamline its efforts, Spirent projects that the private networking market could reach a value of $7.7 billion by 2027.