One of many hype-versus-reality questions we can expect to focus on in 2024 is the private 5G space. As it’s become clear that 5G investment by operators is winding down and that there’s little on the horizon to replace 5G budgets, private 5G has gotten more interesting. The question is whether there’s really a significant opportunity there, whether the move is a pure desert-the-sinking-ship strategy, and whether it’s all do stand tall with Wall Street. Or maybe a bit of both.
The reality that 5G isn’t going to drive additional major investments in infrastructure, beyond possibly the 5G RAN space in some markets, has largely been accepted by everyone. Even as that acceptance finally dawned this year, though, there was an attempt by vendors to shift focus to private 5G. I’ve had an opportunity to get comments on 5G in both forms from 394 enterprises, almost my entire contact base, and their views and how they’ve shifted are interesting.
In early 2023, when I had 214 comments to deal with, roughly two-thirds of enterprises said they believed that 5G services would have “some impact” on their future network plans. As of last week, with 394 comment sources, less than a fifth expressed that belief. And it’s not that 5G impacts had already hit either; only 19 said that their current networks depended in any way on 5G features. Further, all but eight of those said that the source of impact was FWA in some form.
Private 5G comments at the same two points are also interesting. In early 2023, 49 of the enterprises said they were considering private 5G, most of them in the usual verticals of public utilities, government, and transportation. Last week, there were 53 with that view, which is at least some growth but hardly an indication of great potential. Only 7 said they actual did private 5G at year’s end. Add to this the story in Light Reading about NextWave, whose heady expectations of multiple cities where they’d offer private 5G has apparently fallen to one customer in one city.
This sure sounds like one of those classic fade-to-black situations, and I’ve chatted with 5G sales people from operators, operator-focused equipment vendors, and the private 5G side, and many of them are indeed buying crepe armbands. It may be premature, because there’s actually some hope in what all these companies have been telling me.
Let’s start with those companies who saw FWA as a 5G feature in use. At the beginning of 2023 there were no enterprises telling me that FWA was a priority at all, and even at the end of the year I got that view from only 78 enterprises, including the 8 that were using FWA. That’s significant, though, because that’s essentially all the enterprises who saw future 5G impact. It’s even more significant when 276 enterprises said that they used, or would likely be using, wireless backup for Internet connections associated with SD-WAN in remote offices. This backup mission is in fact the only 5G mission that actually exploits a feature—speed—that differentiates 5G. And 313 of the enterprises suggested that they would be “interested” in or were “likely” to use, a wireless technology in that mission, and would expect to pay for it. This is actually the only 5G mission where enterprises have indicated a willingness to pay.
This paying thing is really the issue with 5G. If you consider 5G as a mobile service that’s supporting smartphone use, only 18 enterprises in my group said that they believed they might run stuff on a smartphone that required or even benefited from 5G at the start of the year, and only 21 at year’s end had that view. This is the basic reason why 5G hasn’t been paying off; a feature you don’t think you need isn’t one you’d pay for. The backup mission, on the other hand, is one where enterprises would see a clear advantage to higher speed. Consultants and integrators, carriers and MSPs, are already telling prospective SD-WAN users who are concerned about Internet availability that wireless backup is a reasonable solution, and a 5G FWA strategy would be the cheapest way to provide it.
Private 5G suffers from the same problem of justification for incremental cost that’s plagued public 5G, but it has added challenges. First, why private versus public? Second, why use any form of 5G? Third, why use private versus 5G network slices? Most enterprises believe almost intuitively that they can’t answer any of these questions in a way that justifies 5G. Less than a hundred enterprises even suggested that they might undertake some studies to get a firm answer to those questions.
The big problem here, I believe, is the classic cry-wolf issue. Enterprises believe that 5G has been almost all hype, that sources that predicted transformational impact simply lied. Of the 394 enterprises at year’s end, 228 said that 5G had been overhyped and that published information on it could not be trusted, and 117 said that they had been “lied to” by at least one party. Regarding private 5G, only 88 enterprises indicated that private 5G was in fact “likely worth considering” in some verticals; the rest either dismissed it out of hand or said they had no believable information on it. Cast a very wide net looking for private 5G prospects, and you catch mostly companies who will never make the business case and will now be advocates for the view that the whole private 5G thing is hype.
The saving concept for private 5G is the digital twin or metaverse. We have already built industrial systems around IoT sensors and control elements, and some of these are advancing into actually building a digital-twin model of the industrial process. A model of a complex real-world system is unlikely to be workable absent a means of communicating with mobile pieces of that system, and WiFi isn’t the technology of choice for this mission, and none of the 94 companies who offered comment on this topic believed that public wireless services would be suitable either, for security reasons. The question is whether an unlicensed-spectrum model of private 5G would be viewed differently; I didn’t get any enterprise comments on that.
What we may be seeing here is proof that the biggest problem with realizing revenue from 5G is hype. Hype distorted the value proposition for 5G adoption, promising vague benefits that actual applications at the time were in no position to realize. This led to a number of early disappointments, and that combined with the inevitable progression of the media cycle from mindless promotion to savage diminution. We are now starting to see the outlines of real missions with real business cases, and neither vendors nor buyers have prepared themselves for it. That doesn’t mean it won’t develop, but I’d say (based on the attitudes those enterprises expressed to me) that we can expect only modest progress in 2024 even if vendors and operators get their acts together and there’s realistic press releases and coverage generated.
We should also learn a lesson here, which is that you can’t put the network cart before the business case horse. It didn’t work with 5G, and it’s hurt realization of revenues. It won’t work with AI or 6G or any other new technology. Optimism is nice as a way to approach life, but it’s a risky way to promote a technology that’s going to require major investment from a number of different industry sectors. We could have done 5G right, and we can still get it right, at some loss of time and money. We can also stop other technologies from getting it wrong, and preserve both.
