Understanding the current status and challenges of 5G private network development in one article

5G was oriented to vertical industry applications when it was first formulated, so there is a saying that "5G changes society", which also places the hope of telecom operators to expand the industry market with the help of 5G, and 5G private network is undoubtedly the stepping stone to enter this market. With the help of 5G private network, especially the integration with traditional OT network, telecom operators will further provide cloud computing, Internet of Things, and intelligent applications for vertical industries, opening another door to growth in the digital transformation of industries in addition to the traffic dividend of public users.

At the national level, industrial digital transformation has become the main choice in the face of uncertainty in economic growth and external environment in an era of great changes. 5G, as a new type of information infrastructure, combined with technologies such as artificial intelligence and cloud computing, will be the digital foundation for the industrial digitalization shift. It has a "multiplier effect" on the economy and is therefore highly valued. A series of policies have been introduced to promote the integration of 5G with the industry.

After two years of commercial use, China's 5G independent network has also been commercially available for a year, and has achieved remarkable results. As of the end of June 2021, 961,000 5G base stations have been built and 365 million 5G terminals have been connected. In the industry, the three major operators have launched their own 5G private network service products and built a large number of commercial 5G private networks. This article briefly summarizes and analyzes the current development status of private networks and the challenges they face.

[[418294]]

1. 5G Application "Sailing" Action Plan

The Party Central Committee and the State Council attach great importance to the development of 5G. In order to implement the requirements of the 2021 "Government Work Report" to "increase the construction of 5G networks and gigabit optical networks, and enrich application scenarios", as well as the goal of "building application scenarios and industrial ecology based on 5G" in the "14th Five-Year Plan", the Ministry of Industry and Information Technology, together with 9 departments including the Central Cyberspace Affairs Commission and the National Development and Reform Commission, issued the "5G Application "Sailing" Action Plan (2021-2023)".

The Action Plan proposes eight special actions in terms of standard system construction, industrial foundation strengthening, information consumption upgrading, industry application deepening, social livelihood services, network capability strengthening, application ecosystem integration, and security improvement. In order to further promote the implementation of the Action Plan, four key projects are set up in the special actions, including the implementation of the 5G application standard system construction and promotion project, the 5G product breakthrough project for industry needs, the 5G application innovation ecosystem cultivation demonstration project, and the 5G application security capability forging project. Through the eight special actions and four key projects, the integration of 5G and the industry will be effectively promoted.

The Action Plan is oriented to the three major areas of information consumption, real economy, and people's livelihood services. It clearly defines the focus on promoting 5G applications in 15 industries, and a preliminary 5G innovation application system will be formed in three years. From the perspective of promoting information consumption, the focus is on cultivating the two directions of 5G+ new information consumption and integrated media, driving the consumption of new products and new content, and accelerating the implementation of 5G in the media field; from the perspective of promoting the real economy, the focus is on promoting the in-depth application of 5G in 9 major fields such as industrial Internet, Internet of Vehicles, smart logistics, smart ports, smart mining, smart electricity, smart oil and gas, smart agriculture and smart water conservancy, and accelerating the digital transformation process of key industries. From the perspective of improving the field of people's livelihood services, the focus is on increasing 5G application innovation in the four fields of smart education, smart medical care, smart cultural tourism and smart cities. These 15 key industries are also the main directions of 5G application innovation at present.

To implement the Action Plan, a national 5G industry application scale development conference was held in Shenzhen and Dongguan, Guangdong from July 24 to 25, and an in-depth interpretation of the 5G Application "Sailing" Action Plan (2021-2023) was conducted.

2. Main indicator system for 5G application development

The Action Plan also proposes a quantitative indicator system for the development of 5G applications:

Among them, items 1, 2, and 5 mainly measure the level of development of public services, and the other four mainly evaluate the level of development in vertical industry applications. It is believed that after three years of development, the realization of these goals will promote 5G industry applications to a stage of healthy development.

3. Operator 5G private network service product system

China Mobile:

In July 2020, China Mobile released three major systems of 5G private network products, technologies, and operations. It launched three modes of 5G private network, namely "premium, exclusive, and premium", and released multiple 5G private network capabilities such as edge computing, super uplink, and network services. It provides 12 major capabilities in three aspects: basic capabilities, network deployment, and service support: basic capabilities include network slicing, QoS enhancement, edge computing, and exclusive uplink; network deployment includes exclusive network elements, service diversion, wireless public-private integration, and frequency coordination; service support includes unified entry, self-service operation and maintenance, capability exposure, and single networking.

