China? The United States? South Korea? Which country has the strongest 5G private network application development in the world?

As an important driving force for the digital transformation of the industry, 5G technology promotes the integration of information technology and operational technology through the three major application scenarios of eMBB, URLLC and mMTC, and improves industry productivity and operational efficiency. 5G private networks can not only use 5G technology to meet the performance requirements of the industrial field, but also ensure security and control data through self-built networks. Therefore, they have become an important area of ​​concern for all countries. Recently, some countries and regions are taking various measures to accelerate the introduction of 5G private networks, cultivate the 5G private network industry ecosystem, and enhance the competitiveness of industries and services. This article analyzes the development trend of global 5G private networks, summarizes the 5G private network promotion policies and industrial ecosystem development status of major countries, and puts forward thoughts and suggestions on the development of 5G private networks.

Development of 5G private networks

5G private networks are still in the development stage of extensive exploration

Since 2018, the number of private networks using 5G technology has continued to grow. According to GSA data, 181 new 5G private networks will be added in 2022, accounting for 56% of the number of new private networks. Enterprises in many fields such as manufacturing, mining, ports, logistics, healthcare, and utilities have begun to deploy 5G private network applications. Despite the rapid growth in number, it is still in the stage of extensive exploration. Among many cases, test bed and laboratory as a service (Device Testing & Lab as a service) cases account for 11%, providing experimental infrastructure for testing, verifying and accelerating the maturity of 5G private network equipment and technology. Manufacturing is the most active private network application industry, with application cases accounting for 26% (122), of which discrete manufacturing application cases reached 96. Details are shown in Figure 1. From the perspective of terminal equipment, the development of the 5G private network terminal equipment ecosystem is relatively slow, and industrial-grade 5G terminals are still lacking, especially 5G terminal equipment for specific industries, such as AGV, robots, embedded devices, etc.

Figure 1 5G private network application industry distribution (data source: GSA, China Academy of Information and Communications Technology)

5G private network suppliers are becoming more diversified

The construction and operation of 5G private networks require a deep professional technical background. In this case, a small number of capable large-scale industry enterprise users among end users build and operate 5G private networks by themselves, while the vast majority of industry enterprise users adopt a managed mode, with private network providers planning, deploying and operating private networks. In the early stages of the development of 5G private networks, mobile operators dominated the private network market to a certain extent with their network deployment and operation experience, as well as their bargaining power with equipment vendors. Mobile operators in major countries around the world have launched 5G private network solutions for industry users, which are flexibly customized for enterprises of different sizes; the professional capabilities of equipment vendors are trusted by industry enterprises, and their integrated solutions have attracted a large number of users. With the development of technology and the market, the development prospects of 5G private networks have attracted various market players to enter. System integrators, cloud providers, cable TV companies, emerging equipment vendors, etc. have entered the 5G private network market and launched 5G private network solutions and products, providing full-process service support from demand determination, supplier and equipment selection, license application, deployment to operation and maintenance. The number of emerging 5G equipment suppliers is also gradually increasing. There are more than 50 manufacturers providing equipment for 5G private networks worldwide, and the 5G private network ecosystem is gradually taking shape.

Multiple countries and regions have introduced 5G private network spectrum policies

In order to meet the personalized needs of industry users for 5G network technology, construction, management, etc., some countries and regions have formulated spectrum policies related to 5G private networks. So far, 32 countries and regions in the world have issued or planned to issue local 5G spectrum policies (17 of which have opened applications for licenses). Under the industry's call and policy guidance, Europe is the region with the most countries issuing dedicated spectrum policies, accounting for 63%. Germany and the United Kingdom took the lead in opening up licenses for dedicated frequencies in 2019, while France allocated mid-frequency and high-frequency band private network trial spectrum to demanding companies. Japan and South Korea in the Asia-Pacific region also quickly followed suit. In the Americas, the shared spectrum of the 3.5GHz CBRS band in the United States was previously used for 4G private networks and was expanded to 5G in 2020; Brazil approved the technical requirements for low-power ground stations in the 3.7-3.8GHz private network band in mid-2022 and issued the first 5G private network license in November. In terms of specific frequency bands, 56.3% of countries and regions adopt a combination of mid-frequency bands (FR1, <6GHz) and high-frequency bands (FR2, millimeter waves) to provide private network spectrum. Overall, the mid-frequency band spectrum is slightly more than the high-frequency band spectrum.

