One of the most interesting aspects of 5G is the way it will drive new approaches to deployment, and a rebirth of private networking. 5G has the capabilities to enable many new services and experiences for enterprise and industrial organizations, including those which require very low latency, high availability or strong security. But in many markets, MNOs find it very difficult to make a strong business case in industrial or IoT sectors, and prefer to focus on their familiar consumer broadband user bases.
That has created damaging misalignment, and lack of trust, between industry and telecoms in many areas. But it is also opening the doors for enterprise-focused service providers to offer mobile services which are optimized specifically for certain vertical markets, either in partnership with the MNOs, or bypassing them.
Rethink forecasts that the rise of specialized enterprise and industrial mobile services will drive rising investment in neutral host networks and private cellular, accelerated by growing availability of shared spectrum and of localized, virtualized RAN and core platforms to reduce the cost of deployment.
Many of the early projects in this area are related to manufacturing and Industrial IoT, often known as Industry 4.0. In last week’s edition of Wireless Watch, for instance, we highlighted a deal between Nokia and China Unicom to deliver a private cellular network, with virtualized edge cloud infrastructure, for BMW’s Chinese joint venture and its factories.
So important is this market becoming that the 3GPP has launched a new study item, within its SA1 (system architecture) group, looking at requirements for automation in vertical industries, and particularly focused on wireless control loops with critical availability, for factories and other industrial environments.
This shows the standards body recognizing the importance of understanding requirements in industrial settings, and ensuring these inform future 5G work, especially when it comes to Releases 16 and 17, which will focus heavily on ultra-low latency and other industrial requirements, rather than the mobile broadband speeds that are at the heart of the first 5G specs in Release 15.
More interesting than MNOs operating private networks, however, is the prospect of some industrial players wanting to run the systems themselves. In the USA, GE says it aims to buy spectrum in next year’s auction of the licensed element of the 3.5 GHz CBRS band, to support specialized IIoT services for its own operations and for external customers.
And in Germany, car giants BMW, Daimler/Mercedes and Volkswagen have told the regulator, the BNA, that they are “interested in operating local 5G networks”. As reported in Handelsblatt Global, “there’s a gold rush atmosphere about it,” according to Jochen Homann, the head of the BNA, who claims many industrial verticals have been enquiring about private spectrum.
In the case of the three carmakers, the main motivation is to ensure that sensitive data is fully secured and controlled within their plants. This will be a key driver of private cellular networks – in many cases, a more important one than ultra-low latency, which only applies to a few use cases in the short to medium term. Enterprises are extremely nervous about ceding control over their data, or their critical processes, and want the same level of management that they have over their internal LANs and WLANs. There is a gulf of trust in many markets, with enterprises assuming that MNOs will always prioritize the needs of their own consumers over the very different network requirements of industrial applications. These are the dynamics which are opening up the market for specialist or neutral host operators, which can deploy and run networks entirely to the enterprise’s requirements.
Nokia and Huawei have been active in developing systems for these potential new operators, while Qualcomm has been talking about its development of 5G New Radio technology for private IIoT networks, looking at “replacing wired industrial Ethernet for reconfigurable factories with our ultra-reliable, ultra-low latency 5G NR link”.
The chip company agrees that private, local networks will often be driven by the need for “stringent privacy and security restrictions”; as well as by the ability to configure the network for low latency and real time operations, without the burden of “interworking with public networks”. It gives the example of robotic motion control in factories as a use case which requires millisecond updating, along with Time Sensitive Networking (TSN), where flexible slots are used for efficient synchronization of machines.
However, spectrum will be a barrier to private 5G unless regulators start to take a more flexible approach. In the USA, the operators have been resisting the FCC’s proposals to offer 3.5 GHz licences in small geographical chunks and for short time periods, to encourage new operators and business models – GE has said it will have to rethink its spectrum plans if it cannot bid for licences which map well to its desired locations, or which become very expensive. Many industrial players want spectrum only in certain areas – to cover a city, harbor, railway or factory complex, for instance – rather than spending huge sums on large regional licences.
Germany has been offering strong indications that it will reserve some 3.5 GHz spectrum, in its 2019 auction, for industrial use – this could be for a new entrant or specifically for an IIoT, neutral host player. The comments by the BNA about the high interest levels are significant, in a country in which manufacturing is so important, and where the Industry 4.0 concept originated.
In other countries, though, there have been few signs that regulators will stop most of the 5G spectrum going to the same MNOs. This can be a big problem for industrial companies. MNOs often find it hard to make a business case for enterprise and IoT applications and prefer to prioritize mobile broadband, but they can be equally reluctant to allow other service providers to use their spectrum. That leaves new entrants with unlicensed or shared spectrum, where that is available. That may be fine in an enclosed environment like a factory, which can be easily protected against interference from other wireless devices, but is very challenging when a use case involves outdoor access or very low latency (5G will not run in unlicensed spectrum until Release 16 or 17).
Qualcomm suggests that some private cellular networks will be able to use MNO spectrum on a lease basis, or that the enterprise might build and run a localized RAN, whole the MNO provides interconnection to the wide area mobile network and provides sensors and services such as device management.
But the Handelsblatt article points out that such arrangements are entirely in the gift of the MNO, in a situation where nobody else has spectrum, and it claims that three major European MNOs have already “spoken out against local, private 5G networks”.
One way forward, though a relatively long term one, will be network slicing, which will enable willing MNOs to create virtual slices, optimized for particular use cases or vertical markets. A recent announcement by Ericsson and Deutsche Telekom, with German lighting manufacturer OSRAM, shows how some operators are taking small steps towards this nirvana.
This will see Deutsche Telekom providing a network split into two virtualized ‘slices’, one public and one private, both running on LTE. This will be deployed, along with local cloud infrastructure, at OSRAM’s Schwabmünchen plant in southern Germany.
The network is being used first to prototype and test robotics systems and autonomous vehicles for the shop floor. These will transport goods and help move to a “more flexible production environment”. Ericsson is providing the campus network infrastructure, with a private LTE network inside the factory to deliver guaranteed levels of coverage, throughput, latency, reliability, security and quality of service, supported by a localized, dedicated core network. There will also be a services layer, performing tasks like IoT device management.
Alex Jinsung Choi, SVP of DT’s research & technology innovation unit, said: “In line with Industry 4.0 requirements, our customers want extremely reliable and high performance network solutions tailored to their specific demands. Working together with our partner Ericsson, we will provide dedicated campus solutions that allow customers such as OSRAM to develop and optimize their production processes.”
Ericsson has been more cautious than Nokia about appearing to undermine its core customers, the telcos, by appealing directly to enterprises. It did announce a major IoT deal with Volvo a couple of years ago, providing the kind of device management and other services that an operator might have hoped to provide. But since then, it has reduced its direct enterprise ambitions and said it will only pursue these markets in partnership with telcos. However, if its telco customers prove lukewarm about the private, industrial network opportunity, Ericsson may have to reconsider targeting enterprises directly, or risk losing a major growth market within the 5G landscape of the early 2020s.