Mobile core network market falls 10% in tough economic climate – Mobile Europe

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Dell’Oro Group describes the sector as having “developed an ominous downward trend for three quarters” – 5G is doing even worse

Dell’Oro Group says the growth of the mobile core network (MCN) sector continued to slow in the first quarter of this year. It dropped 10% compared with the same period in 2023.

The MCN is a transitional stage as part of the move from 4G to 5G with a new type of core network known as 5G Core Service Based Architecture (SBA) which was expected to be widely adopted. It is designed as a universal core – for 2G, 3G and 4G mobile, fixed wireless networks, fixed and Wi-Fi networks, and the IMS Core is expected to migrate into it too. The plan is that ultimately, a single core network will be required.

The 5G Core SBA includes the network slicing function, so operators can manage parallel networks within a single slice such as to support an MVNO or IoT network or connected cars, industrial robots, smart city applications and more.

A key feature of the 5G Core SBA is that it was designed from the ground up with separate control and user planes, allowing user plane compute to be pushed out closer to the edge for lower latency. Another motivation was to avoid incurring backhaul costs, moving data to and from the central core unnecessarily.

The combo of network slicing and edge can meet some of the extreme requirements that factories and enterprise have via, in effect, their own virtual network.

To enable NFV, the 5G Core SBA uses cloud-native network functions that disaggregate the hardware and software, operating in a stateless function with the data separated from the control function, among other things.

However, the pandemic, inflation, geopolitical tensions, high levels of debt and general uncertainty mean that MCN deployments are a lot slower than anticipated. So the arguments for are compelling, operators are not opening their wallets.

Dave Bolan, Research Director at Dell’Oro Group, comments, “The four-quarter rolling average [for MCN] has developed an ominous downward trend for three quarters as economic headwinds tighten their grip on the market, moving into negative territory in year-over-year growth rate in 1Q 2024.

“This suggests that the downward trajectory will last at least one more quarter after the market high in 1Q 2023 falls out of the four-quarter rolling average.

5G worse hit

He continued, “In addition, the 5G MCN market, based on the four-quarter rolling average, has now decelerated for five quarters in a row.

“Inflation has impacted the ability of some Mobile Network Operators (MNOs) to raise capital, and it has also impacted subscribers when it comes to upgrading their phones to 5G. Many MNOs have lowered their CAPEX plans and announced that they have fewer than expected 5G subscribers on their networks which limits MNOs’ growth plans.

“As a result, we are lowering our expectations for 2024 from a positive growth rate to a negative one.”

Industry snapshots

Dell’Oro’s 1Q 2024 Mobile Core Network and Multi-Access Edge Computing Report found:

• As at the end of 1Q 2024, 51 mobile operators have commercially deployed 5G Standalone (SA), enhanced mobile broadband (eMBB) networks and two more began roll-out during the quarter.

• Over the last year, North, Central and Latin America, and Europe, the Middle East and Africa are all “trending into negative territory” in terms of year-on-year rate of revenue growth. Only the Asia Pacific region, including China, was following an upward trend as of 1Q 2024.

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