The battle for 5G private networks has begun

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We divide 5G private networks into two categories: one is the 5G private network based on the spectrum authorized by operators, and the other is the 5G private network built by vertical industries based on the 5G private network frequency bands allocated by various markets. The 5G private network referred to in this article is the latter.

01Global 5G private network development accelerates

In 2021, with the advancement of 5G R16, global 5G private networks represented by markets such as Germany, Japan, and South Korea entered a stage of accelerated development.

South Korea

On December 28, 2021, South Korea officially ushered in the 5G private network era. Naver Cloud became the first non-operator company in South Korea to be approved for 5G private network frequencies.

Naver Cloud has obtained a total of 700MHz bandwidth of 5G private network frequency, including 600M bandwidth in the 28GHz band (28.9 to 29.5GHz) and 100M bandwidth in the 4.7GHz band (4.72 to 4.82GHz). According to the Korean Ministry of Science and Technology, Naver Cloud only needs to pay 14.73 million won for this 700M bandwidth (the use area is 0.1682 square kilometers and the use period is 5 years), which is much lower than the operator's public network spectrum fee.

Naver is the largest Internet company in South Korea, and Naver Cloud is its cloud service business. The South Korean Internet giant plans to use 5G private networks in combination with Naver Cloud, first deploying 5G private networks in its office buildings to develop robot services.

Germany

In order to accelerate the realization of Industry 4.0, Germany allocated 5G private network frequency bands in the range of 3.7-3.8GHz and 24.25-27.5GHz to the industrial field in November 2019 and January 2021 respectively, which enterprises can use once their applications are approved.

Germany is currently the most active 5G private network market in the world. Many industrial giants such as Audi, BMW, Siemens, Bosch, and BASF have applied for and obtained approval for 5G private network spectrum. As of December 15, 2021, the German Federal Network Agency announced that it had received 181 5G private network frequency applications, of which 179 companies or institutions had been approved. In December, the speed of 5G private network spectrum application in Germany hit a new high, with the Federal Network Agency receiving 20 applications within 3 weeks.

Japan

Faced with social problems such as population decline and aging, declining productivity, frequent natural disasters, and economic recession, Japan is actively using ICT technology to accelerate the digital transformation of society. Japan's 5G private network is called "Local 5G", which allows vertical industries (including enterprises, local governments, etc.) to use private network frequency bands to build and operate 5G private networks in specific areas, which are different from the operator's 5G public network. Like South Korea, Japan allocates frequency bands of 4.7GHz and 28GHz for Local 5G.

At present, Japan has built about 560 Local 5G base stations, and at least 96 units have obtained Local 5G frequency licenses, including manufacturers such as Hitachi, Toshiba, Toyota, NEC, Fujitsu, Mitsubishi, Canon, Yaskawa Electric, Ehime CATV, Akita Cable TV, ZTV, NTT East, NTT West, NTT Com and other cable TV operators and local network operators, Tokyo Metropolitan Government, Ministry of Land, Infrastructure, Transport and Tourism, Hyogo Prefecture and other government agencies, as well as universities and research institutions such as the University of Tokyo and the Railway Technical Research Institute.

USA

In 2020, the United States auctioned the CBRS band (shared spectrum between 3.55GHz and 3.7GHz), paving the way for the development of 5G private networks. Enterprises can use this band to build their own 5G private networks in areas where there is no risk of frequency interference.

With the release of spectrum, US operators, cloud vendors, and vertical industries have begun competing for the 5G private network market. For example, Verizon, the largest mobile operator in the United States, has launched the On Site 5G integrated solution for 5G private networks, Amazon AWS has launched the AWS Private 5G service, and agricultural machinery giant John Deere has used CBRS to build its own 5G private network in its factory.

U.K.

The UK's 5G private network spectrum is 3.8-4.2GHz and 24.25-26.5GHz. As of 2021, more than 35 companies in the UK have obtained 5G private network licenses.

