What is the operator opportunity for private mobile networks?
A new report from Heavy Reading looks at the opportunity for private cellular networks from the perspective of both operators and enterprises. Private cellular networks (LTE and 5G) bring mobility, the ability to scale to many connected devices, and support for many services types in the same network. From improving employee productivity to implementing IoT for smart buildings and production lines, the survey shows that enterprises see potential in private mobile networks.
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Factories become more agile when not tied to the physical constraints of cables. LTE and 5G enable mobility for autonomous and remote-controlled operations that companies can depend upon. The hard-wired networks that workers depend upon today are being replaced with cellular networks to support use cases such as real-time automation, monitoring, tracking and connected vehicles. And Land mobile radio (LMR) networks are being modernized with cellular, to enable the ‘collaborative worker’ with video streaming for real-time sharing with teammates or remote experts and augmented reality (AR) to interpret the surrounding environment and equipment.
Industry imperative: Prepare for scale
As the Heavy Reading report identifies, it is early days. Operators either expect strong demand across many vertical markets (33% of operators), specific verticals (25%) or see demand as small and fragmented (34% of operators) (Figure 1). The good news is that more than half the operators surveyed see private mobile networks as a major contributor to enterprise business within five years (Figure 8). This corresponds well to what we at Ericsson are seeing with our customers globally.
For Enterprises, 50% have already deployed or are actively evaluating options. Another large percentage (33%) are interested and in the desk research phase (Figure 2). In addition, while 48% of operators think that they will lead engagements with vendors and SI support, only 22% of enterprises think their deployments will be provided and managed by mobile operators (Figures 13 & 14). On the technology side, 16% of operators think that Wi-Fi 6 will be very competitive, while that number is higher (22%) for enterprises (Figure 20).
The potential value to Enterprises and Operators is recognized. The 4G and 5G environments thrive on scale, being built for global mobility and high performance.
These are signals of something big ahead, but for now the scale factor is missing. And to operators who have been part of building our smartphone world where there are 6.2B mobile broadband subscriptions empowering people to access apps and share from anywhere in the world, scale is what gets attention.
The future demands increasing levels of compute and connectivity to be built into our products, and our production sites. The overwhelming data available to us needs to be retrieved, analyzed, shared, and acted upon. And it needs to be done cost-effectively.
So, what does it take to scale up industrial connectivity? How does cellular become the most relevant choice for the enterprise connectivity environment, which may currently include LMR radio, Fiber, Ethernet LAN and Wi-Fi?
First let us highlight two top use cases for industrial connectivity:
The Collaborative Worker, a natural place for cellular to start
As the survey highlights, apps for employee productivity are the primary reason for enterprise interest. By a good margin, enterprises see mobile smartphone applications for employee productivity as the biggest driver for private mobile networks (Figure 5). This is in part to replace aging LMR with PTT smartphones for workers. This corresponds to the operator view that the most important devices on LTE networks will be tablets and laptops (Figure 18). However, worker augmentation is a broad theme, where workers on-site or in the field are augmented with high bandwidth devices with video sharing capabilities to be able to tap into remote centers of expertise in real-time, consult online databases, and interrogate connected equipment with AR status information overlay. As we interpret this, operators’ have a view that AR/VR/XR devices and high bandwidth video cameras will become much more important on 5G networks.
This matters for the safety of workers in remote or dangerous conditions, and it matters for the productivity, to be able to ‘multi-skill’ workers in action. And clearly, the need for mobility drives the need for cellular networks. Public networks may not be dimensioned for this. Workers may be in remote areas with limited public coverage or may require guaranteed network capacity – imagine engineering crews servicing an aircraft at the airport Gate during turnaround, uploading images and streaming video, this needs dedicated resources that are not shared or competing with the heavy passenger traffic demands.
Automation and remote operations accelerate post-Covid-19
In the survey, the leading use case from the operator perspective is ‘Real-Time Automation’ (Figure 4). Automation has momentum in industries such as mining and ports, where haulage trucks and trains operate autonomously in restricted areas. Ship-to-shore cranes, and underground mine drilling equipment may be remote-controlled, with workers moved out of distant, difficult, or dangerous conditions to more comfortable operations centers. Typically, the investment is motivated because operations are in places which are distant, difficult, or dangerous for workers. Covid-19 has highlighted the exposure of sites dependent on workers working in close proximity to each other. Expect more investments in remote operations centers and supporting technology, which will put additional requirements upon site connectivity to interwork smoothly with wide-area networks.
Ericsson has been engaged with operators and industries around the world to develop real-time automation solutions and put them into practice. For example: Port of Rotterdam, Boliden Aitik mine, Agnico Eagle mining site in Canada and Fraunhofer Institute for Production Technology which is researching how 5G can improve jet engine manufacturing processes. These cases and others showcase the benefits that real-time automation can bring to an industrial operation. See more cases here.
