The need for Land Mobile Radio (LMR) modernization, together with industry digitalization, are driving the market.
- Communications service providers have identified governments and industries as addressable market segments.
- The two main drivers for growth in the private networks market are the need for LMR modernization and industry digitalization.
- Cellular technology adoption varies across industry segments, but they have up to 90 percent of network connectivity requirements in common.
- LTE/5G is already the chosen technology for many industry segments.
The continuous investments and improvements in cellular technology on a global scale are making it compelling for governments and industries to explore its use for private networks. In parallel, communications service providers are looking for new revenue streams and have identified governments and industries as addressable market segments.
The two main drivers for growth in the private networks market are:
- The need for modernization of LMR systems. These lack broadband capabilities, offer limited value for money and major deployments are nearing end of life. These conditions are driving investments, especially in public safety, utilities, public venues (e.g. airports, ports) and natural resource segments (oil and gas, mining).
- Industry digitalization (including Industry 4.0 initiatives). This is driven by new use cases that generate strong productivity improvements and/or operational efficiencies, and are the main drivers within logistics/supply and manufacturing segments among others.
In the table below, the industry segments are listed together with key characteristics of each segment. As depicted, the public safety segment¹ is mainly driven by LMR modernization needs. These systems tend to be very large and, for example over the next few years, focused on a handful of nationwide opportunities, with more planned beyond that. For the manufacturing segment, it is the opposite. In these cases, potential deployments tend to be relatively small in terms of the number of radio sites. However, the potential value is expected to be significant over the long term, with the number of deployments driven by Industry 4.0 and digitalization.
Today, the adoption of cellular technology varies across market segments. However, these segments all have similar needs, with up to 90 percent of network connectivity requirements in common. This makes cellular technologies attractive and is a key reason why LTE/5G is already the chosen technology for many industry segments. Others are still evaluating alternatives (fixed, Wi-Fi or LTE/5G).
A key challenge for these deployments is how to access suitable spectrum when using cellular technologies for private networks. There are three main alternatives: via service providers, direct allocation by regulators to industries, or by using shared licensed spectrum with local allocation.² Which option is best will depend on the conditions in each market.
The mobile broadband communication needs of industries and governments, where network connectivity requirements are common throughout, are set to lead to more private network deployments over the coming years. The early adopters in this market, including major public safety and utility organizations, have chosen 3GPP LTE (and by inference 5G), and are now in the process of implementing these solutions globally. Many more industries are expected to follow shortly, all of which will drive the wider market adoption of 3GPP cellular technologies.
1 Public safety is the main segment within the public protection and disaster relief area
2 For example, Citizens Broadband Radio Service (CBRS), 3550MHz to 3700MHz on the 3.5GHz band, will be available with a three-tiered sharing model for wireless carriers and enterprises in the US