Is there still a market for private LTE?​

With all the talk of private 5G, is there still a market for private LTE? This article will investigate the existing market for private LTE and what place it has in the private networks market in future.

What is the current state of the private LTE market?

Private LTE networks have been deployed in industry since 2014. These networks were deployed at sites which were usually remote and had a need for secure, reliable, wide-area mobile coverage. Private LTE networks enabled far greater reliability and (outdoor) coverage than WiFi, which could be delivered in areas where public mobile networks did not reach.

Initially this demand was predominantly from heavy industry, such as:

• Mining
• Oil and gas
• (Sea) Ports and airports
• Energy and utilities
• …and some manufacturing

Some estimates put the total number of private mobile networks globally as nearing 3,000 by the end of 2023, with likely 75% of these being private LTE deployments. STL Partners’ recently published private networks forecast estimates that 64% of total revenue from private networks by 2024 will come from LTE-based networks, despite the higher cost of 5G-bases solutions (this is forecast to drop down to 38% by 2030). While private 5G deployments began to emerge in 2019, private LTE remained the dominant deployment until around 2022.

Figure 1: Private networks are often adopted at remote sites which lack reliable public mobile network coverage

Most private LTE deployments have been connectivity-centric, i.e. focusing on extending coverage rather than enabling innovative new use cases. For many enterprises, they have just needed secure, reliable connectivity in mission critical environments. Spectrum availability is a key factor in adoption of private networks, and demand has been exhibited in countries which combine presence of the heavy industries listed above, and spectrum availability. Countries such as Germany, Australia, Canada were the largest early markets for private LTE, with the US, UK and others seeing more and more deployments in the last couple of years.

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What is the difference between private 5G and private LTE?

Private 5G has gathered significant hype since deployments first began, and with the majority of new deployments seemingly being 5G as opposed to LTE – what is it that makes private 5G a superior solution to private LTE?

5G technology has strengths over LTE technology in the following areas:

• Data speed (max LTE speed of 100Mbps vs. max 5G speed of 20Gbps)
• Capacity (100,000 devices per km2 for LTE vs 1,000,000 devices per km2 for 5G)
• Latency (40-50ms for LTE vs <10ms for 5G)

That being said, private LTE reserves several advantages over private 5G. While private 5G can boast enhanced capabilities, these come at a cost: general readiness and greater cost. Device compatibility has also been a major barrier to adoption of private 5G networks, as a newer technology it simply lacks the deep ecosystem of compatible devices and would require enterprises to upgrade devices on their sites to run them on the network. However, the recent developments on 5G RedCap is directly focused on addressing this.

Will there be a market for private LTE in the future?

Given this difference between private LTE and private 5G, it is clear that the transition to the newer technology will not be immediate. For many enterprises, the extra cost will not be justified given the applications that they are currently running. These enterprises will tend to be:

• Isolated, single sites
• Running low bandwidth-intensive applications, likely including push-to-talk applications
• Supporting a low number of devices
• Cost-sensitive

Therefore, for enterprises that have an acute need for secure and reliable connectivity for mission-critical applications, they are likely consider private LTE as a more feasible option.

In STL Partners’ ‘Private networks market forecast’ we estimate that private 4G deployments will still account for 64% of the total revenue in private networks in 2024. Indeed, we do not expect 5G to overtake 4G as the dominant driver of revenues until 2028.

That being said, private 5G is – rightly – touted as being a transformational technology for many enterprises. However, transformation is not always the objective, and many enterprises are still looking for mobile technologies which are reliable and secure and allow them to continue with business-as-usual, without massive investment. Moreover, 5G still remains a relatively nascent technology, and the applications and devices which will run on private 5G networks are not yet there. Until 5G-enabled devices have penetrated further across industries, they will simply represent an extra cost to enterprises looking to adopt. Many of the use cases which need private 5G have also not proliferated beyond some early adopters. Hybrid private networks and slicing models are only possible with 5G and we predict will significantly lower the cost of deployments (explore them in more detail in our article here), but these are also very nascent.

There has been a lot of deserved hype for private 5G, but for many enterprises private LTE remains the more feasible choice, and we expect deployments to continue for the next few years.

Author

Matt Bamforth

Senior Consultant

Matt is a Senior Consultant at STL and has experience in consulting projects across a wide range of topics. These span areas such as 5G, private networks, telco cloud, and edge computing. Matt has previous experience in strategy consulting, as well as in the Fintech sector. He holds a BSc in Economics from University College London.