Industries in various countries are actively applying for 5G private network frequency licenses, with a clear diversity of entities involved, including telecom operators and other industry enterprises, IT service providers/integrators, research institutes, universities, government agencies, etc. They fully leverage their respective advantages in the CT, IT, and OT fields to explore private network service models and application innovations.

Progress of 5G private networks in major countries

01 Germany

1. 5G private network promotion policy

With the development of German Industry 4.0, 5G, as a key network technology of the industrial Internet, has attracted the attention of many large industrial enterprises. In 2019, German automotive, mechanical equipment manufacturing and electrical equipment industry associations asked the German competent authority, the Federal Network Administration (BNetzA), to plan 5G private network spectrum for the construction of enterprise private networks. BNetzA believes that with the development of 5G technology, some new business models will emerge in the future, triggering the demand for self-built wireless networks in local areas. Based on the above needs, BNetzA reserved local 5G network spectrum before auctioning 5G frequencies, and opened applications for 5G private network licenses in the mid-band (3.7-3.8GHz) and millimeter wave bands in stages. As of March 2023, German regulators have issued 304 mid-band spectrum licenses and 17 high-band spectrum licenses. Among the licensees, most are IT service/consulting/system integrators, scientific research institutes, and industrial enterprises. Automobile manufacturers in industrial enterprises are particularly active, and large German automakers have applied for local 5G licenses. From September 2022 to the present, the number of IT system integrators among new applicants for private network spectrum has increased significantly, accounting for nearly 30%.

Multiple measures have been taken to promote the development of 5G private networks. The German Federal Ministry of Economic Affairs has issued a 5G campus network guide for small and medium-sized enterprises (covering the procedures, application areas and business operation models for establishing and operating 5G campus networks). The Federal Ministry of Transport and Digital Infrastructure has funded the European 5G Industrial Park Project to accelerate the popularization of 5G technology to small and medium-sized enterprises. In 2022, Germany launched a three-year 5G campus network project to implement modular components and toolkits for campus networks for the industrial, medical and logistics industries, and cooperated with France to fund 5G private network projects to create an open interface 5G private network technology and application ecosystem.

2. Progress of 5G private network industry

After four years of development, the German 5G private network market has formed a "three-legged" situation of mobile operators, system integrators, and traditional equipment suppliers. Mobile operators can provide a variety of networking services by using public network spectrum resources; equipment suppliers provide one-stop services to end users through complete core networks, wireless access equipment and cloud-based management platforms; system integrators give priority to using small and medium-sized core networks and base station equipment, and launch "turnkey" solutions for manufacturers' products to reduce the difficulty and cost of private network deployment. The details are shown in Table 1.

Table 1 5G private network providers’ private network solutions

Some large industrial enterprises choose to cooperate with equipment manufacturers to build their own 5G private networks, using the specific frequencies of the private networks to achieve physical isolation from the operator's network. For example, the 5G private network of Bosch's semiconductor factory in Reitlingen is built and operated by Bosch itself, while the 5G private network of Bosch's factory in Stuttgart is jointly built and operated by Bosch and equipment manufacturers. The industrial robot manufacturer Kuka's production center in Augsburg is supported by equipment manufacturers to build a 5G private network. From the application situation, large German industrial enterprises are actively developing new 5G products. Industrial giants such as Siemens, Bosch, Schneider, and Mercedes-Benz have already carried out a variety of applications such as AGV, remote access to industrial machinery, and real-time positioning of assembly line products. The application scenarios are gradually deepening from the periphery to the core, penetrating into various links such as R&D design, production and manufacturing, warehousing and logistics.

