- China already has about 4,000 private wireless-enabled factories
- But these private wireless networks may not have a great return on investment
- Meanwhile, vendors around the world are starting to see some decent revenues from private wireless
We see reports and headlines in the wireless ecosystem that tout the great strides that China has made with 5G private wireless and enterprise 5G. Fierce Network wanted to know: Why is China leading so much compared to other countries?
In the U.S. and other Western nations, 5G use cases have disappointed, as spelled out in this recent Fierce Network Research report. But China is blasting ahead, using 5G in all kinds of industries such as mining, rail networks, ports and manufacturing.
Analyst Stefan Pongratz, vice president at Dell’Oro Group, said that more than anything else, China is doing the most with 5G because of top-down goals set by the government.
“An example would be in the factories,” said Pongratz. “They want to have 10,000 5G-enabled manufacturing facilities by 2027. And they've already done about 4,000.”
But these types of goals are easier to reach with authoritarian governments that say “jump,” and everyone says “how high?”
Conversely, in democratic countries the governments can encourage things such as 5G private wireless and enterprise 5G, and possibly offer incentives, but the market will do what it wants to do.
And Pongratz pointed out that the return on investment for enterprise 5G in China is not always great. However, enterprises and service providers are required to meet government targets.
In Western nations there’s more of a bottom-up approach, which can take longer. “At the end of the day, there should be a business case for it, and it needs to be justified,” Pongratz said.
Why isn’t there a business case?
Pongratz said, “If you speak to enterprises and ask them why they haven't deployed private wireless, they will say, ‘We have Wi-Fi, and it works fine. We don't know why we should justify the investment in private cellular when Wi-Fi can handle more than 95% of the use cases.’ That's ultimately what it boils down to.”
Service providers vs. vendors
Fierce Network was also curious as to who’s reaping the most private wireless revenues.
A new Dell’Oro Group report says private wireless RAN revenues ended 2024 stronger than expected, growing more than 40% year over year. Dell’Oro ranks the top three private wireless RAN vendors in 2024 as Nokia, Ericsson and Samsung, respectively. Its ranking excludes Chinese vendors.
But a January Gartner report ranked a slew of service providers as the “leaders” in its Magic Quadrant for 4G and 5G Private Mobile Network Services. Meanwhile, it placed some big vendors in the “challengers” quadrant. But Gartner explained that its Magic Quadrant is designed to help enterprises figure out which companies can help them the most.
Gartner analyst Sylvain Fabre said, “The Magic Quadrant is written from the perspective of the enterprise. So, we try to address what they need to make their purchasing decisions.”
He said a lot of enterprises that are interested in private wireless, do in fact, first reach out to their service providers. “They actually know their service providers, so it is one of the natural partners they would think of,” said Fabre. “They don’t necessarily know a lot about telecom vendors. That's not people they normally buy from.”
When asked specifically, who’s getting the most revenue from private wireless installations, Fabre said, “Money-wise, it’s probably the large vendors because their kit is being sold by a lot of people.”
In fact, that’s why Dell’Oro focuses on the large vendors, because their gear is sold directly to customers and also indirectly through service providers, so their revenues are the most indicative of the growth in the overall private wireless market.
Dell’Oro reports that private wireless accounted for 3% to 5% of total RAN revenue in 2024, and that includes China. That may seem like a small amount, but Pongratz considers it significant. He said the revenues have finally “moved above the noise.”
Spectrum differences
Private wireless networks weren’t really a thing in the U.S. until the FCC auctioned off Citizens Broadband Radio Access (CBRS) spectrum in 2020. Some enterprises purchased CBRS licenses, but many others have since begun using the shared CBRS spectrum in its unlicensed bands. CBRS has since ignited the private wireless industry in the U.S.
Pongratz said CBRS has definitely not been “chump change,” and it’s the spectrum most private wireless networks in the U.S. are using. But he also pointed out that millimeter wave spectrum is used in some cases.
Other countries where enterprises use private wireless have different spectrum arrangements. For instance, Fabre said Germany and some other European and Nordic countries have allocated spectrum specifically for industrial usage.
“China does it differently,” said Fabre. “They haven’t actually allocated spectrum. The public 5G availability is good, and there’s quite a lot of industrial networks leveraging the public radio network.”
He said a private network in China might be created from the public network via network slicing. Or an enterprise could use the public network with a proprietary list of devices that are able to access the private network – similar to using a password to gain access to a Wi-Fi network.