Appendix: Current status of global 5G private network spectrum allocation

02 Players from all walks of life rush in

On the one hand, it is well known that the integration of 5G with cloud, AI and other technologies can enable enterprises to upgrade their production and services digitally, which is beneficial for enterprises to improve quality, reduce costs and increase efficiency, expand front-end and back-end ecosystems, and innovate services and business models. As the current epidemic accelerates the trend of global digitalization, almost everyone predicts that the 5G private network market will have unlimited opportunities in the future. On the other hand, with the release of 5G private network spectrum, the 5G private network market has been opened up. Naturally, this open big cake has attracted the salivation of various players.

Traditional equipment suppliers

Ericsson

As early as September 2020, Ericsson acquired Cradlepoint for US$1.1 billion, sending a signal to the outside world that it would expand into the enterprise market. Cradlepoint is committed to providing enterprise customers with cloud management platforms, SD-WAN, edge security and other technologies, as well as 4G/5G private network wireless edge routers and other products and solutions. After acquiring Cradlepoint, Ericsson can better supplement its existing 5G enterprise product portfolio and accelerate its expansion into the 5G 2B market.

Ericsson has launched the "Ericsson Private 5G" (EP5G) solution, which provides high-speed, secure 4G and 5G connections, is easy to install and maintain, and can be easily integrated with enterprise IT and OT systems through open API interfaces. Ericsson claims that the solution has achieved an ultimate balance between simplicity and capability, and can achieve extremely simple installation, deployment, upgrade and operation and maintenance management without affecting network performance, security and availability. For example, in a 5G private network deployment in Germany, it took only two days from unpacking and installation to completing end-to-end connections including antennas, basebands, network controllers and cloud management platforms, and then running 5G SA use cases.

Ericsson 5G Private Network Solution (Source: Korea 5G Private Network Guide)

At present, Ericsson has announced that it will cooperate with Ford, Bosch and other companies to deploy 5G private networks. Among them, Bosch's semiconductor factory 5G private network adopts the German 5G private network frequency band (3.7-3.8GHz).

However, in general, Ericsson is relatively cautious and low-key on the road to expanding into the enterprise market. Every step it takes will take into account the feelings of its old customer operators. For example, EP5G is still mainly aimed at the operator market to help operators expand 5G toB business, but "there may be exceptions in some markets that have allocated 5G private network frequency bands."

Nokia

Competitor Nokia is not so low-key. As early as 2019, Nokia did a statistics, pointing out that there are nearly 15 million enterprises or places in the world with potential 4/5G private network needs. If only one 5G base station is deployed in each place, there will be a demand for 15 million 5G private network base stations in the world. This number is more than twice the total number of 2/3/4G base stations that Nokia has provided to global operators.

Faced with such a big cake, Nokia did not hide its greed. Relying on its previous acquisitions and diversified product portfolio, it announced that more than 340 corporate customers around the world have deployed Nokia private wireless solutions. At the same time, it directly targeted the enterprise market with its strategic focus and launched two 5G private network solutions, Nokia Digital Automation Cloud (DAC) and Modular Private Wireless (MPW).

NDAC is a pre-integrated solution that integrates edge cloud, core cloud, cloud management and application deployment. It has "plug and play" flexible deployment capabilities, can integrate Nokia's RAN products, and is also compatible with other manufacturers' RAN solutions that comply with 3GPP standards.

MPW is an end-to-end solution that includes Nokia Flexi Zone micro base stations, AirScale macro base stations, IP/MPLS, compact core network, edge computing, operations management and application deployment. It can be customized and modularly deployed according to the differentiated needs of enterprise customers.

Currently, Nokia has cooperated with Lufthansa Technik, Toyota, Sandvik, Schneider Electric, Volkswagen, and other companies to deploy 5G private networks based on NDAC or MPW solutions. Most of these 5G private networks use 5G private network spectrum, with or without the participation of operators.

Samsung

Samsung's 5G private network is also an end-to-end solution that includes RAN, core network, switches, management systems and applications. In the RAN part, Samsung offers a wide range of product portfolios, including macro and micro base station solutions that support low-frequency, medium-frequency and millimeter-wave frequency bands, as well as indoor solutions such as Link Cell and Link Hub. In the core network part, Samsung said that its Compact Core supports public cloud platforms such as AWS, Microsoft Azure, and IBM Cloud, and supports CU integration and remote management.

