The resurgence of private networks has been one of the big themes of 2019 (see lead article) as enterprises look for ways to leverage 4G and 5G quickly, and in the best way to suit their transformation attempts.
Nokia is the most active of the large equipment vendors in this space, clearly targeting a new set of customers for its networks and services, as a valuable hedge against pressures in its core operator base (though of course, it may also have to deal with conflicts of interest in scenarios where its MNO customers are competing with private operators rather than partnering with them).
In the past week, the Finnish company has announced three new private cellular project, including one in Germany concerned with automated railways – rail is one of the most vociferous sectors in demanding full control of its wireless networks in order to support new and critical processes; while automated vehicles and transport have clearly pressing requirements for dedicated connectivity to ensure availability and quality of service.
However, while enterprises like Germany’s Bosch fly the flag for full control of their mobile networks – taking it to the lengths of lobbying (successfully) for industrial spectrum – other large enterprises are not convinced. Oil giant Shell is one example. Its IT CTO, Johan Krebbers, told this month’s Private Networks in a 5G World conference in London that his mantra remained “public, public, public”.
He said Shell has limited use for 5G in the short to medium term anyway, and even when those use cases emerge, it will be too expensive to build or use private networks. In general, using the public network will always be more cost-effective, he said, except in very specific scenarios “where there is no public infrastructure and you have to do something yourself”. Shell, for instance, has built its own private network covering parts of Nigeria.
“For many things we can get away with 4G,” he said. “We are interested in 5G, but we will not be a driving force behind it.” In future, he can envisage value for 5G in “time-critical” applications like the use of drones for predictive maintenance and site inspection, but this is not an urgent requirement now.
If cost is the main barrier to adopting private cellular, the same goes for WiFi – it is too expensive to build WiFi to the standard required to support oil industry applications, or to use a private managed WLAN service. He told the event: “We have not implemented WiFi at any of our facilities because it is far too expensive. WiFi in refineries is very tedious to do because of all the network and cables and we could never make a case for that.”
Other enterprises are far more positive about private networks, setting the obvious costs off against the ability to ensure their traffic is prioritized and fully guaranteed – essential if mobile connectivity is to be implemented, for the first time, in new or existing mission-critical processes. Full control of the way the networks are secured, optimized and integrated with other corporate systems can deliver far greater value to the enterprise than sharing a generic public network, supporters argue. This can help with broader digitalization programmes, designed to deliver radical cost efficiencies and new customer services.
One of the three enterprises which has announced new partnerships with Nokia in this area is Germany’s national railway operator, Deutsche Bahn. Nokia is to develop a 5G New Radio Standalone (NR SA) network, initially for a 23-kilometer stretch of the S-Bahn Line 21 rail route, running from the Berliner Tor transport hub in Hamburg.
This will allow Deutsche Bahn to stress-test the capabilities of the 5G network to support automated rail operations, with plans to have driverless trains on this piece of railway by 2021 as part of the Digitale S-Bahn Hamburg automation project. To test how the trains could share data along the route, various use cases will be developed and demonstrated, including the automated shunting of empty trains in an area near Bergedorf station, enabled by the communication of train control data over 5G.
This is the kind of application which should one day be supported in a specialized slice within an operator’s main network, but those solutions are still to be fully developed and commercially stabilized, so for now, private networks are seen as a major opportunity for industrial service providers, neutral hosts and vendors. The S-Bahn network will be based on 3GPP 5G standards, but with specialized enhancements to support automated train communications, including at very high speed.
Nokia believes the trials on this piece of track will be valuable contributions to the development of a 5G-based Future Railway Mobile Communication System (FRMCS) standard, the proposed successor to GSM-Railway (GSM-R), which is still in use on many rail systems, but has very limited data capability.
To date, the vendor says it has deployed GSM-R networks for rail operators in 22 countries, covering 109,000 kilometers of track; and has supplied over 110 operators with networking, cybersecurity, IoT and analytics offerings.
Kathrin Buvac, president of Nokia Enterprise and chief strategy officer, said in a statement: “Together, we have worked to research, develop and deliver the world’s first 5G-based communication system for automated rail operation, an important milestone towards the Future Rail Mobile Communication System and a major step in making Industry 4.0 a reality.”
Its private network activities are not all about wireless. In Finland, Nokia is installing a mission-critical IP/MPLS network for Fingrid, the national energy transmission system operator (TSO), which will be using it as the basis for a smart grid upgrade. The network will support all of Fingrid’s legacy grid control applications, across its 14,600 kilometers of transmission lines, and 120 high-voltage substations.
The rapid packet routing capabilities of MPLS should allow for network latencies low enough to support the automation of grid assets, the control of renewables that have variable generation output capacities, and the scheduling of demand response (DR) and other ancillary grid services.
Kari Suominen, head of ICT for Fingrid, said in a statement: “We are committed to realizing the potential of renewable energy generation and are embarking on an ambitious transformation of our national grid to make it smarter and more flexible. Nokia’s IP/MPLS solution plays an important role in the digital transformation of our distributed energy resource management by providing us with a reliable, secure and agile communications system that has the potential to support all of our power management needs.”
In Japan, Nokia recently struck a partnership with Hitachi, to provide private networks to industrial and government organizations in the country. Like Germany, Japan is planning to provide spectrum to companies looking to build their own networks, and with Hitachi, Nokia will be pushing its Digital Automation Cloud platform as the foundation on which these new applications can be built. The initial targets are the public sector, transport, logistics, manufacturing, and energy.
Kaichiro Sakuma, CEO of Hitachi Kokusai Electric, said: “Industrial-grade private wireless networks will be very important for our industry customers, helping them to become more efficient, automating dangerous operations, and improving worker safety. Our collaboration with Nokia is helping to speed the delivery of these innovative capabilities to the Japanese market.”
While vendors like Nokia see these developments as a source of a wider customer base, for operators, private networks can be a threat. Some are being proactive in offering their spectrum and radio expertise to industrial partners, maintaining a key role in the private cellular value chain (Deutsche Telekom is a good example). But others find the business case for supporting many diverse and localized deployments, rather than one scaled-up national network, very challenging, and could be eclipsed by alternative operators armed with their own spectrum and technology, plus their specific vertical industry experience.
Industrial deployments do not need the national or global coverage that an MNO provides, and if they can use unlicensed spectrum or can purchase an exclusive licence, they don’t even need the MNO’s airwaves. This threatens to sideline the MNOs, in a rather disruptive fashion. As communications regulators start making more spectrum available in both manners, the value that an MNO can provide to industrial customers diminishes – leaving the door open for the likes of Nokia.
This scenario would relegate the MNOs to applications that require the wide area functions that are beyond the capabilities of a campus network, and in industrial contexts, those tend to be quite low value. Applications like asset tracking are the most obvious, but those would likely be provided as services to the enterprises’ logistics and supply chain partners. The really valuable applications that take place in these campuses will often be confined within an emerging walled garden, which some MNOs will struggle to enter.