5G is no longer dependent on operators, and 50 companies have been approved to build their own private networks

5G is not just for operators; vertical industries can also have their own independent 5G private networks.

As we enter the 5G era, while global operators are building 5G public networks, a number of 5G private networks independent of the operators' 5G public networks are also emerging in Germany.

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Industrial giants prefer to build their own 5G private networks

"If we have our own 5G network, sensitive production data will not flow to third parties. At the same time, by building our own 5G network infrastructure, we can also respond faster when the system fails without having to wait for external support." said German auto giant Daimler.

"With our own 5G network, we can determine the quality of the network ourselves and ensure the availability, confidentiality and integrity of the data," said German chemical giant BASF. "We will openly cooperate with partners such as technology providers and equipment suppliers to build 5G networks, but operators such as Deutsche Telekom, Vodafone and Telefónica may not be included."

As we all know, 5G will enable the digital transformation of thousands of industries. The newly released 5G R16 standard is to better promote the expansion of 5G into vertical industries.

There are two main ways for 5G to expand to vertical industries in the form of private networks.

One is that operators share 5G network resources with vertical industries. For example, they deploy 5G private networks for vertical industries by sharing RAN and core network control planes, or use network slicing technology to cut out multiple virtual private networks end-to-end for vertical industries on a 5G public network.

One is that vertical industries use lightweight equipment to independently build the entire 5G network, which can be isolated from the operator's 5G public network. This means that equipment information, control plane signaling traffic, user plane data traffic, etc. within the factory or park will not leave the park and will not enter the operator's 5G public network.

So where do the spectrum resources for vertical industries to build their own 5G private networks come from? They can rent them from operators, or have 5G private network frequency bands allocated by regulatory agencies, or even use 5G unlicensed spectrum like the Wi-Fi model.

Some German industrial giants seem to prefer the latter because, as they say, they can independently determine the quality of the network, respond to failures quickly, and ensure the privacy and security of sensitive data.

For this reason, it is estimated that considering that Germany is a manufacturing powerhouse, the German regulators allocated 5G private network frequency bands specifically for these industrial giants when allocating 5G spectrum.

5G private network frequency band allocation and charging model

As early as 2018, some German industrial giants, cities, municipalities and large agricultural companies asked the government to allocate dedicated frequency bands for regional or local 5G network construction.

Subsequently, the German Federal Network Agency (BNetzA) intends to divide the 5G spectrum into national frequency bands, regional frequency bands and local frequency bands according to network coverage.

The "national frequency band" is allocated to operators such as Deutsche Telekom and Vodafone to build 5G public networks covering the whole country; the "regional frequency band" and "local frequency band" are allocated to vertical industries. For example, the "regional frequency band" is allocated to local governments to build regional 5G private networks, and the "local frequency band" is allocated to enterprises to build 5G private networks in factories or parks. Among them, the bandwidth of the "regional frequency band" is 80MHz, and the bandwidth of the "local frequency band" is 20MHz.

But the plan was strongly opposed by operators.

The 5G mid-band bandwidth of operators is only about 100MHz, while the bandwidth of regional private networks is 80MHz, and regional coverage networks are also allowed to be built. Doesn't this mean that a city can build its own 5G network? It's obvious that this is stealing the jobs of operators!

Faced with strong opposition from operators, the German Federal Network Agency finally changed its decision, canceled the "regional frequency band", and divided all 100MHz bandwidth between 3.7GHz-3.8GHz into "local frequency bands" for allocation to vertical industry deployment of local 5G private networks limited to parks and factories.

This means that companies only need to apply to the German Federal Network Agency for frequency band usage licenses and 5G operating licenses to deploy and operate their own 5G private networks, and no longer rely on the operator's 5G public network.

However, if enterprises want to apply to build their own 5G private network, they need to pay a certain fee. This fee is mainly calculated based on the allocated spectrum bandwidth, network operation time and operation area.

The calculation formula is: Cost = 1000 + B ? t ? 5 (6a1 + a2)

• 1000 is the basic fee, in Euros;
• B is the allocated frequency band bandwidth in MHz, with a minimum of 10MHz and a maximum of 100MHz;
• t is the spectrum allocation time, in years;
• a is the area of ​​the spectrum usage region, measured in km2, where a1 is densely populated or traffic-intensive areas, and a2 is other areas.

Let's do some calculations. If a company wants to build a 5G private network in an area of ​​50km2, which consists of dense areas and other areas of 25km2 each, and the leased spectrum bandwidth is 50MHz for two years, then the 5G private network will cost 88,500 euros.

50 companies have been approved for 5G private network frequency bands, and operators are quite dissatisfied

Starting from November 21, 2019, Germany officially opened applications for the 3700-3800 MHz 5G private network frequency band. Companies only need to apply according to the process and pay the corresponding fees to obtain the 5G frequency band. Subsequently, some companies have successively deployed 5G private networks.

For example, Germany's Rittal has obtained 5G frequency allocation and has deployed 5G private networks and edge cloud data centers in its new factory to monitor and analyze the entire production process in real time.

Smart Factory OWL laboratory has also obtained the 5G private network frequency and operating license from the German Federal Network Agency. They have now deployed and operated a 5G private network.

LSU Sch?berle, a German logistics company, has also obtained a 5G private network operating license.

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In addition, well-known giants such as ABB, Audi, BASF, Bosch, Sennheiser, Siemens, Daimler, and Volkswagen also hope to build their own local 5G networks instead of sharing or renting the public network of operators in the traditional way.

How has Germany's independent 5G private network developed over the past six months?

Not long ago, at an industry forum, German operators revealed that as of June 25, 2020, 50 German companies had obtained 5G private network licenses.

50 companies? Is this number too many or too few?

Considering that the 5G R16 standard has not been frozen in the past six months, most companies are still taking a wait-and-see attitude, which is not a small number. Of course, the development trend of Germany's independent 5G private network remains to be seen, especially the development after the R16 version is frozen.

As we all know, through 5G network slicing technology, operators in the future will be able to rent out isolated, SLA-guaranteed 5G network slices to various industries, that is, virtual 5G private networks. This will be the main source of income for operators in the future.

Germany's purpose in allocating 5G private network frequency bands is nothing more than hoping that 5G will develop in more places. However, if this is the case, industrial giants will apply for 5G private network frequency bands and build their own 5G private networks, which means they will no longer rely on operators and do not need to rent slices from operators. This is depriving operators of their core business! For this reason, German operators have expressed dissatisfaction with this many times.

The vast majority of operators around the world are also opposed to this. Some operators said that this approach will lead to a clear gap between the telecommunications industry and vertical industries, and may even lead to each industry fighting alone and industrial differentiation, thus affecting the overall strength and international competitiveness of the 5G industry.