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Ericsson keeps MNOs involved in industrial networks, but for how long?

One of the rare points of consensus at the recent Mobile World Congress was that industrial cellular networks were on the rise, to support the specialized needs of some enterprise sectors with demanding mobile requirements.

And a rising number of those enterprises are willing to turn to private networks, in shared spectrum or even their own airwaves, if the mobile operators do not make the case to prioritize industrial use cases. The car industry is in the forefront of such activity, as the dispute over the current German spectrum auction has highlighted. The MNOs have been furious at the regulator’s decision to earmark a portion of the 3.5 GHz band for Industrie 4.0 networks – spectrum which a consortium of manufacturers intends to control.

The big vendors are in an awkward position when it comes to private networks. On the one hand, it would be a welcome revenue boost to target non-telecoms verticals. On the other, they risk undermining their primary customers’ position in the market, at a time when so many 5G business cases are revolving around enterprise growth. Nokia – though paying lip service to involving the MNOs in every deal – has a platform that is heavily focused on private networks and could easily bypass the operator.

Ericsson backed away from direct enterprise contracts, however, when it changed its market strategy, and its CEO, two years ago. At the time, it said it would only go after enterprise networks business in partnership with a telco, or via its strategic alliance with Cisco. Now that the Cisco alliance is dead in the water, removing one route into new verticals, it will be interesting to see whether Ericsson alters its stance on direct-to-industry deals, especially if many MNOs fail, as they have done so far in 4G, to make a strong business case to optimize their networks for specialized enterprise services, especially those requiring SLA-based reliability, or deep indoor penetration.

Ericsson’s latest industrial network contract does, indeed, involve a telco, and is located close to home, with Sweden’s Volvo Construction Equipment and MNO Telia. The three companies plan to roll out an industrial 5G network, with the first phase operating with a test license at Volvo CE’s R&D facility in Eskilstuna, 90 miles west of Stockholm. Volvo CE, a subsidiary of the car company, is using the network to test remote-controlled construction machinery such as autonomous load carriers and wheel loaders.

“Automation has several levels, and having 5G is an important technical support to enable us to drive development in this area,” said Melker Jernberg, president of Volvo CE, in a statement.

In another partnership with Telia, Ericsson is supporting the implementation of an autonomous electric transportation (AET) system in Sweden with transport operator Einride.

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