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New figures from ABI Research point to lucrative new sources of revenue for neutral host providers.
February 2, 2024
The analyst firm said it expects neutral host connectivity revenues to reach $1.3 billion by 2030. It doesn't say what the size of the market is today though, making it difficult to draw any conclusions from the number, other than to say that – taken in isolation – it is a pretty big one.
What is interesting though, is where this $1.3 billion of connectivity revenue is expected to be generated. Traditionally when neutral hosts are talked about, it is usually campuses, office blocks, stadiums and venues, shopping malls and transport hubs.
But there is a growing opportunity in the industrial manufacturing, logistics/warehousing, and energy generation sectors. In fact, ABI reckons more than 65 percent of that $1.3 billion will be derived from these verticals.
"These findings open a range of interesting themes for enterprise connectivity," said Leo Gergs, principal analyst for enterprise connectivity and 5G markets at ABI Research.
"First, it shows the growing importance of neutral hosts and managed service providers to bring connectivity to different enterprise verticals," he said.
Gergs said that demand for neutral host networks is being driven by higher energy prices and constrained budgets. The former is fuelling demand for digitalisation, while the latter is encouraging enterprises to outsource their corporate network infrastructure to a neutral host or managed services provider.
"Our discussions with enterprises from various industries revealed that it is not the traditional neutral host delivery architecture but their legacy and experience as a managed service provider that drives this opportunity," he said.
ABI's research chimes with what others have being saying lately about the neutral host market.
Dell'Oro vice president Stefan Pongratz said in a blog post summarising his thoughts on Mobile World Congress (MWC) Las Vegas in October, that discussions about the neutral host market were no longer just about large public venues.
"The improved economics, simplicity, scalability, and deployment times associated with recently announced neutral host offerings are expected to open up opportunities beyond the traditional DAS footprint," he wrote.
Predictions about the size of the overall neutral host market – above and beyond the connectivity piece that ABI talks about – are hard to come by, so it's not easy to put ABI's forecast into a broader context.
ResearchAndMarkets in November said it expects the market to be worth $8.7 billion by 2028. Similarly to ABI and Dell'Oro, it predicts that growth will be driven by private deployments in the enterprise, industrial and government verticals.
Assuming the market keeps growing beyond 2028, then by 2030 it could be worth considerably more than $8.7 billion. If accurate, it would also mean that the $1.3 billion of connectivity revenue is a relatively small slice of the pie.
From this, it is possible to infer what can usually be inferred from anything telecoms-related – that the bulk of the value will be generated by the services that run on that connectivity, rather than the connectivity itself.
When it comes to cracking that particular nut, neutral hosts will have to compete with the usual array of managed service providers, hyperscalers, systems integrators and so-on.
As nuts go, this one routinely proves to be one of the tougher ones.
Nick is a freelancer who has covered the global telecoms industry for more than 15 years. Areas of expertise include operator strategies; M&As; and emerging technologies, among others. As a freelancer, Nick has contributed news and features for many well-known industry publications. Before that, he wrote daily news and regular features as deputy editor of Total Telecom. He has a first-class honours degree in journalism from the University of Westminster.
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