Private Networks Market: Vendors Hold Key to Operators’ Success

Private networks are still an emerging market and many players offering vertical-specific solutions or specialized services are entering the space to grab a piece of the pie. There is a vast selection of vendors offering small-cell, LTE and 5G hardware as well as end-to-end easy-to-deploy solutions.

MNOs also view private networks as a growth opportunity against the backdrop of stagnating revenues from the consumer segment. After all, revenue diversification is need of the hour! Many operators have forged partnerships with vendors either to develop private network solutions or collaborate on network deployment.

Tier-1 operator-vendor partnerships

We studied a selection of Tier-1 operators and their private network go-to-market strategies. These strategies can be broadly categorized as “offer spectrum and private network solutions in partnership with vendors” and “offer only managed services to enterprises with their own spectrum”.

MNO-Equipment Vendor Partnerships

MNO-Equipment Vendor Partnerships_Counterpoint Research
Source: Counterpoint analysis

These partnerships may also differ from one another as some of them may be aimed at co-developing industrial use cases or combining hardware and software with the operator’s assets, while others may be formed to act as global marketing partners. At times, these partnerships evolve as a result of long-term relationships for public networks. Some examples to help understand these dynamics:

  • BT and Ericsson, which had partnered in the past to build the UK and Ireland’s first private 5G network for ports at Belfast Harbour, signed a multi-million-pound deal in May 2022 to provide commercial private 5G for the UK market. The partnership combines the operator’s expertise in building converged fixed and mobile networks with the vendor’s network technology and enterprise solutions.
  • AT&T offers private enterprise network solutions with Nokia and Ericsson using CBRS spectrum in the US. On the other hand, Verizon has partnered with Nokia to market private 5G for international customers, mainly in Europe and Asia-Pacific.
  • Deutsche Telekom and Ericsson have recently partnered for a new 5G standalone (SA) campus network offering. Ericsson provides the required modern 5G SA technology, while the operator looks after planning, deployment, operation, maintenance as well as optimization.

So, what do operators gain?

Many operators and vendors partner to co-develop private network solutions. A pre-packaged or end-to-end solution offering allows operators to reach a wider set of enterprises, especially small and medium businesses. They are better placed to sell a predefined solution as compared to the one with a high degree of complex customization, which at times makes it difficult for the enterprise to understand the business rationale in respect of investments.

Also, partnerships help operators increase their outreach across the ecosystem and gain access to new markets.


Since MNOs lack the specialized knowledge to target a large swathe of vertical markets, they should focus and prioritize their resources on three or four broad verticals. In order to profit from the enterprise sector, Counterpoint Research believes, operators need to invest in and partner with numerous vertical-focused companies. For every single vertical, and even some use cases within those verticals, a distinct set of partners will be required.

The success of operators may well depend on how willing they are to scale down, i.e. extend their reach into smaller organizations, verticals and sub-verticals. For many of these use cases, operators may not offer spectrum but provide network support services. For instance, Vodafone Germany and Lufthansa Technik launched a private 5G network in Hamburg based on standalone technology. The operator does not own the spectrum used to provide the connectivity but takes on the role of technology and service partner to support the deployment and operation of the private network.

It is important to acknowledge that although operators are set to gain by collaborating with various vendors, the same set of vendors may also be viewed as competition, especially in markets with enterprises having direct access to spectrum to set up private networks. We will be looking at this perspective in an upcoming blog. Stay tuned!

Related Reading

Monetizing 5G Will Be The Challenge For Incumbent Vendors in 2022

Nordic duo Ericsson and Nokia both had a good 2021. With strong cash generation from its core networks business, Ericsson had one of the best years in its history. Meanwhile Nokia provided proof that its turnaround is on track, with a solid improvement in margins and a return to profitability – although it needs to increase its RAN market share in 2022. With most of the largest operators having deployed their 5G networks, the challenge for all vendors now is to develop technologies and solutions to enable their CSP customers to monetize them.

