The ongoing struggles within the mobile core network (MCN) market can be attributed to multiple factors including a slow shift to 5G standalone (SA) architectures, economic challenges, and intense price competition. The MCN market has entered a downturn, as noted by Dell’Oro Group, with projections indicating it will peak around 2025 and subsequently decline through 2029. Despite the significant push towards 5G SA technology, the anticipated growth has been sluggish, with only eight new 5G SA networks expected to launch in 2024, totaling about 61 across 34 countries. This limited adoption reflects broader market pessimism and raises critical questions about the sector’s future.
Several regions, including Europe, the Middle East, and Africa (EMEA), have seen incremental growth. Nonetheless, these gains have not been substantial enough to counterbalance the declining 4G MCN and VoLTE/VoNR markets. While some mobile operators in the EMEA region, such as the UK’s EE, are beginning to leverage 5G SA capabilities for innovative applications like network slicing, these advancements remain relatively isolated. Noteworthy instances include Singtel’s collaboration with Singapore’s Defense and Home Affairs ministries for security applications, and Deutsche Telekom’s introduction of the 5G+ Gaming Tariff. However, these isolated cases do not signify a broad market trend.
Market Dynamics and Economic Challenges
One of the pressing issues faced by the MCN market is the hesitation among mobile operators to make significant investments in 5G SA infrastructure. This reluctance is contributing to an overall market stagnation. According to Dave Bolan of Dell’Oro, the industry needs a more compelling and scalable path to drive the market forward meaningfully. Instead of focusing on 5G SA, investments are being diverted towards other emerging technologies such as 5G-Advanced networks, common APIs, non-terrestrial networks (NTN), and artificial intelligence/machine learning (AI/ML).
Moreover, the influx of capital aimed at AI data centers and AI-supporting semiconductors further detracts from the investment needed in mobile core networks. Although these technologies hold immense potential and are critical for future advancements, the sidelining of 5G SA development poses a risk to the anticipated evolution of mobile networks. It appears that without a significant shift in investment priorities, the full potential of 5G standalone networks may remain unrealized.
Impact on Global Adoption
Despite instances of advanced network capabilities being deployed globally, broader market adoption of 5G SA networks remains limited. This trend underscores a stagnant MCN market further burdened by economic and competitive pressures. For instance, the slow rollout of 5G SA in the EMEA region highlights the significant challenges that need to be addressed to facilitate widespread adoption. The economic pressures exacerbated by the need for extensive infrastructure upgrades and the competitive landscape are major hurdles.
In addition, mobile operators are navigating a complex financial environment, making it difficult to justify high upfront investments in 5G SA technology. The need for a clearer, scalable approach to 5G SA investment is evident. Bolan’s insights suggest that a more strategic, long-term vision is required to invigorate the mobile core sector. Without this strategic shift, the 5G SA market may continue to face stagnation, delaying the innovative potential of mobile networks worldwide.
Conclusion
The mobile core network (MCN) market is grappling with various challenges such as a slow shift to 5G standalone (SA) architectures, economic difficulties, and intense price competition. According to the Dell’Oro Group, the MCN market is facing a downturn, expected to peak around 2025 and then decline through 2029. Despite a significant push towards 5G SA technology, growth has been slow, with only eight new 5G SA networks projected to launch in 2024, bringing the total to about 61 across 34 countries. This slow adoption reflects broader market pessimism and raises important questions about the sector’s future.
While some regions like Europe, the Middle East, and Africa (EMEA) have experienced incremental growth, these gains haven’t been enough to offset the declining 4G MCN and VoLTE/VoNR markets. Some mobile operators in EMEA, such as the UK’s EE, are beginning to use 5G SA capabilities for innovative applications like network slicing. Notable instances include Singtel’s partnership with Singapore’s Defense and Home Affairs ministries for security applications, and Deutsche Telekom’s 5G+ Gaming Tariff. However, these examples do not indicate a broader market trend.
