In recent years, the concept of private networks has become popular among industry stakeholders. Such networks were first deployed for 4G technology, but have gained traction only with the advent of 5G and the new applications enabled by the technology. 5G private networks are becoming increasingly popular in countries such as Germany and Japan, where regulators are offering enterprises the opportunity to purchase their own 5G spectrum and deploy their own mobile networks. As the global 5G ecosystem gains maturity and more telecom regulators start offering spectrum for building private networks, there will be a surge of robust, customised and secure next-generation connectivity services.

A look at the key factors driving the adoption of private networks and the benefits of these networks…

Growth drivers

For years, if an organisation wanted to deploy a private wireless network at a factory, office, transit hub, or any other facility, its options were limited to Wi-Fi or proprietary network technologies such as long range or Sigfox. While private networks powered by these technologies were adequate for connecting laptops to the internet and for other limited industrial internet of things (IIoT) use cases, their coverage and security limitations, incompatibility with public cellular networks and high ongoing management costs made it difficult for enterprises to use them for many IIoT applications.

In this scenario, 4G and 5G private networks have emerged as a solution for enabling robust connectivity for enterprises, industries and service providers. There are several factors responsible for driving their uptake across the world. First, the global shift towards freeing up of spectrum is ushering in a new wave of private network use cases. For instance, in the US, the Citizens Broadband Radio Service, a wireless spectrum band, has been made available by the Federal Communications Commission for private LTE networks. In Europe, spectrum blocks are being made available across different countries including the UK, Germany, the Netherlands, France and Sweden. In Asia, spectrum auctions and allocations are being conducted in countries such as Japan and Taiwan.

The transition from 4G to 5G and the increasing Industry 4.0 use cases in manufacturing and factory automation, healthcare, retail, hospitality, etc. have increased the adoption of private networks. Moreover, enterprises today need networks to provide connectivity services for both

people and assets as digital transformation of enterprises and industries has become an integral part of any business environment. Another major driving factor for the increased use of private networks is the need for enhanced security. Many industrial users want data to remain on premises. They also want higher reliability and availability than they can get with public networks.

Advantages of private 5G networks

Earlier, private cellular networks were driven by 4G, but the move towards fifth-generation technology has ushered in a new era in this space. Organisations across industry verticals seem to have a positive outlook towards deploying private 5G networks owing to their several benefits.

For instance, private 5G networks offer robust security offerings and hence are attractive to companies with very high security requirements such as power plants. Further, private 5G networks are highly customisable and can be built as per exact company specifications as opposed to telco offerings. Data from these networks can be managed and analysed internally.

There are several other key benefits of private and dedicated 5G networks as well:

  • They offer flexibility of device movement and deployment efficiency.
  • Not all environments are suitable for wired connectivity such as Wi-Fi. In this scenario, mobile private and dedicated networks can deliver the required coverage and capacity with high quality and reliability.
  • The advanced range of features available with 5G network solutions can help meet strict security, privacy and data isolation requirements.
  • Through private 5G networks, enterprises can determine how to deploy mobile networks for their specific requirements like capacity, coverage and data privacy/security.
  • The highly predictable transmission delay and error rate for 5G allows reliable software-based compensation, which is important for industrial and autonomous applications. In contrast, in Wi-Fi networks, the contention between devices is often an issue.
  • Private networks deliver the required bandwidth at scale to meet the needs of enterprises without necessarily being dependent on the wider roll-out plans of the public mobile network operator.

Adoption and deployment trends

The demand for private networks is on the rise across industries, especially among larger enterprises. The manufacturing sector is among the front runners in private network deployment. With private networks, a factory can be built without wires and cables, which is a costly investment. While wired networks provide network bandwidth, they also hamper mobility within the factory and the reconfiguration of robots and assembly lines as product lines evolve. Industries like mines, utilities, and oil and gas, which require dedicated and continuous communications, also tend to opt for private networks. In addition, traditional enterprises in fields such as education, government, healthcare and retail might be attracted to private networks as privacy is an important criterion for them. As more regulators offer spectrum for private networks and the 5G ecosystem matures, deployment costs will fall, making private 5G networks an attractive and viable option for smaller organisations as well.

In terms of deployment, fully private 4G and 5G networks require a higher initial capital investment than Wi-Fi and other networks. Thus, organisations deploying these networks are usually ones that need to provide connectivity to a large number of users and devices or need to cover a large geographic area for IIoT applications. These include mobile network operators (MNOs), which are considering the deployment of private networks to supplement their existing wireless services in areas where there is high demand or where they have access to a limited licensed spectrum. For instance, private networks enable MNOs to provide additional services to customers outside of the licensed spectrum that they already have. Further, some MNOs set up and manage private 4G and 5G networks on behalf of organisations that want a private cellular network, but do not want to own or operate the private cellular network infrastructure themselves.

Another group deploying private networks is neutral hosts, which help set up a private cellular network in an airport, office building, hotel, or stadium. In this scenario, the owner of the facility pays the neutral host provider for improved connectivity at the facility. Further, private enterprises like manufacturing companies, mining companies and utilities have also started installing and operating private networks, to provide connectivity to their factories, mines and utility service areas. These enterprises utilise wireless spectrum, which is either purchased from the government or provided to them by an MNO or third-party spectrum provider.

The way forward

Private networks seem to be the next big thing in the global telecom space, especially with the advent of 5G. The ongoing Covid-19 pandemic and the resultant demand for higher capacity and high-bandwidth data applications have put an increased pressure on Wi-Fi hotspots. Therefore, there is a need to incorporate private 5G networks in the operations of private organisations, manufacturers and other potential users globally.

Recently, a number of global operators have entered into partnerships to pursue opportunities in the private network space. However, monetising private 5G networks across verticals will require the right mix of partners that can create value. These partners may include cloud providers and system integrators. With them, operators can explore the possibility of co-creating solutions to tap the growing market opportunity in the private network space.