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5G private networks emerge, with very ambitious and integrated projects

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Several large manufacturing centers have started in recent months to build and launch private 5G networks, with very ambitious and integrated projects. This trend is expected to increase throughout 2022, to become more general from 2025. Large equipment manufacturers, such as Ericsson, Nokia, NTT and Samsung, as well as Huawei and ZTE in China, are cooperating very actively with manufacturing centers in the installation and development of applications, calling into question the role of telecommunications operators in the sector, which may be relegated to small and medium-sized projects, at least in this incipient phase.

 

Ericsson and Nokia have taken a very active role in the development of the 5G private network market, especially in Europe, leading the design and commercialization of specific solutions for industrial groups, with the collaboration of other partners. NTT DoCoMo has also been very active lately in Europe, trying to increase its presence in this important market, like the Korean Samsung. Those who are more advanced, however, are Huawei and ZTE, although focused on the mammoth Chinese market, with the crucial support of the Government and the three state-controlled mobile operators to promote large 5G projects in various industrial and vertical sectors.

 

From the beginning, when people started talking about private 5G networks three years ago, Nokia was very much in favor of developing equipment and solutions for large companies that wanted to have their own private network and that could manage it almost autonomously, without having to depend on entirely from telecommunications operators. Ericsson, on the other hand, was initially more reluctant to work directly with the end customers of private networks, fearing to upset its natural client, the mobile network operators.

Ericsson and Nokia have focused on developing platforms and applications that facilitate the use of private 5G networks and that greatly improve the competitiveness of their customers

But since the beginning of this year, and in the wake of the $ 1.1 billion purchase of Cradlepoint, an industrial solutions integrator in late 2020, Ericsson has been shifting positions and works directly with end customers who are not necessarily operators. At the time of its acquisition, almost all of Cradlepoint’s customers were from outside the telecommunications sector and it was important for Ericsson to exploit this asset.

 

It was in early June that Ericsson’s new strategy became clear, introducing a private 4G and 5G plug and play solution for the manufacturing, mining and energy sectors, as well as ports, airports and other industrial sectors. The solution, called Ericsson Private 5G, is based on the management of private clouds with mobile networks and aimed at simplifying telecommunications tasks for industries, as well as industrial solutions for mobile telecommunications operators. The new solution promises fast installations and immediate updates and guaranteed high performance.

 

In mid-October, Ericsson CEO Börje Ekholm confirmed the company’s new strategy on private networks for business groups, calling it a great opportunity to offset the relative low investment in 5G for companies that are expected to make the operators in the coming years. By 2025, Ericsson estimates that the enterprise 5G sector will provide a market opportunity of $ 15-25 billion for telecommunications equipment manufacturers. Annual growth will be close to 25% in the next five years, on a total market of the order of 194,000 million dollars in the middle of this decade, according to Ekholm said in the presentation of results for the third quarter. In any case, although the corporate telecommunications sector grows more than the traditional one, Ericsson, like the other large manufacturers of network equipment, does the main business with the operators.

 

Nokia, as has been said, was clear from the beginning to offer private 5G networks to companies, without neglecting the operators, but in recent months the solutions offered by the Finnish company have proliferated. One of the latest is the native industrial cloud solution at the edge, known as MX Industrial Edge, aimed at accelerating business migration to Industry 4.0.

 

Nokia has a number of corporate wireless private network initiatives. The most important announcement this same month of December has been the installation in the main plant of VolksWagen in Wolfsburg (Germany) of the pilot project of a private autonomous 5G network (SA 5G), which operates in the band of 3.7 to 3, 8 GHz that the German Government reserved for industrial uses. The solution uses Nokia’s automated digital cloud (DAC) that enables companies like VolksWagen to “test use cases for reliable, secure smart factories and connectivity in real time,” as its statement states.

Samsung, NTT and Big Tech also want to enter

The industrial 5G initiatives of equipment manufacturers in Europe are not limited to those of Ericsson and Nokia. Also the telecommunications division of Samsung and the Japanese NTT are making important efforts to publicize their industrial 5G solutions. The same is the case with the triumvirate of large American technology companies: Amazon Web Services (AWS), Microsoft Azure and Google Cloud, which want to further penetrate the European market, either directly or through telecommunications operators, and especially in Germany, where all they have their sights fixed. The reservation of 100 MHz in the 3.7-3.8 GHz band for exclusively industrial 5G uses prompts interest.

 

In a survey of 216 technology managers, carried out by the Economist Impact, of The Economist group, and sponsored by NTT, it stands out that 90% of the responses expect private 5G networks to be the preferred network of choice, and that main deployments of private 5G networks will be made in the next two years. The study, entitled “Private 5G here and now”, concludes that 40% of the surveyed German companies plan to deploy private 5G networks, followed by 28% of the British, 26% of the Japanese and 24% of the United States. 51% want to do it within the next six to 24 months to improve the security, reliability and speed of their operations and 30% have already started the deployment process.

