The global mobile core network (MCN) market is on the cusp of a downturn, expected to decline by 10% from 2024 to 2028, as forecasted by the Dell’Oro Group. This forecast marks the fifth consecutive downward revision for the MCN market growth rate, attributing the anticipated reduction to persistent economic challenges and the sluggish adoption of 5G Standalone (5G SA) networks by mobile network operators (MNOs). The intersecting impacts of economic hardships and technology adoption hesitancy create a troubling future outlook for the MCN market. Economic pressures, technology strategies, and market forces coalesce to form a complex backdrop that MNOs must navigate through cautious financial planning and strategic deployment of advanced technologies.
Economic Pressures Shaping the Market Landscape
Economic headwinds are playing a significant role in shaping the future of the MCN market. High inflation rates have persisted globally, putting a strain on market growth expectations. These economic pressures have been a key factor behind the Dell’Oro Group’s successive downward revisions. The prolonged financial instability adds a layer of complexity for MNOs, making it difficult for them to justify substantial investments in new technology infrastructure. As governments and central banks struggle to rein in inflation, the financial outlook remains clouded with uncertainties, leaving little room for optimistic forecasting.
Compounding these issues is the cautious approach MNOs are taking toward significant overhauls required for 5G SA networks. The economic climate is prompting operators to reassess and often delay their rollouts, focusing on optimizing their existing setups instead. This conservative strategy is critical for MNOs aiming to balance immediate financial constraints with long-term technological ambitions. Even as operators attempt to maximize the utility of their current networks, the reduced spending forecast suggests that the transition to 5G SA may be more lethargic than initially anticipated, influenced heavily by the tightly constrained economic environment.
The Lag in 5G Standalone Network Adoption
A major factor contributing to the projected decline in the MCN market is the slow adoption rate of 5G SA networks. By the end of 2023, only around 50 5G SA networks had been commercially deployed globally—a figure stagnant over time. This sluggish pace highlights the hesitancy among operators to fully invest in 5G SA infrastructure, which requires more extensive changes compared to the Non-Standalone (NSA) 5G networks. In essence, the slow roll-out reflects MNOs’ reluctance to embrace the full spectrum of 5G’s transformational potential, thereby delaying broader technological advancements.
The NSA networks offer a middle ground by working on existing 4G LTE infrastructure, thus requiring less capital expenditure and enabling quicker deployment. However, this approach also delays the full realization of 5G capabilities, leading to a more prolonged period of hybrid network operations. The reluctance to shift to 5G SA can be traced back to the uncertain return on investment, further discouraged by ongoing economic challenges. MNOs remain trapped in a cycle of cautious spending, as the high-cost infrastructure needed for comprehensive 5G SA is continuously weighed against uncertain monetary returns.
Struggles Within the Multi-Access Edge Computing Market
The Multi-Access Edge Computing (MEC) market, a vital subset of the MCN sector, is also projected to face a downturn, with its 5-year cumulative revenue forecast slashed by 18%. MEC’s slower adoption rate is particularly concerning as the mobile industry struggles to attract application developers to create innovations that leverage its capabilities. This slow market penetration reflects a gap in the ecosystem needed to drive forward technological advancements. The anticipated value of MEC in enhancing network efficiency and enabling new applications remains underutilized, stoking concerns about its potential impact on the broader MCN market.
New initiatives are underway to mitigate this challenge, including developing open gateway application programmable interfaces (APIs) to streamline the development process for the application community. Yet, meaningful adoption and subsequent revenue generation will take time, underscoring a more protracted timeline for MEC’s growth in the broader MCN market context. The anticipated introduction of the 3GPP’s Release 18 standards aims to provide new capabilities that could potentially accelerate market uptake, albeit these advancements are still a few years away from hitting critical mass. Meanwhile, the MEC segment stands as both a frontier of promise and a sector mired in short-term challenges.
Challenges Facing the Radio Access Network Market
Similarly, the Radio Access Network (RAN) market, crucial for deploying 5G networks, is experiencing its set of challenges. After a robust growth phase from 2017 to 2021, reaching an increase of over 40%, the market stabilized in 2022. However, a sharp decline is projected for 2023, driven primarily by the scaling back of the Indian RAN market and other global economic factors. The challenges facing the RAN sector are indicative of how globally intertwined markets can significantly influence localized outcomes, creating a complex environment requiring strategic agility.
While Dell’Oro forecasts that the overall decline in the global RAN market will become more moderate over the long term, near-term challenges persist. These include fiscal cautions imposed by the uncertain economic environment and the MNOs’ deliberative strategies concerning RAN investments. The evolving dynamics within the market necessitate adaptive strategies to mitigate further declines and stabilize growth trajectories. As risk-averse attitudes prevail, MNOs must strategically deploy resources to avoid exacerbating current market vulnerabilities while setting the stage for future recovery and growth.
Navigating the Complex Market Forces
The global mobile core network (MCN) market is poised for a downturn, with a projected 10% decline from 2024 to 2028, according to the Dell’Oro Group. This forecast marks the fifth consecutive downward revision for the MCN market growth rate. The anticipated reduction is primarily attributed to ongoing economic challenges and the slow adoption of 5G Standalone (5G SA) networks by mobile network operators (MNOs). These intersecting issues of economic difficulties and hesitancy in embracing new 5G technology paint a challenging future for the MCN market. The combination of economic pressures, strategic technology considerations, and evolving market dynamics creates a complex scenario that MNOs need to navigate carefully. To steer through this impending challenge, MNOs are required to employ meticulous financial planning and strategic deployment of advanced technologies. This intricate backdrop necessitates a nuanced approach for MNOs to sustain and grow amidst the predicted market decline.