In 2021, China Mobile planned the 2.0 evolution of the 5G private network technology system for the commercial use of R16, expanding the original three categories to four categories with the addition of "industry enhancement". The main plans include the implementation of R16's enhanced 5G LAN, TSN (time-sensitive network), NPN (non-public network), high-precision positioning, secondary authentication (application-side authentication) and access security for vertical industries. In view of industry application needs, ultra-low latency and ultra-high reliability capabilities have been added to the basic capabilities category; equipment customization and disaster recovery have been added to the network deployment category. There have also been corresponding enhancements in the service support category, expanding the original 12 capabilities in three categories to 24 capabilities in four categories. Further meet the network needs of vertical industries.

China Telecom:

In November 2020, China Telecom released the 5G customized network solution of "network customization, edge intelligence, cloud collaboration, and application on demand" and the "China Telecom 5G Customized Network Product Manual", providing three types of customized network service models: "Zhiyuan", "Bilin", and "Ruyi". That is, the "Zhiyuan" model for wide-area priority industry customers, the "Bilin" model for latency-sensitive regional government and enterprise customers, and the "Ruyi" model for security-sensitive customers. In terms of customized services, the 5G customized network will flexibly combine 12 capabilities including customized traffic, customized SIM cards, service isolation, service acceleration, data non-exit, local service guarantee, dedicated line access, wireless enhancement, dedicated macro base station, dedicated indoor distribution, dedicated frequency, and dedicated 5GC.

• The Zhiyuan model mainly matches wide-area access and cloud-network integration. Based on 5G network resources, through QoS, DNN customization, slicing and other technologies, it provides end-to-end differentiated network connection, industry application and other services for wide-area priority industry customers.
• Neighborhood mode, local processing, cloud-edge collaboration. Through multi-frequency collaboration, carrier aggregation, super uplink, edge nodes, wireless resource reservation and other technologies, we provide bandwidth enhancement, low latency, and data local offloading proprietary network services for latency-sensitive government and enterprise customers. In conjunction with MEC and Tianyi Cloud, we maximize the advantages of cloud-edge collaboration and empower digital applications for industry customers.
• Ruyi mode is region-specific, secure and reliable. For security-sensitive government and enterprise customers with high security and high isolation, we provide industry customers with end-to-end, customized and exclusive solutions by customizing base stations, frequencies, campus-level UPF and other dedicated network equipment and network services, and fully matching key components such as MEC, cloud, industry capabilities, and industry applications.

China Unicom:

• In August 2020, China Unicom released three 5G private network products and two 5G dedicated line products: 5G virtual private network, 5G hybrid private network, 5G independent private network and 5G smart dedicated line and 5G premium dedicated line.
• Based on the coverage of 5G public network, the 5G virtual private network provides customers with a private network with guaranteed latency and bandwidth and data isolation. It has the characteristics of wide-area networking, priority protection, customer self-service and ready-to-use.
• The 5G hybrid private network is a 5G dedicated network with exclusive access to some resources. It deploys user-side network elements down to the campus side and has the characteristics of customization, resource sharing, and data not leaving the campus.
• The 5G independent private network has the characteristics of physical isolation, independent operation, flexible self-management, and can provide super uplink bandwidth network capabilities.

At the same time, China Unicom has also built a 1+1+1 private network operation system with standardized service standards, intensive service platforms, and professional service teams to provide industry users with ten customized services, including exclusive customization of wireless resources, ultra-low network latency guarantee, local offloading of campus data, and flexible and open interface capabilities.

4. Operators’ 5G private network development goals and progress

2021 is generally considered to be the first year of large-scale commercial use of 5G private networks. Under the guidance of the "Action Plan", all operators have clarified the development goals of 5G private networks, and as of the end of June 2021, some progress has been made.

China Mobile:

In 2020, China Mobile launched a series of 5G private network products, released the "Excellent, Specialized, and Honorable" service model and the BAF multi-dimensional business model, and provided "self-service, self-operation and maintenance, and self-development" network services to industry customers based on the 5G private network operation platform, creating 100 high-quality private network benchmarks and forming an industry demonstration. In 2021, China Mobile plans to build a service-centric network based on digital operation and maintenance, systematization of guarantees, template-based solutions, and online operations, help thousands of industries build digital twin networks, and actively promote the implementation of 1,000 commercial private network projects to form a scale effect.

On August 12, 2021, China Mobile released its semi-annual report, announcing the achievements of 5G private networks and industry applications: in the first half of the year, the entire network signed 900 provincial regional characteristic projects, expanded 452 5G private network projects, with a contract amount of over 10 million yuan, and 122 large DICT orders, driving DICT incremental revenue of more than 6 billion yuan, and the number of government and enterprise customers reached 15.53 million; in terms of industry applications, China Mobile has created more than 4,000 commercial cases for more than 100 key industry scenarios.