02 Japan

1. 5G private network promotion policy

The demand for wireless communications represented by the Internet of Things is becoming increasingly diversified. In some industry application scenarios, most of the business is concentrated in local areas. Considering that the national 5G services of mobile communication operators cannot fully meet the fragmented and personalized industry application needs in local areas, the Ministry of Internal Affairs and Communications (MIC) of Japan has introduced local networks based on 5G technology, and relevant entities can flexibly deploy and use local 5G systems in railways, factories, airports, hospitals, ports, agriculture, construction, logistics and other fields. From the end of 2019, MIC officially began to accept applications for 5G private network service spectrum licenses (local 5G), allowing local governments and enterprises to build their own networks. As of November 2022, a total of 126 institutions in Japan have obtained 149 licenses, including 108 mid-band licenses and 31 high-band licenses. The applicants include manufacturers, cable TV companies, government agencies, educational and scientific research institutions, system integrators, equipment manufacturers, etc. As of March 2023, MIC has approved 1,072 mid-band local 5G radio station licenses and 134 millimeter wave licenses.

The Japanese government supports the development of replicable local 5G application demonstration models through project selection and funding to reduce the cost of use in other regions and accelerate the implementation of 5G in various industries. From 2020 to 2022, MIC selected more than 70 private network application demonstrations. In order to solve social problems such as population decline and aging, the demonstration projects led by MIC focus on supporting agriculture, forestry, factories, power stations, transportation and other fields, including emergency medical care, disaster prevention, remote control of agricultural machinery, telemedicine, factory machine vision, autonomous driving and other scene applications.

2. Progress of 5G private network industry

From the supply side, Japan has many local equipment manufacturers that can independently develop local 5G equipment and supply it to the Japanese market at low prices; from the demand side, in order to solve the problem of labor shortage and improve productivity, Japanese companies, especially manufacturing companies, are mostly carrying out production automation and digital transformation.

The promotion and popularization of 5G private networks faces problems such as high deployment and operation costs and great technical difficulties. Many Japanese system integrators and local equipment manufacturers have entered the 5G private network market, launched integrated local 5G solutions, innovated operation service models, and opened up the small and medium-sized enterprise market. For example, equipment suppliers such as NEC, Fujitsu, and Mitsubishi provide end-to-end services from planning to design and deployment, and carry out lightweight packaging and low-cost promotions for access network and core network equipment, and launch ways to purchase equipment or subscribe to services to reduce the construction and operation and maintenance costs of private networks; Ehime CATV, Akita CATV and other cable TV companies cooperate to uniformly purchase local 5G equipment to reduce unit prices, build shared 5G core networks, and launch subscription-based local 5G services.

The Japanese government has made great efforts to promote and the industry has responded positively, creating a relatively active Japanese 5G private network industry. However, overall, Japan's 5G private network is still in the extensive exploration stage and its commercial use is limited. According to statistics from the Ministry of Internal Affairs and Communications, as of the end of January 2023, Japan had only 565 base stations used for local 5G networks.

03 South Korea

1. 5G private network promotion policy

South Korea regards 5G private networks as a powerful tool to promote the development of the "5G+industrial ecosystem". On the one hand, it can drive the innovative development of industrial support such as equipment and components, and on the other hand, it can activate various 5G integrated services. While promoting the 5G enterprise private network applications based on the public network of the three operators, South Korea vigorously promotes the development of 5G private network applications using private network spectrum. In October 2021, it issued a 5G private network frequency allocation announcement. As of March 2023, private network frequency licenses have been issued to more than 10 applicants. Applicants have used private network spectrum to build networks and carry out applications in multiple locations. 307 base stations have been built, of which 84 are used for experimental verification.

