5G Core Market

Market Overview

The global 5G core market size was valued at USD 1,664 million in 2022. It is estimated to reach USD 76,001 million by 2031,growing at a CAGR of 52.9% during the forecast period (2023–2031).

A 5G mobile network's heart is the 5G Core (5GC). The core domain is in charge of many mobile networks operations, such as managing connectivity and mobility, authentication and authorization, subscriber data, and policies. 5G Core network services are completely software-based and built for the cloud making deployment faster and more flexible, regardless of the cloud infrastructure. The new 5GC architecture is built on a Service-Based Architecture (SBA), which uses IT network concepts and a cloud-native design approach to apply IT network principles. Each network function (NF) in this new architecture provides one or more services to other NFs via Application Programming Interfaces (API).

Market Dynamics

Market Drivers

Development of Smart Infrastructure

The speed at which 5G is introduced worldwide will decide how soon it becomes the standard technology for smart cities. For smart city projects to work, the infrastructure for communications and how it is used for public safety are critical. The core idea of smart cities is that managing the resources and operations of so many huge cities can only be cost-effective and efficient if they are automated and networked.

Furthermore, 5G introduces a vastly enhanced foundation for delivering scalable and dependable connectivity to the rest of the world. The term "Internet of Things" (IoT) has become a household term. Connected thermostats, security cameras, door locks, and even connected kitchen appliances are examples of IoT devices. In addition, 5G is an enabling technology for IoT, and because smart cities rely on IoT to operate, the two are intimately intertwined. As a result, 5G will be important in allowing data collected by sensors to be relayed in real-time to central monitoring stations, boosting market growth.

Growing Demand for Cloud-Native and Service-Based Architecture

Introducing service-based architecture (SBA) and container-based cloud-native network services in the 5G Core constitutes a substantial technological breakthrough for mobile core networks. Traditional communications service provider (CSP) approaches take years to implement or upgrade. In contrast, the dynamic, flexible, and agile nature of the 5G core network necessitates a cloud-native strategy that is robust, decomposed into microservices, and, to the extent practicable, open-source. 

CSPs can gain web-scale benefits such as "independent and fast deployments, programmability, elasticity, and minimized interdependencies among services" by adopting the cloud-native architecture that runs today's largest cloud service providers and using it as the foundation of their virtualized networks. Further, the new 3GPP standard for 5G Core introduces a service-based architecture targeted for cloud-native deployment. The new 5G core will open up new use cases and opportunities for innovation in areas like ultra-low latency and mission-critical networks that CSPs have hitherto been unable to handle, driving the market's growth.

Market Restraint

Data Security Concerns in 5G Core Network

5G security will be more critical than ever as 5G services are anticipated to be available throughout most of the world's economies in the upcoming years. The security vulnerabilities that 5G poses as major network operators roll out new services internationally have received a lot of attention. The security of telecom networks is a top issue for governments. Although 5G opens up new opportunities for sectors like healthcare, manufacturing, and transportation, the truth is that it is also making the market a more attractive target for cybercriminals since it increases the threat surface and the consequences of any damage done. This is expected to restrain market growth.

Market Opportunities

Rising Demand for 5G Private Networksacross Enterprises, Governments, and Industrial Sectors

The idea of a private 5G network is gaining traction worldwide as regulators give companies more freedom to purchase their own 5G spectrum and set up their mobile networks, which is especially common in Japan and Germany. Eighty-eight private 5G licenses in the 3.7 GHz–3.8 GHz spectrum have already been granted by the German government to many of Germany's top firms. Private 5G networks, which are not linked to the more extensive telecom network, offer much more security than public 5G networks.

In addition, private 5G networks are tempting to companies with highly high-security requirements, such as power plants, as a result. Private 5G networks are also highly configurable, allowing companies to build networks to their requirements rather than relying on telecom solutions, and data may be controlled and analyzed in-house. As leading network providers gear up to deploy their 5G offerings, the benefits of 5G for individuals and businesses have vast potential. Thus, the demand for 5G private networks across enterprises, governments, and industrial sectors creates lucrative opportunities for market growth.