China Telecom:

China Telecom formulated the development goals of 5G customized network at the beginning of the year: China Telecom will accelerate the development of 5G customized network business, create 100 customized network benchmark projects that are influential, scenario-based, valuable, collaborative, ecological, and demonstrated, implement 1,000 commercial projects, and enhance the industry's influence.

On July 12, 2021, at the launch conference of China Telecom's 5G Converged Application Open Laboratory (5G Open Lab), China Telecom's Government and Enterprise Information Service Group introduced its achievements in 5G industry applications, stating that as of now, China Telecom's 5G customized network has accurately covered more than 1,600 leading government and enterprise customers, providing 5G customization capabilities to more than 4,500 customers, and implementing more than 360 customized network commercial projects.

China Unicom:

China Unicom is also focusing on the 5G private network market in 2021. Although it has not announced specific goals and progress like other operators, it is estimated that the number of its 5G private network commercial projects is between 250 and 300.

Overall benchmarking:

Based on the market progress of the 5G private network projects of the three major operators and benchmarking the main indicator system of 5G applications, the following rough conclusions are drawn.

• The number of 5G industry virtual private networks is 3,000: According to the above data, the three major operators have deployed a total of 1,060 to 1,110 5G private networks, which is still a large gap to 3,000.
• The penetration rate of 5G in large industrial enterprises is 35%: According to statistics in 2018, there are 9,103 large industrial enterprises nationwide. The 35% target means that 3,186 large industrial enterprises are needed to carry out 5G applications. Considering that applications can only be carried out if there are private networks, this gap is even greater than the number of private networks.
• There are 100 benchmark 5G applications in each key industry: 15 key industries require 1,500 benchmark applications. Currently, there is a lack of data. Only China Mobile mentioned the creation of commercial cases in more than 100 key industry scenarios. The corresponding goal is obviously still in the initial stage.

5. Challenges and opportunities facing the development of 5G private networks

Although the three major operators have released products, planned goals, established promotion systems for 5G private networks and industry applications, and promoted product maturity and replicability of solutions by creating benchmark projects/lighthouse projects, there are generally some shortcomings and challenges in terms of actual results.

• There is insufficient rigid demand for 5G in business scenarios, and the value of 5G is weak in most scenarios. According to HMS statistics, despite rapid growth in recent years, wireless networks accounted for only 7% of industrial networks in 2020, of which 4% were industrial WiFi. Currently, 5G applications in the industry are also mainly concentrated in video/image-based applications, such as machine vision, unmanned inspection/maintenance, video surveillance, etc., and business expansion into production business has just started.

• The product capabilities are insufficient, and the public network-based architecture and products are not highly matched when facing the industry. At the current stage, the private network system architecture and products are mainly based on public network standards and centralized procurement products. However, due to its deployment environment and cost requirements, such as the unique deployment scenarios of underground mines and the high reliability and high safety requirements of industry, the industry needs miniaturized core networks, intrinsically safe equipment, and cloud-network integrated products.

• The large differences in projects and insufficient product standardization make the project cycle long. There are two problems when expanding the industry. On the one hand, the needs of industry projects vary greatly. Although the three major operators have proposed a combination of capability system and product system, it is difficult to quickly build solutions and quickly open them for specific projects.

• The lack of industry standards means that even if the technology is feasible, there are still obstacles to commercial deployment. Due to the inertia of existing business system planning and construction, although some 5G applications have proven technical feasibility, the lack of corresponding industry planning, construction, deployment, maintenance, and security standards, as well as the lack of upgraded equipment to support 5G, has led to insufficient enthusiasm for industry deployment.

• The industry chain and business model are immature, and industry customers are not willing to pay. The low scenario value, the poor matching between 5G capabilities and products, and the incomplete industry chain have led to a small number of 5G applications that can be deployed at this stage, resulting in a high overall cost of ownership. Industry customers are more likely to conduct pilots and tests, but fewer will pay.

Despite so many challenges, most of these problems will be solved based on the advantages of 5G basic capabilities over other wireless technologies, the rapid evolution of 5G standards and products, the gradual maturity of the industrial chain, the formulation of industry standards based on application pilots, and the support of industry equipment for 5G upgrades. The most important point is that 5G uses a flat network to simplify the level of digital control in the factory and directly promote the integration of IT/OT. It can not only break the closed ecology of the existing foreign manufacturers in the underlying industrial network and system, but also help lay the foundation for the high-quality and low-cost digital transformation of my country's industry. This is in line with the new stage of transformation of China's industry to high-quality development, and 5G private network will play an important role in this process.