Lack of 5G SA causes core network market contraction

According to new data from Dell'Oro Group, globally the mobile core network market will decline at a CAGR of 10% over the five years from 2023 to 2028.

The analyst firm has reduced mobile core network forecast a number of times of late, but nonetheless, this new five-year outlook represents a much weaker performance than even it had expected.

"It bears repeating, this is the fifth consecutive time we have reduced the growth rate of the MCN [mobile core network] market as the build-out of 5G SA networks continue to wane compared to 5G non-standalone networks," said Dave Bolan, Research Director at Dell'Oro Group, in a statement.

He explained that this is the first time in the past five forecasts that the analyst firm has predicted a negative CAGR, if that's not too much of a contradiction in terms.

The economy has a significant role to play in the market decline. Dell'Oro points to "severe economic headwinds," highlighting high inflation rates in particular.

There is also the perennial issue of operators not having rolled out standalone 5G networks as quickly as the analyst firm – or indeed most industry watchers – had expected. And that, of course, takes its toll on the overall mobile core market.

"The count of 5G SA networks commercially deployed by MNOs remains the same as it was at the end of 2023, about 50 5G SA networks," Bolan said.

Growth has indeed been slow. In November Dell'Oro noted that there had been just seven 5G SA launches in 2023 to date, down from 17 in 2022 as a whole. However, it was relatively upbeat about the market's prospects back then. It seems to have changed its tune in the past six or so months.

There could be light at the end of the tunnel though. In May the GSA declared 5G SA networks to be "on the rise." It noted that while only 49 operators had deployed or soft-launched 5G SA networks, 124 were investing in the technology. Naturally, as a kit makers' industry body the GSA has a vested interest in painting a rosier picture of the 5G SA market, but if those operators evaluating, planning and piloting 5G SA networks go ahead with commercial launches, the numbers could tick up significantly.

However, that is not the state of play at present. And as such, the vendor community is having to deal with slow spending on core network equipment.

As well as reducing its forecast for the overall MCN market, Dell'Oro also dropped its guidance for the Multi-Access Edge Computing (MEC) sub-segment by 18%.

"In the case of MEC, the adoption rate is slowed much more dramatically than the overall MCN market," Bolan said. He pointed out that there are industry initiatives underway that should help to address the issue, but "these will take time to bring solutions to market and more importantly at scale to have an impact on the overall market growth."

In short, for now at least, the mobile core market is in some trouble. The kit makers will be firmly hoping they can persuade their customers to move to 5G SA...but we have said that before and thus far there has been little movement.