Regional Analysis

Asia-Pacific Dominates the Global Market

By region, the global 5G core market is divided into North America, Europe, Asia-Pacific, South America, and the Middle East and Africa.

Asia-Pacific is the most significant share holder in the global 5G core market and is anticipated to grow at a CAGR of 45.1% during the forecast period. The continuous development in the networking sector and the increase in the need for cloud-native and service-based architecture are promoting the growth of the Asia-Pacific market. Further, ongoing developments by critical vendors such as Nokia, Ericsson, Huawei, NEC, ZTE, and Samsung are anticipated to generate huge market demand in the region. For instance, Nokia announced that its 5G Core network is serving the Asia-Pacific Telecom Co. Ltd's (APT) live 5G NSA (Non-Standalone) and VoLTE service with the use of MOCN (Multi-Operator Core Networks) capability to share 5G Radio Access Network (RAN). This complete cloud-based solution is expected to pave the way toward zero-touch automation capabilities that helps to boost greater scale and reliability.

Europe is estimated to grow at a CAGR of 63.6% over the forecast period. Developing smart infrastructure and the requirement for high-speed, low-latency networks in different areas, such as the automation industry, is expected to boost the market's growth in Europe. In June 2021, Vodafone selected Ericsson's cloud-native dual-mode 5G Core technology to power its core network in Germany and UK. Such development towards the network and growing demand for cloud-native architecture in this region is expected to form enormous opportunities for the market.

In North America, the growing demand for smart infrastructure across the region is the crucial factor influencing the market's growth. The presence of key players, such as Nokia, Ericsson, and Cisco, investing heavily in developing the 5G Core technology is also responsible for the tremendous growth of the 5G Core technology in this region. Higher speeds, a faster pace, and lower latencies are anticipated to be delivered with the aid of hardware, software, and services supplied for US cellular with Nokia's 5G Standalone core. This technological development has helped people in North America achieve high performance and meet the required demands at a lower latency rate.

In South America, technological advancements and growing urbanization are gradually defining the opportunities of the 5G Core market. Furthermore, the region is witnessing increased investments and government initiatives to support technological advancements. For instance, Telefonica is planning to deploy 5G SA core in Brazil, validating Amazon Web Services (AWS) Outposts, and looking forward to increasing automation and driving revenue in the country. Due to the introduction of new network processes, these factors are expected to create opportunities for the market in South America.

The Middle East and Africa is expected to drive the 5G Core market due to increasing technological advancements. The partnership between Ericsson and STC aims to offer innovative services and platforms supporting digital transformation across the areas of Saudi Arabia and the Middle East and Africa. It is expected to form opportunities to expand the 5G Core market. South Africa MTN deploys the products and solutions of Ericsson, including radio access network (RAN), transport and 5G Core network portfolios, and Ericsson Radio System. This digitalization in Africa is anticipated to fuel the 5G Core market demand in future years.

Segmental Analysis

The global market is segmented by component, deployment mode, network functions, and end-user.

By component, the global 5G core market is divided into solutions and services.

The solutions segment is responsible for the largest market share and is anticipated to grow at a CAGR of 50.8% over the forecast period. The solution comprises an integrated firewall and a built-in network data analytics function (NWDAF) to improve customer experience from data-driven networks that learn and improve, as well as a built-in network data analytics function (NWDAF) to raise 5G network security. It also has network exposure features, such as an embedded Application Programming Interfaces (APIs) administration module, allowing service providers to explore new business options by allowing for more network programmability.

Services are essential to the core 5G industry because they focus on improving business operations and exploiting the enterprise's network. They also significantly meet user needs, like testing the network, scheduling and optimizing it, providing service and maintenance, and consulting. The 5G infrastructure providers offer several benefits to the communication providers/MNOs to deploy the 5G infrastructure. These services can be categorized into professional and managed services.

