No RAN market uptick expected until 6G

The remaining growth in 5G globally is not expected to be enough to reverse a declining market for radio access network equipment, which leaves the industry waiting anxiously for 6G for a return to growth.

RAN revenues flattened out last year and are predicted to decline at a CAGR of 1% over the next five years, according to Dell’Oro Group.

It’s all part of a fairly normal cycle. High growth is the norm for a number of years as operators in more advanced markets roll out a new generation of mobile technology; indeed, Dell’Oro reports RAN market growth of 40%-50% between 2017 and 2021. The market then slows as those operators get to the end of the spending cycle.

There is, of course, still plenty of 5G spend to be captured around the world: the analyst firm puts 5G RAN growth at 20%-30% by 2027. However, that figure will not be enough to offset steep declines in investment in LTE. Similarly, areas such as fixed wireless access and enterprise 5G and LTE networks are still growing, but also not quickly enough.

“With 5G-Advanced not expected to trigger a new capex cycle, the question now is no longer whether RAN will grow. The question now is, rather, how much will the RAN market decline before 6G comes along?” said Dell’Oro vice president Stefan Pongratz.

Meanwhile, purveyors of mobile core equipment are also facing tough times. In a separate report published earlier this week Dell’Oro again lowered its forecasts for the market, this time citing a slowdown in customer growth.

It now predicts that the worldwide market for mobile core networks will expand at a CAGR of 1% over the next five years, having previously guided for a 2% CAGR as recently as January.

“We have reduced our forecast for the third consecutive time, primarily caused, this time, by an expected slowdown in subscriber growth,” said Dave Bolan, Research Director at Dell’Oro Group.

Bolan added that the firm has reduced its expectations for the Multi-Access Edge Computing (MEC) market, which it now anticipates will swell at a CAGR of 31%, noting that commercially-viable enterprise applications are taking much longer to come to fruition than it had hoped.

“Mobile Network Operators (MNOs) are concerned about inflation, a possible recession, and political conflicts. They are therefore being restrained in their capital expenditures, another factor weighing in on a more conservative forecast,” said Bolan. “As we continue refining our count of MNOs that have launched 5G Standalone (5G SA) eMMB networks, we note that only 4 MNOs have commercially deployed new 5G SA networks compared to six in the first half of 2022,” he added.

Vodafone became one of those first-half 2023 launches, when it brought 5G Ultra to market in the UK in late June. In its latest Mobility Report, published around the same time, Ericsson noted that while around 240 telcos have launched commercial 5G services, only 35 of them have brought standalone 5G to market.

That should bode well for the mobile core market, and indeed it is faring better than the RAN space, in growth potential terms, at least.

Nonetheless, Dell’Oro predicts that year-on-year growth rates in mobile core network revenues will be flat by 2026 and turn negative the following year.

That’s a bit soon to expect 6G to be picking up the slack, which could mean a tricky few years for the big vendors.

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