Private 5G networks are becoming more popular as more trials and projects are launched. According to Analysys Mason, the number of public projects using 5G increased by 32.5% from Q1 2022 to Q1 2023, with 5G deployments accounting for half of all LTE/5G deployments. It accounted for more than that. Despite this growing popularity, the number of companies able to build and complete private 5G deployments remains small. Continued growth in this sector, which IDC predicts this year to reach $5.2 billion in 2027, will depend on closing the gap beyond providing just the network side.
#1: Building the business case for 5G networks will be about data and applications, not connectivity
According to the GSMA, more than half of all carriers have made enterprise 5G network services available beyond simple connectivity in the past year. This ability to create and run private networks is a first step, but creating a complete business case for these deployments is only the beginning of development.
The most common use cases developed to date target areas such as manufacturing and industry, where it is understood to support connectivity of devices and connectivity in specific locations. The role of private 5G here is to remove the costs and headaches associated with operating a network. However, this is not enough for many companies to switch to using private 5G. This is because there are other technologies available that could produce the same results.
To make the business case for private 5G clearer and emphasize that this is something no other technology can offer, we first need to focus more on the value proposition. Connectivity elements are essential to making these business cases work, but they are not the overall goal. To further develop these opportunities, businesses need help understanding how private 5G allows them to use the data they create more efficiently compared to other approaches. From a network perspective, applications running on private 5G need to be able to take advantage of that network.
#2: Telcos will further expand cloud-native projects for themselves and their customers
Today, most modern applications are built to take advantage of the cloud. Developers can build and reuse components and use a combination of off-the-shelf applications, third-party services, and open source software to assemble the applications their business demands. This assembly can be completed more quickly than building a standalone or monolithic application. Business logic can be separated from the underlying software, which consists of microservice components connected through APIs. These components run inside software containers managed by Kubernetes, an open source container orchestration platform.
From a software perspective, applications rely on interconnections to function. However, each component can be exchanged behind the API. Would you like to implement another service or open source component that does the same job more cheaply? The rest of the application that communicates with the API remains unchanged. Similarly, do you need to scale up your application? Running inside containers makes this easier because you can create more container images to keep up with demand. If demand decreases, those container images may be removed.
But the biggest challenge for many enterprises, and for many carriers, is deploying the right infrastructure to run these cloud-native applications. While the network is active, further consideration should be given to the application and data side design. Telcos need to combine network availability and speed with cloud services that can deliver value at the same pace. Telcos are also running their own technology stacks and want to use the same cloud-native design philosophy for their internal applications, rather than sticking to traditional data center deployments.
At the same time, carriers do not want to be tied to a particular producer for cost and lock-in reasons. Instead, we plan to further enhance Kubernetes by considering a combination of private 5G and cloud-native applications and infrastructure. For application infrastructure such as databases, Kubernetes operators allow you to run these components without being locked into a specific provider or vendor. Telcos want the flexibility to operate the way they want, rather than being overly reliant on a particular technology provider.
#3: Telcos will use more open source technology
In 2024, open source components will enable carriers and service providers to offer private 5G networks at low cost with the services their customers want. This makes it easier for many companies to justify the business case and opens up more market opportunities.
As the field becomes more commoditized, open source approaches will complement private 5G and help provide the valuable opportunities that enterprises are seeking. However, it is the data, software, and cloud-native applications on the network that turn potential opportunities into real-world implementations. Telecommunications companies use open source to build applications and services in-house and create new products for their customers faster than they could using proprietary technology or developing all their own software. You can create one. The telecommunications industry has traditionally shied away from open source, but will need to further develop and use this software to keep up with the offerings of cloud service providers.
