• 5G
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Emerging In-Building 5G Private Network Businesses

Jul 31, 2023

Guidehouse Insights

5G is a public network technology commonly used by mobile carriers globally. This technology can also be installed within commercial buildings to operate as a private network for voice and data services with low latency, high reliability communications. Installing wide-area technologies in commercial spaces has enjoyed very limited adoption up till now. However, several recent developments may change that dynamic and make 5G a popular solution for private networks.

Frequency Allocations and Pilot Tests Spur Growth

Recently, interest in the 5G private network business has been growing because some countries have allocated 5G frequencies for private networks, and technologies have been improving due to pilots. There are three approaches to using frequencies for a private 5G system: licensed, unlicensed, and shared spectrum. The allocation approach for each spectrum type varies by region, but such frequencies are made available across North America, Europe, and Asia Pacific.

Germany is one of the leading countries for licensing 5G local networks, as 5G plays a key role in its Industry 4.0 strategy, which aims to develop innovative uses of digital technologies. The country opened 100 MHz in the 3.7-3.8 GHz band for 5G regional spectrum licensing in 2019.

In the same year, UK telecom regulator Ofcom announced the availability of 400 MHz in the mid-band spectrum from 3.8-4.2 GHz for enterprise users. The success of Ofcom’s Shared Access License framework, which opened four bands for public use, kicked off a recent 6-week consultation to consider opening more of the spectrum to shared and private use.

In South Korea, the pilot demonstration of the 5G Mobile Communications Convergence Project is underway, under the supervision of the Ministry of Science and ICT. The $37-million project, which comprises three public and private sector demonstrations, aims to “discover and spread the use of 5G convergence services by tapping into private 5G networks.”

A New Market Is Emerging

Customizable private networks, depending on the company’s network infrastructure, are expected to enable business innovations in large-scale data management, security, and other applications. As a recent Guidehouse Insights report shows, utilities’ use of private wireless networks is beginning to gain traction worldwide. Private 5G offers opportunities as an emerging market; Swedish telecom equipment manufacturer Ericsson estimates that private 5G networks cover only 10%-15% of building floor space, even though 80% of mobile data comes from indoor use.

Examples of market entry strategies for emerging private network businesses include the following:

  • Expanding existing business: Ericsson is strengthening its private wireless network business as a telecom solutions provider.
  • Pursuing collaborations between solutions providers and existing telecom players: Future Technologies, a US-based firm providing private network solutions, and Finnish global telecom network company Nokia have announced collaboration on private 5G projects in the US federal market.
  • Fostering new business: South Korean electronics manufacturer LG Electronics is developing private 5G network equipment, pursuing new revenue streams after withdrawing from the smartphone business. LG’s first 5G private network is expected to be installed in a Tennessee factory in the US, with the goal of increasing the factory’s automation rate to over 70%.

Challenges also exist in this emerging market. For example, private network solutions can be highly customized, complex, and expensive to install, which can be daunting for small and midsize enterprises. How to wisely incorporate these opportunities and challenges into business strategies can determine the success of a new entrant’s business in the private network market, including 5G, LTE, and maybe 6G in the future.