Samsung's end-to-end 5G private network solution

In 2021, Samsung announced that it had partnered with OPTAGE, the communications subsidiary of Kansai Electric Power, to deploy Local 5G. OPTAGE obtained Japan's Local 5G frequency license in 2020 and established a Local 5G laboratory, planning to help vertical industries deploy 5G smart factories through 5G technology.

Public cloud vendors

Amazon AWS

On November 30, 2021, Amazon announced the launch of AWS Private 5G service. "With AWS Private 5G service, enterprises can easily build, upgrade and expand 5G private networks without facing lengthy network planning and design, complex system integration, and huge upfront investment."

AWS provides an end-to-end 5G private network solution including SIM cards, Small Cell RU, DU/CU, 5G Core, and servers. Importantly, this is a pre-integrated solution. For most enterprise customers who do not have 5G expertise, it is very difficult to purchase 5G private network software and hardware components from multiple suppliers and then integrate and maintain these components. To this end, AWS will pre-complete the interoperability verification between multi-supplier software and hardware components, provide automated network configuration and parameter planning, and AWS remote operation and maintenance services, providing enterprises with one-stop packaged services, thereby helping enterprises to quickly and cost-effectively deploy 5G private networks.

AWS Private 5G has two business models: one is to directly serve enterprise customers (mainly for the market with allocated 5G private network frequency bands); the other is to cooperate with operators to expand 5G private network business (mainly for the market with unallocated 5G private network frequency bands). For the former model, it is obvious that there will be an inevitable competition with traditional operators.

Microsoft Azure

Like Amazon AWS, Microsoft Azure is also forming a cooperative and competitive relationship with traditional operators in the 5G era. However, Microsoft's 5G private network "ambition" is not as obvious as AWS.

First, Microsoft has launched edge computing solutions for the 5G toB market, including two solutions: one is Azure Edge Zone with Carrier, which is aimed at the carrier market and cooperates with carriers to deploy cloud-network integrated edge computing; the other is Azure Private Edge Zone, which is an edge solution for 4G/5G private networks. It can provide enterprises with low-latency, high-reliability and high-security cloud-network connections by deploying Azure Stack Edge hardware locally and connecting to 4G/5G private networks. It goes without saying that the second solution may form a competitive landscape with carriers.

Secondly, Microsoft acquired core network supplier Affirmed Network in 2020, and Affirmed, "a Microsoft company", is working with some Open RAN suppliers to develop the 5G private network market.

Affirmed 5G Private Network Service

As shown in the figure above, Microsoft is integrating Affirmed's core network with Azure Private Edge Zone to provide 5G private network solutions to vertical industries.

Industrial giants

Hitachi & Mitsubishi

In order to help enterprises solve problems such as large initial investment in 5G private networks and the need for professional knowledge in construction and operation, on December 7, 2021, Hitachi International Electric and Mitsubishi HC Capital announced that they would jointly provide a "pay-per-month" monthly Local 5G service.

The two companies provide one-stop Local 5G services from planning, design, construction to post-maintenance, including frequency license application, equipment and systems, wireless consulting, network construction, system maintenance and operation, etc. Among them, Hitachi is responsible for 5G private network planning, construction, maintenance and operation, and Mitsubishi HC Capital is responsible for equipment leasing and financial services.

As early as 2020, Hitachi obtained Japan's Local 5G frequency license and established a 5G Joint Innovation Laboratory with its partners to develop industry applications that integrate 5G and AI for manufacturing, logistics, construction, services, public infrastructure, and local governments.

Siemens

Siemens is one of the main promoters of Germany's 5G private network spectrum and one of the earliest industrial giants to independently deploy 5G private networks. On the Siemens official website, an article titled "A 5G network for every factory" points out that on the road to industrial 5G, it is very important to directly allocate 5G private network spectrum to the industrial field because "we understand the needs of our factories better than anyone else." It also stated that Siemens will use 5G private networks to widely test industrial 5G network solutions.