2. Progress of 5G private network industry

South Korea's 5G private network applications using private network spectrum are still in the pilot demonstration stage. In order to promote the development of integrated applications, the South Korean government has launched 11 demonstration projects since June 2022. The project undertakers include both self-built and self-used enterprises and telecommunications operators. Most of the 5G equipment and solution suppliers are Samsung Electronics and local system integrators, and Ericsson and Nokia have also obtained some shares. In addition to promoting application demonstrations, South Korea is also vigorously promoting the research and development and production of private network equipment. In February 2023, South Korea's first millimeter wave 5G private network terminal equipment passed the radio wave certification. So far, a total of 35 5G private network terminal equipment (modules, modems) have been certified, most of which are products of local Korean companies. South Korea's 5G private network demonstration projects are shown in Table 2.

Table 2 South Korea’s 5G private network demonstration projects

04United States

In 2015, the FCC of the United States passed the rules for the shared commercial use of the Civil Broadband Wireless Service (CBRS) 3550-3700MHz frequency band, hoping to increase the utilization rate of this frequency band by introducing small cells and spectrum sharing technology, and created a three-tier access and authorization framework to accommodate the shared use of this frequency band by naval radars and commercial users. The auction of priority access (PAL) licenses was completed in August 2020, and 228 applicants obtained 20,625 PAL licenses. In addition to telecom operators, cable TV operators, and system integrators, there are many industry enterprise users who have obtained PAL licenses, covering industries such as oil and gas, electricity, manufacturing, medical care, and education.

From the perspective of industrial development, the private mobile networks deployed by most industry and enterprise users in the United States using shared frequency bands are based on 4G, and 5G private networks are mostly in the testing stage. Once the 5G private network ecosystem matures, these networks can be upgraded to 5G. Mobile communication operators such as Verizon and AT&T use CBRS spectrum to provide private network services to enterprises in the fields of manufacturing and finance. For example, AT&T cooperated with Microsoft to deploy 5G private networks for Ford's electric vehicle production base based on Microsoft Aure cloud combined with its 5G MEC solution, using AR to improve work efficiency such as detection and improve the safety of automated equipment such as robots. American cloud giants not only cooperate with domestic operators to provide private network services, but also launched a package of solutions, providing core network functions and application services based on the cloud, installing MEC in the enterprise, and processing some core network functions (user data processing, etc.) and wireless access network functions. With the help of cloud infrastructure, the cloud giant's 5G private network services can quickly expand the market around the world. In March 2023, AWS released the latest 5G private network solution, cooperating with international operators such as Deutsche Telekom, KDDI, Orange, etc., based on operator spectrum, using cloud infrastructure and 5G network operation and management tools. It can quickly and economically provide flexible private 5G networks. The target market has shifted from local small and medium-sized enterprise users to large global parks, industrial enterprises, ports and smart cities.

Thoughts and inspirations on the development of 5G private networks

Overall, the development of 5G private networks is still in its early stages. Most companies in major countries maintain a pragmatic attitude, deploy moderately and advance cautiously, and most of them are concept verification and trial projects. The reasons are as follows from both the supply and demand sides. First, it is difficult for demand companies to integrate 5G equipment into existing equipment, especially in the industrial field where the equipment replacement cycle is long. In addition, the cost of deploying 5G private network equipment is high and the network operation and maintenance is complex. Considerations on the cost-effectiveness of investing in 5G private networks have affected the willingness of companies to widely adopt 5G private networks to a certain extent. Second, from the supply side, the demand of vertical industries is differentiated and fragmented. On the one hand, high requirements are placed on the diversity and capabilities of 5G industry terminals. The terminal equipment market has not yet formed scale value, which has affected the research and development and manufacturing of technical products to a certain extent, resulting in a small number of terminal equipment types and high prices. On the other hand, it is difficult for private network providers to replicate the scale of existing projects and it is difficult to ensure profitability.

In the face of obstacles and problems in the development of private networks, we can consider starting from activating the industrial ecosystem: first, focus on developing terminal equipment to facilitate seamless integration of existing facilities, networks and 5G; second, reduce the burden of 5G network operations on enterprises, including the development and promotion of lightweight, low-cost equipment, and the launch of private network hosting services; third, establish a supply and demand docking platform, summarize best practices, analyze the economic feasibility of private networks, etc.