There is almost a feeling of crisis among mobile operators over private 5G as they fail to be included in the majority of networks deployed by enterprises so far. The situation can only worsen further as other players including the Internet technology giants players get stuck in, as well as IT system providers like IBM and HPE.
At the same time the infrastructure providers, especially Nokia and to an extent Huawei, are sensing blood themselves and cutting deals directly with enterprises, bypassing their operator customers. Operators therefore have to invest and position themselves to be relevant, whether they are providing private network services in licensed or unlicensed spectrum.
The key question for operators is what they can offer enterprises that they cannot obtain internally or elsewhere. This question underpins some recent initiatives, such as the 5G Private Network Solutions Group just launched by the Telecom Infra Project (TIP), aiming to create an open cloud-based architecture for delivery of private networks, featuring what the CI/CD (Continuous Integration Continuous Delivery) platform previously developed by its OpenRAN project group.
The idea is to kick back against the big infrastructure providers and entice enterprises by offering competitive networks comprising components from emerging vendors in many cases, with operators ensuring they work and conform with standards. Indeed, Telefónica as one of TIP’s strongest supporters is conducting laboratory tests of the working group’s system at its TIP Community Lab in Madrid, before moving on to field tests in Malaga.
As Juan Carlos García, SVP of technology innovation and ecosystem at Telefónica and TIP board director, stated, the project would help operators “address the exciting opportunities that 5G is creating in the enterprise segment, both through valuable features for our customers and more efficient network operations”.
This is more of a rallying call than a statement of fact at this point, but highlights the urgency of the mission. TIP is a consortium founded by Facebook, but has become operator-centric with board-level participation from the big European carriers, including BT, Vodafone and Deutsche Telekom as well as Telefónica . Facebook’s involvement of course ensures it is not just a European club and operators around the world, especially in North America and Asia-Pacific, share these concerns.
In the USA, it is rare for private LTE and 5G networks to name the operator is the primary partner, although a notable exception is AT&T at Phillips – it is mostly involved as spectrum provider, while Accenture installed the network. With the CBRS bands being offered to new entrants, this is letting in a growing band of private network specialists, such as Athonet, Sierra Wireless and Connectivity Wireless, while making it harder for MNOs to offer their own spectrum.
The global picture is similar, as reflected in a list of publicly disclosed LTE and 5G private networks compiled by our peers at Analysys Mason. This found that at the end of Q3 2020, operators were the main contractors in only 16 of 101 networks the firm was tracking, as providers of licensed spectrum and in some cases also network planning, network management and hardware support.
Operators had little or no role in the other private LTE/5G networks, of which the majority of 64 were led by one of the big three established vendors, that is Ericsson, Nokia or and Huawei, seemingly disloyal to their traditional customer base. The other 21 private networks in that list were provided by other emerging service providers or smaller vendors.
The immediate challenge for operators lies on two fronts. First, they must position themselves as experts in private 5G that understand requirements are different from public networks and call for a tailored approach that caters for the differences between verticals and individual enterprises.
The second front lies in allocation of spectrum, with operators around the world lobbying to keep it within licensed bounds. It is allocation of unlicensed spectrum, or licensed spectrum to emerging players that are not traditional operators, that is helping shut MNOs out of private networks. The latter is happening particularly in Japan and Germany, with Fujitsu’s 5G smart factory for example using spectrum in the 28.2–28.3 GHz band it was awarded by the government.
In Germany, regulator BNetzA set aside 100 MHz of spectrum in the 3.7 GHz-3.8 GHz band for private 5G, with takers including Bosch, BMW, BASF, Lufthansa, Siemens and Volkswagen. Bosch has been a particular thorn in the side for operators, having embarked on an expansive strategy for private 5G from 2014 and inspired counterparts and customers in Germany to plough a similar furrow. It established a private 5G network with Nokia at its factory in Stuttgart-Feuerbach and said it would gradually deploy 5G without operators in all 250 of its factories around the world.
This raises the question of how operators can seize a significant stake of private 5G even when they do not provide the spectrum. Vodafone has shown this can be done in its partnership with Lufthansa Technik, part of the German Lufthansa airline group, deploying a private 5G network at the latter’s Hamburg base. Yet the 3.7 GHz-3.8 GHz spectrum used by the network is owned by Lufthansa not Vodafone.
This positioning as an expert in vertical 5G, rather than simply provider of spectrum, has paid some dividends elsewhere for Vodafone, partnering with Ford Motor Company in the UK over 5G private network at the carmaker’s new electric vehicle battery plant in Essex. The two are also leading a UK consortium evaluating how 5G mobile private networks can improve the processes for electric vehicles more widely. They have deployed private 5G at welding research specialists TWI in Cambridge, focusing on improvements to the welding process of electric battery manufacture.
Currently Western Europe, North America and China are at the head of private 5G networking deployment, but with fast growing interest in India for its manufacturing sector. China is an interesting case because there the three big state-owned operators, China Telecom, China Mobile and China Unicom, have experienced an unaccustomed challenge to their hegemony in the country’s cellular field by industrial giants. There are heated battles behind the scenes, as is covered in the latest RAN Research report and forecast.
The outcome is as yet uncertain, but it is clear that the desire for self-determination in 5G is not confined in China to manufacturers and engineering giants but is shared even by smaller enterprises, even in the public sector. This even exposes delicate faultlines in the country’s counterpoint between centralized control orchestrated by the communist party and its vast industrialized private sector. China is one country and two systems in multiple senses.