Siemens has built a 5G private network at its automotive testing center in Nuremberg, is building its own 5G private network in its factories in Amberg and Karlsruhe, and has launched industrial 5G routers. Many industry analysts believe that Siemens will rely on its rich experience in the industrial field and its accumulated communication technology capabilities to provide other industrial manufacturers with a complete solution for the integration of 5G private networks and enterprise OT/IT. At least, as an active promoter of 5G private frequency spectrum, Siemens has its own 5G private network and will be a "new type of operator" in the future.

Cable TV and fixed-line operators

Ehime CATV, etc.

In Japan, several cable TV operators have obtained Local 5G licenses. An interesting phenomenon is that in order to save the cost of 5G private network deployment and operation and maintenance, several Japanese cable TV operators such as Ehime CATV, Akita Cable TV, ZTV, and Tama Cable Network have invested in and established GraphOne, a company specializing in providing Local 5G services.

Through GraphOne, these cable TV operators can, on the one hand, reduce the cost of purchasing 5G network equipment through a joint procurement model; on the other hand, GraphOne will deploy a unified 5G core network for shared use by various cable TV operators. At the same time, GraphOne is also responsible for operation and maintenance services, which can significantly reduce the CAPEX and OPEX costs of 5G private networks.

The web interface between cable TV operators and GraphOne

By establishing GraphOne, these cable TV operators can not only build their own 5G private networks at low cost, but also rely on their existing wired network infrastructure and GraphOne's 5G private network service capabilities to provide 5G private network services to corporate customers economically and efficiently.

Ehime CATV has already taken this step. In June 2021, Ehime CATV announced the launch of Local 5G services for corporate customers. The cable TV operator said that considering that enterprises do not have 5G expertise, the deployment of 5G private networks on their own faces unfamiliarity with the frequency application process, difficult network deployment, difficult operation and maintenance, and expensive initial network investment. The Local 5G support services provided by Ehime CATV include network and demand consultation, frequency license application, network construction and operation and maintenance, etc. It also stated that the service fee will be charged monthly based on the number of base stations and terminals.

NTT Com

As the largest operator in Japan, NTT Group owns several subsidiaries including NTT East, NTT West, NTT Com, NTT Docomo and NTT Data. Although NTT Docomo is a mobile public network operator and cannot provide Local 5G services, NTT Com mainly provides ICT solutions for large enterprises and can operate Local 5G business.

NTT Com provides end-to-end 5G private network services from network, edge, cloud to application. First, with the help of NTT DoCoMo's rich experience in mobile network construction and operation, NTT Com provides enterprises with one-stop services including consulting, license acquisition, network planning and design, construction and operation and maintenance. Secondly, in order to help enterprises reduce the initial network construction cost burden, NTT Com provides an Opex-based 5G private network service model, that is, enterprises do not need to purchase 5G network equipment at one time, but pay NTT Com on a monthly basis. In addition, it also provides a smart data platform (SDPF), which can provide data collection, storage and analysis functions in one stop to help enterprises make full use of data to achieve digital transformation.

NTT Com Local 5G Service Architecture

Open RAN and Small Cell Vendors

In December 2021, German media reported that Cologne Bonn Airport is building Germany's first 5G private network based on Open RAN. The article pointed out that the 5G private network uses the 5G private network frequency band allocated by the German Federal Network Agency. The network equipment is not provided by traditional telecommunications equipment manufacturers such as Ericsson and Nokia alone, but is based on the Open RAN architecture and uses many software and hardware components from multiple manufacturers. This inconspicuous report shows that Open RAN manufacturers have substantially entered the 5G private network market.

For new Open RAN players, the traditional operator market is difficult to break into. After all, traditional equipment giants have been working hard for many years and have built a high barrier to entry. Moreover, these operators cannot spend more money to replace 4/5G equipment in the existing network with Open RAN equipment. They will certainly focus their efforts on the emerging market of 5G private networks. The 5G private network market has the characteristics of diversified demand, flexible networking, lightweight, and customization. Some companies have also put forward requirements such as autonomy, low cost, and avoiding equipment vendor lock-in, which also brings hope to Open RAN manufacturers.

