On the eve of large-scale commercial use of 5G, private LTE networks will take the lead in IoT applications

In the past few days, South Korea and the United States have been racing against time to compete for the "global first" in 5G commercial services. They suddenly advanced the original release time. South Korea even officially launched the 5G commercial network late at night on April 3, just to be two hours ahead of Verizon in the United States. It is not easy to strive for the reputation of "global first", but it is even more difficult to truly use 5G to bring a revolutionary experience to the industry. At present, the industry has explored a large number of application demonstrations for 5G, but these demonstrations are not just a matter of time before they can become commercial realities, because the business model, technology maturity and regulatory barriers may take several years. The deployment of some technologies that have been commercialized can be used as a means of verifying 5G applications. Among them, private or dedicated LTE networks may serve as a "front station" for 5G, verifying whether many seemingly in-demand 5G applications are really in demand and whether there are suitable business models.

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Widely used private network

Private networks have a longer history than public networks and are now widely used in a large number of key industries. There are many industries in the national economy that have special communication network needs, such as highly real-time monitoring, visual operation, high-security authentication control, production safety monitoring, remote diagnosis, asset management, etc. Some of these special needs cannot be met by the unified and standardized services of the public network. These include resource-based industries, power production and transmission, civil aviation, railways, and some manufacturing industries.

The market space for private networks targeting key industries and businesses is also relatively large. According to market research firm Harbor Research, by 2023, there will be 750 million IoT devices connected to private networks, compared to 170 million in 2017, with a compound annual growth rate of nearly 30%. GSMA predicts that by 2015, the number of IoT connections based on NB-IoT and eMTC will reach 1.8 billion. Although the number of private network IoT connections is less than half of that of NB-IoT/eMTC, they serve more critical businesses and the value gained from them may be much higher than NB-IoT/eMTC connections.

The Citizen Broadband Radio Service (CBRS) and MulteFire Alliance in the United States will play a role in this regard. For example, the MulteFire Alliance is committed to promoting global network standards, allowing developers and users to use LTE and 5G NR technologies under the architecture of unlicensed or shared spectrum. Driven by this standardization organization, the number of IoT connections based on private networks has also grown rapidly.

Private LTE networks bring in considerable revenue. Harbor Research predicts that from 2017 to 2023, the system revenue generated by private LTE networks will increase from US$22.1 billion to US$118.5 billion, with a compound annual growth rate of 32.3%.

Private LTE networks can be seen as important forerunners to 5G in specific industries

Telecom operators are providers of public network services, and private networks seem to be provided by other types of manufacturers. However, more and more operators are beginning to consider providing LTE private network services. LTE private networks provide operators with a good opportunity to enter the IoT business, rather than just selling IoT Sim card connections.

Private LTE networks are not only a supplement to 4G networks, but also a technology that can be commercialized on a large scale. Although 5G has occupied the headlines of major exhibitions, private LTE networks have also made low-key appearances at various exhibitions, providing trial and commercial deployment in many scenarios such as manufacturing. For example, at the Barcelona exhibition just over a month ago, although 5G stole the limelight, there were also many deployments of private LTE networks. For example, at this Barcelona exhibition, Ericsson announced that it would cooperate with operators to deploy LTE private networks for the manufacturing sector, in which Ericsson provided basic equipment and operators provided spectrum and operation services; Nokia directly cooperated with companies that have their own spectrum resources to deploy LTE private networks, and the network solutions displayed were used in ports and automobile manufacturers. Operators are also displaying LTE private network solutions, such as Deutsche Telekom exhibiting its private network solutions in the park to support Osram's lamp production; Vodafone plans to provide LTE private networks and 5G network slicing solutions for the manufacturing sector; Orange, Telefonica and other operators also have plans to provide LTE private network services.

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In fact, in private LTE networks, network solution vendors can achieve scenarios similar to 5G requirements through some special technical enhancements. For example, for scenarios that require higher reliability, network reliability capabilities are specifically enhanced in relevant indicators; for another example, some private networks are optimized for latency. Although it is not necessarily a standardized network deployment solution, if it is specifically optimized in the direction of 5G application scenarios, it will verify the potential user needs of 5G to a large extent, and it can be concluded whether some scenarios similar to 5G have real needs.

Challenges faced by operators in entering the private network sector

However, operators face many challenges in providing LTE private networks to users. According to Michele Mackenzie, a senior analyst at the well-known market research company Analysys Mason, these challenges mainly focus on:

• Competition with suppliers. Communications equipment suppliers are already providing enterprises with LTE-based private network solutions. In addition to Ericsson and Nokia, domestic equipment vendors such as Huawei, ZTE, and Datang have end-to-end private network solutions that can directly deploy private networks for large enterprises. If operators also provide dedicated private network solutions, they will directly compete with their suppliers.
• Allocation of spectrum resources to enterprises. Radio spectrum resources are very valuable. A few special industries have their own spectrum resources. These spectrum resources are different from unlicensed public spectrum. They are dedicated, private and strictly protected by relevant laws and regulations. Some industries already have dedicated private networks, and some industries have idle spectrum resources. At this time, it provides better convenience for them to deploy dedicated networks or private networks, but whether operators can convince these users to give up spectrum resources and provide network services by operators is indeed a challenge. In addition, some industries' private networks also use shared spectrum or unlicensed spectrum. The spectrum resource planning of these quasi-public products is also a major challenge. For example, the draft for comments on the use of spectrum for micro-power devices issued in China has had a wide impact on the industry, and ultimately made regulators very cautious in issuing policies.
• Business model. The main business model of operators for the Internet of Things is to sell connections. If they provide end-to-end network solutions, they should explore new business models and cooperation methods.

In China, there are few reports about operators entering LTE private networks. Operators provide users with more dedicated line or virtual private network services rather than a dedicated network isolated on the physical network. However, operators need to launch a combination of multiple network technologies and products to meet the needs of IoT services, and private networks are not excluded as one of their product portfolios. 5G's large-scale support for IoT applications has not yet arrived. Which applications are more suitable for 5G in the future? Perhaps the current private LTE network can give a preliminary answer.