The Future of Corporate Telecommunications Through Private 5G
Businesses today require an ever-expanding network of systems, devices, and people to operate successfully, and private 5G networks are becoming a valuable part of that web. A growing number of enterprises, including warehouses, factories, hospitals, and sporting arenas, are actively implementing the networks as they strive to keep up with logistical priorities and digitalization. However, while private 5G presents its share of benefits, hurdles remain in navigating the networks and achieving a timely return on investment. As businesses evaluate the acquisition and large-scale incorporation of private 5G networks, it will be important to assess the value it will bring to their enterprise against the costs and other risks that may emerge when deciding to move forward.
Advantages Over Public 5G
In telecommunications, 5G refers to the fifth-generation technology standard for cellular networks, which U.S. cellular service providers began deploying in 2019. Compared to the previous 4G, which does not always guarantee the same levels of coverage and connectivity due to operating at a more narrow range of frequency bands, 5G networks are built on radio technology that uses high-frequency radio waves to deliver greater speed, lower latency (or lag), higher bandwidth, and more dependable broadband (a measure of high-speed internet access). Public 5G, where the network is usually owned by a mobile network operator responsible for its service and management, comprises most ordinary consumer usage. On the other hand, private 5G is dedicated specifically to the use of a single organization or enterprise, utilized by entities with critical infrastructure or mission critical applications, such as hospitals and military bases. Private 5G can be further divided into two broad categories: independent networks, where the organization or enterprise is responsible for critical operations, and dependent networks, where a mobile network operator is responsible for building and maintaining the network.
Both public and private 5G networks offer similar features, such as faster speeds and lower latency. However, public networks may occasionally prove inefficient in many industrial settings where radio frequency transmissions meet interference or in isolated rural areas where coverage is unavailable. Even in areas with optimal 5G coverage, public networks do not provide the guaranteed security, bandwidth, performance, and direct control that many IT leaders require. By contrast, both independent and dependent private networks offer greater security than a public network as only verified individuals can access them. Independent networks require large capital expenditures and a highly capable IT department to handle the complex process of building and maintaining the network, but the enterprise will have ultimate oversight. Since dependent networks leave the heavy lifting to a mobile service operator, no special IT experience is necessary and capital expenditures are lower, though there are ongoing monthly fees.
Current Use in Industries
After years of service providers deploying public 5G networks across the U.S., the largest mobile network action has shifted to private 5G networks. Consumers increasingly demand connected experiences, which sometimes patchy and insecure public 5G networks have been unable to fulfill. As a result, private 5G networks have appeared in entertainment venues, such as sports events and festivals, as well as schools, hospitals, factories, and construction sites. Notably, the NFL deployed a private wireless solution from Verizon this season to enhance coach-to-coach communications; Super Bowl LVIII this past weekend was the first to make use of the technology. The demand for the superior connectivity private 5G brings has led to a surge of innovation, with the supplier network expanding beyond mobile network operators to include companies such as Amazon, Cisco, and HP, which have become significant players in providing the technology. This development also contains an element of global competition; according to data from China’s Ministry of Industry and Information Technology, the number of private 5G networks deployed in the country increased from 2,300 in late 2021 to over 20,000 in June 2023, leaving the U.S. lagging behind.
The benefits that private 5G networks bring to enterprises across various industries cannot be understated. The technology has made construction projects more lucrative, offering a cheaper and quicker alternative to digging up roads for new cables or addressing historic building preservation regulations. Warehouses and factories are using private 5G to boost efficiency for automation technology in manufacturing and logistics. Hospitals have also benefitted tremendously from private 5G networks, increasingly utilizing them instead of Wi-Fi connections to keep operational efficiency in step with medical technology developments. But the potential does not stop there. As the pace of digitalization picks up across industries ranging from manufacturing, healthcare, and education to consumer goods and beyond, private 5G networks will provide the services necessary to manage greater connectivity requirements.
Making the Decision to Adopt
Current predictions offer optimism on the future of continued private 5G network adoption in the corporate landscape. According to a 2021 report by IT firm Accedian, 76% of manufacturers planned to adopt private 5G by 2024. Market research firm Kaleido Intelligence anticipates most private networks to be 5G by 2027, with 69% of manufacturing private networks utilizing 5G that year. Moreover, Custom Market Insights predicted the global private 5G market size to rise from USD 1.8 billion to USD 41.8 billion between 2022 and 2030 at a compound annual growth rate of 49.7%. For enterprises, private 5G networks will most likely be the gateway to maintaining connectivity with the rapid pace of technological advancements. Yet, with this said, the decision to adopt private 5G will be ultimately based on an individual enterprise’s ability to successfully measure the benefits the technology brings against potential risks that arise to enhance operational efficiency.
Private 5G networks can indeed provide a more cost-efficient option for large enterprises able to build their own networks and scale out the endpoints without incurring the substantial per-device fees associated with public 5G. In doing so, these enterprises have greater control over the quality of service, while security is easier to manage given that the company owns and operates the network. On the other hand, smaller companies that may find it difficult to cover the large up-front capital expenditures that independent private networks require may discover it more convenient to adopt 5G as a service with an external provider who does all the work and simply delivers the service, while absorbing associated overhead costs. Ultimately, firms of all sizes and across all industries will need to reach a decision based on their specific circumstances. Risks lie ahead for late adopters who could find themselves left with inferior communication infrastructure in a future corporate environment dominated by private 5G networks, impacting competitiveness. Yet, early adopters who miscalculate the up-front costs and associated IT expertise could also face the risk of going under before industries further utilize private 5G networks at large. Therefore, as firms continue down the path of digitalization, business leaders must reflect deeply on their internal communication infrastructure and budget capabilities when deciding to adopt private 5G for their enterprise.
This article was authored by William Samir Simpson.