By deployment mode, the global 5G core market is segmented into cloud and on-premises.

The cloud segment is the highest contributor to the market and is expected to grow at a CAGR of 57.3% over the forecast period. The 5G core NFs are placed on a widely dispersed public cloud architecture, allowing for one or more geographic locations within the operator's premises and in other regions. Secure and dependable wireless infrastructure for industrial applications is supported in cloud deployments. The advantages of using the cloud are: Reduces network management complexity and continuous IT maintenance, reduces CAPEX and deployment time, simplifies installations through automated orchestration and setup, and aids traffic control.

The 5G Core (5GC) is deployed on-premises over the private cloud or standalone servers. On cloud-native architecture, containerized 5G core network functions (NFs) are implemented. It is an entirely closed system with no external inputs or outputs, and all data processing and storage is done on-site. High security with local control and no external connection optimizes OPEX, provides a Onebox solution, and ensures seamless operations and maintenance through support for integrated EMS, and PaaS tools are all advantages of an on-premises deployment.

By network functions, the global 5G core market is segmented into AMF (Access and Mobility Management Function), SMF (Session Management Function), UPF (User Plane Function), PCF (Policy Control Function), NEF (Network Exposure Function), NRF (NF Repository Function), UDM (Unified Data Management), AUSF (Authentication Server Function), AF (Application Function), NSSF (Network Slice Selection Function), and others.

The UPF (User Plane Function) segment owns the highest market share and is expected to grow at a CAGR of 58.5% over the forecast period. The 5G core UPF illustrates the growth of the Packet Gateway's data plane function, emerging from Control and User Plane Separation (CUPS) techniques outlined under non-standalone 5G New Radio specifications (PGW). Data forwarding can be installed and scaled independently of packet processing and traffic aggregation, allowing packet processing and traffic aggregation to be delegated to the network edge.

The SMF interacts with the decoupled data plane by generating, modifying, and removing Protocol Data Unit (PDU) sessions and managing session context within the UPF. The SMF also serves as a Dynamic Host Configuration Protocol (DHCP) server and an IP Address Management (IPAM) system, decoupling other control plane functions from the user plane.

By end-user, the global 5G core market is segmented into consumers and enterprises.

The consumer segment is the highest contributor to the market and is expected to grow at a CAGR of 34.6% over the forecast period. Consumer expectations and demand for new services are fast increasing now that 5G networks are operational. 5G has a lot of promise for service providers regarding new client experiences and revenue growth. There are numerous significant opportunities in the following sectors, in addition to high-speed data and broadband, i.e., live sports streaming, enhanced video (4K, 8K, and formats such as 360-degree video), gaming and music (mobile and cloud), consumer IoT services that use augmented and virtual reality (AR/VR), digital advertising and in-car entertainment and connectivity.

The enterprise segment is the most lucrative segment for the 5G technology market because the most substantial value of 5G will not come from connecting people but from its ability to provide seamless connectivity to machines, infrastructures, and things. 5G technology has the full potential to increase efficiency across the industry verticals by offering enhanced speed with low latency. The race is on for service providers to identify the most straightforward path to rolling out and monetizing next-gen technology, especially for their enterprise clients, as healthcare, automotive, manufacturing, entertainment, and a host of other sectors eagerly await the application of next-gen use cases.

Recent Developments

• November 2022- Samsung Electronics announced that it had achieved 10 km (6.2 miles) long-range transmission over 5G mmWave in Australia. This achievement is a big deal because it shows how far this powerful spectrum can reach and how well it can cover many countries with broadband service.
• November 2022- Samsung Electronics stated that it would give NTT DOCOMO a variety of 5G radios to help expand its Open Radio Access Network (Open RAN). Samsung will offer a range of 5G radios that work with Open RAN and cover all of the operator's Time Division Duplex (TDD) spectrum bands.