Enterprise 5G: navigating between hype and reality - unlocking monetization potential

The relationship between telcos and their business customers is complex and challenging. While 5G has been under the (over) hype for the last six years, service providers have continuously tried to reach this demanding market segment with more or less success.

Enterprise 5G: Big hype but a limited momentum so far

When 5G launched in 2019, it raised high expectations for innovative use cases and revenue generation. Six years on, the outcomes remain mixed - 5G cannot be labelled a clear success or failure. While it was understood early on that the consumer segment would not drive substantial average revenue per user (ARPU) growth, attention has shifted toward the enterprise market, where 5G can meet the rising demand for superior performance. In this space, 5G has so far demonstrated its potential to generate revenue streams through three key services: Private 5G networks, 5G for mobility (mobile subscriptions), and 5G fixed wireless access under specific conditions.

• On private 5G networks, Omdia expects the market to reach $9 billion worldwide by 2028. Private 5G networks provide strong performances, safety and security for industrial types of environments (factories, mines, warehouses, ports). This is a concrete example of true monetization made with 5G. However, despite impressive growth (+48% compound annual growth rate (CAGR) between 2023 and 2028), the private network market remains tiny, around 0.7% of the total telecom industry revenue.
• The outlook for 5G mobility is stronger, driven largely by enterprise 5G mobile subscriptions. Omdia forecasts $169 billion in global revenue by 2029, with a 76% subscription penetration. These figures must be viewed in context: while 5G enterprise mobile subscriptions may seem highly lucrative, quick monetization is unlikely. Most communications service providers (CSPs) are not offering 5G plans at a premium, and revenue will primarily come from replacing existing 4G subscriptions, resulting in limited additional value.
• 5G fixed wireless access (FWA) is the smaller enterprise 5G segment to be considered as market-ready. 5G FWA has often been overlooked in telco strategies due to heavy investments in fixed infrastructure, particularly fiber, which can offer superior performance and commands premium pricing. Its enterprise potential might be seen as limited by telcos, as most corporate offices rely on fixed connectivity, and large industrial sites prefer private 5G networks.

Despite these monetization limitations, enterprise 5G presents a significant potential which is still untapped today, and enterprises are willing to pay for this.

Unlock new growth: emphasizing FWA and investing in 5G network slicing

Omdia conducted several surveys about enterprise 5G, to know more about enterprises’ usage, drivers of adoption, challenges and willingness to pay for 5G services. The latest version released in December 2024 focuses on 5G FWA and 5G network slicing, two markets that could allow telcos to generate new ways of monetization.

The main driver of 5G FWA adoption among enterprises is cost competitiveness, as all businesses are cost-conscious and open to more affordable alternatives. Competitive performance compared to wired options ranks second, showing that 5G FWA is seen as a viable substitute for traditional wired connectivity. Interestingly, the absence of high-bandwidth fixed access is not the primary reason for adoption; businesses are willing to consider 5G FWA even in regions with existing fiber or cable services. This presents opportunities for CSPs, if they can find the right balance between price and performance while safeguarding their wired connectivity revenues.

Regarding 5G FWA challenges to adoption, the primary barrier is cost, with 43% of enterprises finding FWA plans too expensive, underscoring the importance of competitive pricing. The second challenge is insufficient data allowances, cited by 38% of respondents, especially for data-intensive industries like manufacturing and logistics. CSPs could address this by offering unlimited speed-tier plans. Survey results show that 64% of enterprises prefer pricing based on speed tiers with unlimited data. Finally, speed concerns are less significant, with only 19% of respondents highlighting it as an issue, suggesting FWA is increasingly seen as a viable alternative to wired connectivity.

On the other hand, network slicing is seen as a multi-purpose tool by enterprises. They ranked slices for lower latency, performance/service priority, and higher bandwidth almost similarly. This aligns with CSPs' focus on these features in their network slicing promotions. Currently, most CSP initiatives emphasize slices that ensure performance and prioritize service access. Results also vary widely across industries, as 30% of public safety enterprises prioritize service, while banking & insurance and media & broadcast focus on higher bandwidth. These differences highlight the need for CSPs to customize their 5G network slicing approach to meet the specific needs of each vertical.

When asked about their challenges to adopt 5G network slicing, enterprise primarily highlight the lack of clarity regarding its benefits, with 40% of enterprises choosing this issue. This reflects a significant gap in awareness and understanding. CSPs need to better communicate the tangible value and specific use cases of network slicing to enterprises. Without a clear ROI, many organizations might remain hesitant to adopt the technology. Following this, 37% of enterprises believe that network slicing capabilities are not relevant to their needs. This suggests a disconnect between CSPs’ current offerings and enterprise requirements. CSPs must align slicing solutions with industry-specific challenges and clearly demonstrate their relevance to enterprise operations. Finally, 23% of respondents cited difficulty in finding network-slicing offerings from CSPs as a barrier. This highlights a visibility and availability issue, where CSPs may not be effectively promoting or delivering these solutions to their enterprise customers.

The survey results indicate that enterprises are interested in these two technologies, offering key insights for telcos:

• Telcos must position 5G FWA as a cost-effective alternative to wired connectivity. The primary barriers to adoption are high costs and limited data allowances. CSPs should provide more affordable pricing models and consider speed-tier tariffs to make FWA more appealing, especially for data-intensive industries.

• Telcos also need to clarify the value of network slicing. A previous survey in 2023 showed that 81% of enterprises are willing to pay a premium for access to a specific network slice. However, a lack of clarity about its benefits is a significant adoption barrier. CSPs should better communicate the practical value and use cases of network slicing, starting with simple solutions that address common organizational challenges.

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