So how does the operator build capability and relevance?:
Real-time automation demands ultra-reliability
While real-time automation is seen as the top use case cluster for operators (Figure 4), it is curious that respondents see the major benefit of private 4G/5G as coverage, indicating that coverage is lacking today. Reliable radio performance and support for applications demanding ultra-reliability, low latency and time-sensitive networking are lower on the list (Figure 22), yet these are typical connectivity profiles for Automation. In our collaborations with industrial customers, we have seen that a lot of attention has been placed on introducing wireless into industrial control systems, which are traditionally connected by fiber or ethernet cables running fieldbus protocols, which need deterministic performance, i.e. minimum guaranteed latency. From a timing perspective, the specific feature sets to support these characteristics in the coming 3GPP release 16.
After real-time automation, the next uses cases for a 4G/5G network are Monitoring & Tracking, and Connected Vehicles. These use cases fit well with cellular networks designed for reliable mobility and handover.
Enhanced video is up, industry spectrum can help meet the capacity needs
Enhanced video is highlighted as a need in several areas. Digitalization needs sensors, and as the cost of HD video cameras comes down, they are increasingly used as sensors. Combined with latency and reliability needs, this is a demanding traffic profile which can be more tailored using a private network on-site setup. And as network traffic increases, cellular enables the ability to prioritize performance for some network traffic with quality of service (QoS) settings.
These new video-centric applications put huge capacity demands on any network, and existing networks may not be able to reliably support many simultaneous video endpoints, particularly as more critical or mission critical operations become reliant upon high performance, high reliability connections. This is where private networks can add value, with on-premise standalone networks or ‘hybrid’ models shared with public network. This is also the case where security or data privacy requirements are high and data should remain on-premise.
In wireless, spectrum is the fundamental driver of network capacity. Some industries see this need for dedicated capacity and apply for local industry spectrum licenses where they are available. For example in Germany the 3700-3800 MHz band for industry, in the U.S. where the CBRS 3.5GHz band offers General Authorized Access shared access option and also in the US where the FCC has recently authorized spectrum in the 900 MH band for utility and other industries. And regulators are also releasing or preparing to release mmWave spectrum to industries. This puts cellular again firmly in the spotlight, because it can support combinations of low-band, mid-band, and high-band in one network to address the very diverse use cases that industries need. This combined scope can’t be matched by technologies like Wi-Fi which operate only in mid-band. And if for example an enterprise has acquired mid-band industrial spectrum, an operator can supplement this with other bands and manage the co-existence between public and private.
There will be many cases where interworking with the public network is a critical capability. For example, the campus networks that Ericsson is building with Deutsche Telecom in Germany combines public, private and hybrid networks for industry campus deployments.
Operators identify that interconnect to the public network is a key asset (Figure 12), and it is certainly true that supply chains are becoming increasingly interconnected, as are the company production facilities. Sites don’t operate in isolation.
Collaboration is key across the ecosystem
The report highlights that enterprises have diverse views on which company is preferred to deploy their private mobile networks, with 27% of enterprises expecting this to be led by a combination of operator, vendor, and integrator partners (Figure 14).
The market is evolving, and many players are expected to contribute. This means that all who want to be part of this opportunity need to work across the ecosystem, perhaps even on a case by case basis for each enterprise opportunity. It’s a new emerging market where operators, system integrators (SIs), industrial specialists and network vendors will all work together collaboratively to meet the needs of the new industrial and enterprise customers. And this makes it essential to choose areas and industries of focus, and to prioritize resource allocation.
The Heavy Reading report reflects what we have observed at Ericsson. Competition from vendors and systems integrators will not seriously reduce the market opportunity for operators. We believe that there will be many routes to market that develop over the next few years. In some cases, operators will lead to the customer, but in others, an ecosystem partner with the customer relationships will bring in operator and vendor partners to meet the customer need. This collaboration between operators, vendors like Ericsson, system integrators and others is likely to characterize the majority of 4G/5G private network deployments.
Opportunities to help industries transform
We are at the early stages of an emerging market for private mobile networks. Industries have new capabilities to transform their operations, increase safety, and deliver new innovative products and solutions. The new use cases drive the need for more reliable, higher performance wireless solutions offered by the new generation of 4G and 5G private mobile networks. Operators, network vendors, and system integrators are creating a new, dynamic ecosystem that is capable of delivering this. Exciting times ahead as this scales up, and Ericsson is all in.
Join Ericsson, Heavy Reading and other industry leaders for the webinar on June 23. Register here.