For example, as a 5G Open RAN and 5G Core supplier for Japan's 5G public network operators NTT Docomo and Rakuten Mobile, NEC announced in December 2019 that it would enter the 5G private network market, hoping to sell 5G network equipment to corporate customers, with the goal of developing more than 100 corporate customers by 2023. NEC not only provides network equipment, but also provides a full-process Loca 5G service from demand analysis, network survey, planning, design, construction to managed operation and maintenance.

For example, Fujitsu has launched the FUJITSU Network PW300 5G private network solution, which is an end-to-end system including RU, DU, CU, 5G Core and monitoring management unit EMS. Among them, 5G Core, CU and EMS can be integrated on one server. This is an entry-level 5G private network solution. Since the end-to-end network function software runs on a general-purpose server, general-purpose hardware can be flexibly added according to demand in the future.

FUJITSU Network PW300

There are also a large number of other smaller Open RAN vendors and small base station vendors that have launched products and solutions for 5G private networks. There are too many to list one by one.

Traditional private network solution provider

Cellnex Telecom is a telecommunications infrastructure service provider headquartered in Spain. In recent years, it has become well-known in the telecommunications industry for its continuous acquisition of tower assets in the European market. In addition to being optimistic about the tower business, this tower company with nearly 130,000 sites in Europe has quietly entered the 5G private network market and started to compete with traditional mobile operators for the 5G toB cake.

In November 2021, Cellnex Telecom won the 5G private network contract in Basingstoke's central business district. It is said that there are more than 100 companies in the business district, which seems to be a considerable 5G private network contract. It is no coincidence that Cellnex won this big order. As early as 2020, the company took the first step into 5G private networks and acquired Edzcom, which focuses on providing wireless private networks for corporate customers. As a well-known wireless private network solution provider in Northern Europe, Edzcom has deployed more than 35 wireless private networks in Europe, covering ports, airports, mines, manufacturing plants, refineries and other fields.

Private networks are not a 5G specialty. As early as the 2/3/4G era, various private networks were deployed in public security, airports, electricity, oil and other fields. In the 5G era, these private networks will face upgrades. From the cases of Cellnex and Edzcom, it is not difficult to see that there is still a place for companies that have been focusing on providing private network solutions in the future 5G private network market. In the 5G era of cloud-network integration, ICT and OT integration, these traditional private network suppliers may develop new cooperation models with cloud vendors, operators, etc.

03The chaotic situation has taken shape

5G private network is a complex end-to-end system that integrates CT, IT and OT. In the integration process, there is a huge gap in professional knowledge and technology between the ICT industry and vertical industries. To fill this gap, operators, equipment suppliers, system integrators, cloud vendors, information technology service providers, vertical industries and other parties need to work together. But because of this, all parties have seen new market opportunities. Therefore, various players have sharpened their knives and rushed into this market.

As some overseas markets allocate 5G private network spectrum, the threshold for 5G private networks has been completely cut, further intensifying market competition. At present, in some overseas markets, a melee pattern for 5G private networks has been initially formed. This melee is roughly divided into two routes: one is the competition between traditional equipment suppliers, OpenRAN suppliers, and cloud vendors in providing equipment, products and solutions; the other is the competition between mobile operators, cloud vendors, cable TV operators, fixed network operators, equipment suppliers, industrial giants, etc. in the integration, construction, operation and maintenance of 5G private networks.

But no matter how chaotic this melee is, its underlying logic is to allocate private network spectrum so that enterprises do not have to rely on public network operators to build their own 5G private networks. There is no doubt that the biggest "harm" is to traditional mobile operators. The cake that was originally thought to be exclusive to traditional mobile operators will gradually be divided up by new small and micro 5G private network operators from various industries and fields. As relevant officials in South Korea said after allocating 5G private network spectrum, with the allocation of 5G private network spectrum, more and more companies will build their own 5G private networks, and it is expected that a pattern of coexistence of operators of various forms and sizes will be formed to jointly promote the digital innovation ecosystem of the entire industry.