Enterprise Revenue Opportunities

As 5G SA deployments gather pace, CSPs are turning to vendors for new enterprise-focused services. Both Ericsson and Nokia are investing heavily in the hope that these service-based businesses will generate new revenues streams to offset the inevitable decline in mobile network infrastructure spending in a few years’ time.

Leveraging their connectivity heritage, both have developed a comprehensive range of mission-critical network options coupled with multi-cloud solutions and a range of digital enablers, including industrial devices.  This should enable their CSP or enterprise customers to introduce a variety of new services ranging from NaaS type offerings, such as network slicing, private networks and IoT connectivity platforms to SaaS-based software services, edge based platforms and solutions. Ericsson even seems to be targeting the autonomous vehicle market with its Ericsson Routes app! In addition, both vendors have developed an extensive network of ecosystem partners – a differentiator and a critical requirement for success.

Exhibit 1 compares revenues at Ericsson’s Emerging Business unit with Nokia’s reported enterprise revenues over the past four years.

Exhibit 1:  Ericsson Emerging Business and Nokia Enterprise revenues

Another revenue opportunity will be network APIs. 5G is touted as a platform that will enable CSPs to offer a range of new services that leverage the key attributes of 5G. However, mobile networks today are essentially closed networks. If 5G is to deliver on its potential, then CSPs must open-up their networks and adopt open interfaces.

Ericsson’s Vonage Acquisition

All vendors see a market opportunity to offer APIs. However, Ericsson may have gained an advantage over rivals with its recent purchase of US-based Vonage, providing it can convince Vonage’s 1+ million developer community to engage in 5G and guarantees that Vonage will be a truly open platform.  Clearly, the hope is that the much-enlarged developer ecosystem will be able to leverage 5G’s inherent network features, such as low-latency, quality-on-demand, network slicing, etc. and that developer/enterprise innovation will drive usage of CSPs networks across various industry verticals resulting an ROI for CSPs.

Despite the inevitable fears of lock-in, Counterpoint Research believes that a vendor-led platform stands a better chance of succeeding than any operator-led platform. With its dominant market share (outside China) and global relationships with CSPs, Ericsson’s API platform could offer an attractive alternative option to the big three public cloud players, which would become more attractive if other vendors could be persuaded to come aboard.

Nokia’s SaaS Launches

5G SA core deployments will also be the catalyst behind the transition towards more software-based revenues for vendors. With more CSPs adopting a cloud-native approach, this will result in an increasing demand for SaaS-based delivery. In fact, the enterprise market offers attractive SaaS revenue opportunities that can be scaled and leveraged to strengthen a vendor’s 5G SA core business.

Widely seen as the most cloud-friendly of the five incumbent vendors, Nokia recently announced a barrage of SaaS offerings covering data trading, analytics, network anomaly detection and iSIM connectivity with further applications covering 5G core, digital operations, monetization and private networks expected to follow in 2022. As SaaS generates recurring revenue streams, this should result in higher margins. However, this will depend on volumes, which will take time to grow. Revenue growth will therefore be evolutionary over several years rather than exponential.

Starting From a Low Base

As Exhibit 1 shows, Ericsson and Nokia’s enterprise revenues varied between $750 million and just over $1.8 billion between 2018 and 2021. Although not intended as a back-to-back comparison – and not strictly accurate as some revenue is split across multiple business units – it does serve to illustrate the scale and largely stagnating growth of enterprise revenues during the period.

Nevertheless, Counterpoint Research believes that both vendors are well-placed to benefit from new enterprise opportunities for a variety of reasons, not least their long-standing, trusted relationships with the majority of the world’s CSPs. However, they are starting from a low base. The challenge over the next few years will be to capitalize on the opportunities – with CSPs and directly with enterprises themselves – in the face of stiff competition from an increasing number of players, both established and new entrants.

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