 

Among the reasons for deploying private networks, two thirds of the responses assure that the security of the current infrastructures is not enough, 48% that it will improve the control of the company’s data, 43% coverage and speed and 40 % latency. However, these good intentions collide with the recognition that the integration of current existing networks with the private 5G network and their interconnection if necessary is a complex issue and that the lack of sufficiently trained personnel is another cause for concern. As with Ericsson and Nokia, NTT’s recent launch of a 5G private network platform that works as a tailored service may pave the way for companies wanting to try it out.

China is focusing on 5G private network use cases that are highly targeted, high-value, and sustainable, even if not very spectacular to begin with.

Samsung is another of the large equipment manufacturers that relies on 5G for industries. In a recent trip to Paris to meet potential clients, Woojune Kim, executive vice president of networks at Samsung Electronics, assured that “the transition to 5G and the virtualization of mobile networks are opportunities that now present themselves and that we want to take advantage of.” Not only companies are interested, but European operators also want to see the Korean company’s offer to escape the duopoly of Nokia and Ericsson in Europe, the Korean executive came to say.

 

Samsung has recently released a whitepaper, entitled “Transforming Private Networks with Samsung 5G” in which it describes the wide range of 5G solutions that the company has, including access networks, transport, core and management systems for the needs specific to private companies.

 

These solutions, the report says, come in three configurations: as a compact product for small businesses, another standard for midsize businesses, and a scalable and tailored solution for large businesses. They are intended, as is the case with the other providers of private 5G solutions, for manufacturing, energy, logistics and transport companies and promise to improve the productivity, efficiency, flexibility, quality, safety and competitiveness of their processes. In Samsung’s report, the advantages of 4G and 5G networks are compared with their most immediate competitor, the new standard for Wi-Fi 6E wireless networks, as seen in the following graph.

Of course, companies that want to experiment with private 5G networks will have no shortage of suitors, because it is a very incipient market for now, especially with 5G, but that throughout this year is expected to mature and there are already very emerging projects. solid in full operation, to take off between 2023 and 2025 and become general from the second half of this decade.

 

Telecommunications operators are not going to sit idly by and see how large projects get out of hand, so it is more than foreseeable than in 2022 the commercial activity and solutions proposed by the large European mobile telecommunications operators start to be frantic, coinciding with the gradual launching of 5G SA networks in the large industrial centers.

 

This is indicated, for example, by the statement of the end of November from Telefónica, in which it assured that it will commercialize 5G services for companies as of January 1 and that “they will respond to the strong demand for 5G-based projects for the sector. industrial expected to occur in 2022 [in Spain] “.

 

European equipment manufacturers also have no interest in antagonizing their main customers, the mobile operators. Proof of this is that the Polish subsidiary of Orange has been selected to be a partner in the construction of a private 4G and 5G network in the factory and three research and development centers that Nokia has in Bydgoszcz (Poland) to create a network that covers the 13,000-square-meter plant and provide faster, more reliable communications to your 6,000 employees.

 

The factory will also carry out numerous industrial automation processes, including driverless vehicles for the transport of materials, supervision and video surveillance drones and a wide deployment of IoT devices. For Nokia, the system will serve as a test bed, to later incorporate aspects to customers who want it. The network will be private anyway and not connected to Orange’s public network. Orange has also installed a major 5G SA private network in the port of Antwerp for testing of various use cases.

China focuses on large industrial 5G projects

China is undoubtedly the most advanced country in the deployment of private 5G networks. Already in 2020 China Mobile deployed a dozen 5G backbone platforms and last June announced the deployment of 452 private network projects, while rival mobile operator China Telecom introduced 360 projects, according to Chinese media reported.

 

The GSMA operators association has published a 76-page report, jointly with CAICT, the Chinese academy of information and communication technologies, which describes dozens of large 5G projects for verticals, with the objectives to be covered and the challenges and opportunities presented by each of them.

 

The report has been prepared jointly with the three major Chinese operators and Huawei, ZTE, Ericsson and Datang Mobile as equipment manufacturers, in addition to multiple non-referenced partners. It comprises 21 flagship projects, with numerous 5G applications for different verticals, from manufacturing to mining and through transportation, health, content creation or power generation, with various practical cases and economic data.

 

The development of these and other large 5G projects is expected to generate many more profitable and competitive applications. In general terms, however, China has focused in recent months on a few but very large projects, with very precise and defined objectives. In a way, it has abandoned “showcase” projects, which look great as demonstration exercises but provide little value and are not necessarily profitable. By narrowing the focus further and specifying the objectives to be met very well from the outset, China hopes to achieve great objectives with 5G and its companies to be highly competitive at the international level.

 

The same has been done by Huawei with the recent formation of four new business teams, which seeks to maximize resources in the development of the most promising areas. For example, Huawei had rolled out a private 5G network for state-owned aircraft manufacturer Comac, but has abandoned it because there were few potential customers to use it and far apart from each other. Nor will it allocate large resources to the automation of very sophisticated production tasks, because China is more competitive in assembling products on a very large scale but not highly sophisticated. Another sector in which it wants to allocate large resources is mining or coal exploitation, to find methods that are more sustainable with the use of technologies such as 5G.