Author: Zhao Xiaofei
IoT Think Tank Original
Guide
In the context of the increasing construction of overseas 5G private networks, the domestic industry is increasingly calling for the opening of the 5G private network frequency policy. Some people believe that apart from operators, enterprises build their own 5G private networks is the best choice for 5G to empower the industry. In the author's opinion, from the current development situation, there is no advantage or disadvantage between the two paths.
Recently, two French government officials and the president of the communications regulator Arcep announced that French vertical industry enterprises can apply for a dedicated frequency band of 3.8 GHz-4.0 GHz and build a private network for various use cases. This policy is undoubtedly an important means for France to enhance its 5G competitiveness in Europe, and it also provides more practices for global enterprises to build their own 5G private networks.
In the 5G era, the self-built private network of enterprises is no longer an inconspicuous supporting role like the 4G era, but has formed a powerful force that may grow into another protagonist of the 5G network. Of course, the path choice of self-built private network or the use of operator private network services is a decision in its existing context, and its advantages and disadvantages need to be analyzed in depth.
Enterprises have built their own 5G private networks and formed a strong force
After several years of practice, many overseas countries have regarded the self-built 5G private network as one of the core paths of their 5G development. During the just-concluded Mobile World Congress (MWC2022), 5G private network is one of the important themes, as a global mobile communication vane, 5G private network will be rapidly deployed in the next few years. The rapid development of self-built 5G private networks by enterprises is manifested in the following aspects:
1. Market expectations are constantly improving
Based on the development of the previous self-built 5G private network, many well-known market research institutions around the world are optimistic about the expectations of the 5G private network, and have released various research reports to predict its rapid development.
Recently, market research institute Berg Insight released a report that by 2021, the global private LTE/5G network will exceed 1,000, and by 2026, the global data will reach more than 13,500, with a compound annual growth rate of 57%. At present, private LTE networks dominate, with more than 700 as of 2021, and only more than 200 private 5G networks, and most of them are in pilot trial status; by 2026, private 5G networks will occupy the mainstream, close to 10,000, while private LTE networks are less than 4,000.
The latest IDC research predicts that global private LTE/5G infrastructure revenue will reach $8.3 billion by 2026, a significant increase from $1.7 billion in 2021 and a compound annual growth rate of 35.7% in the 2022-2026 forecast period.
A previous report released by ABI Research shows that global 5G private network spending will exceed 5G public network by 2036, and this forecast seems to be more aggressive.
2. National policies have been continuously introduced
France this time introduced 3.8 GHz-4.0 GHz dedicated frequency band policy, is a French 5G related agency issued after the release of a report, the report identified the French industrial 5G application lag behind other countries in Europe seven reasons, difficult to obtain the relevant spectrum frequency, suitable equipment and services and French industrial 5G ecosystem is not mature enough, this license, to promote French manufacturing, logistics, energy, health, smart city and other industries enterprises can fully use this 100MHz frequency, And this frequency band is adjacent to the French 5G core frequency band (3.4 GHz - 3.8 GHz), enterprises will be able to access a mature and diverse terminal and device ecosystem.
In fact, as early as 2019, France issued a policy to allow vertical industries to use self-built private networks in the 2.6 GHz and 26 GHz bands. The policy also includes the construction of a portal for the 2.6 GHz band to simplify the application process for industry customers for the 2.6 GHz band.
In addition to France, a large number of overseas countries have introduced spectrum policies for enterprises to build 5G private networks. The most typical is Germany, which allocated 5G private network bands in the range of 3.7-3.8GHz and 24.25-27.5GHz in the industrial sector in November 2019 and January 2021, which can be used by enterprises after application approval, making Germany the most active 5G private network market in the world. In addition, the United States, Japan, South Korea, the United Kingdom and other countries have introduced 5G private network spectrum policies.
3. Vertical industry enterprises have high enthusiasm for participation
Stimulated by the spectrum policy, leading enterprises in vertical industries actively apply for spectrum self-built 5G private networks. In Germany, for example, as of March 15, 2022, the German radio regulator BNetzA released data showing that 201 applications for 5G dedicated networks in the 3.7GHz-3.8GHz band and 10 applications for the 26GHz band have been received and approved. Among these applicants, many industrial giants such as Audi, BMW, Siemens, Bosch, and BASF have become the main players.
Japan is another active 5G private network market, and at least 96 units have obtained 5G private network frequency licenses in Japan, including manufacturers such as Hitachi, Toshiba, Toyota, NEC, Fujitsu, Mitsubishi, Canon, Yaskawa Electric, Ehime CATV, Akita Cable TV, ZTV, NTT East, NTTWest, NTT Com, etc., Tokyo Metropolitan Government, Ministry of Land, Infrastructure, Transport and Transportation, Hyogo Prefecture and other government agencies, as well as the University of Tokyo, Universities and research institutes such as the Institute of Railway Technology.
4. Suppliers show a diversified trend
The development of 5G private network has broken the previous pattern of communication equipment suppliers dominated by Huawei, Ericsson, Nokia, and ZTE, and related suppliers have shown a diversified trend.
Among them, traditional communication equipment suppliers are still one of the main forces. The most typical is Nokia, which in recent years has focused its strategic focus on the enterprise private network market, launching Nokia Digital Automation Cloud (DAC) and Modular Private Wireless (MPW) two 5G private network solutions. In addition, Ericsson also has a similar private network solution.
In recent years, with the development of Open RAN and small base stations, manufacturers in this field have also entered the 5G private network market. Due to the difficulty of entering the operator market in the short term, the enterprise 5G private network has become a breakthrough, and typical manufacturers include Airspan, JMA Wireless, Mavenir, NEC and so on.
Public cloud vendors will not miss this opportunity to enter the telecom business market, typical manufacturers include AWS and Microsoft. Taking AWS as an example, at the end of last year, it launched its solution for enterprise 5G private networks, AWS Private 5G, a new hosting service from AWS, designed to make it very convenient for enterprises to build their own 5G private networks, AWS claims that AWS Privilege 5G allows enterprises to purchase, deploy and expand 5G private networks in just a few days, rather than months, posing a challenge to the 5G public network.
It can be seen that from the aspects of market expectations, government policies, demand-side enthusiasm and supplier diversification, overseas enterprises are highly expected to build their own 5G private networks, and there is a trend of becoming the "protagonist" in the field of 5G networks. Domestically, this area does not seem to be conclusive.
Enterprises build their own private networks is not the norm for 5G to empower thousands of industries
As we all know, domestic operators have launched special programs for 5G private networks, both the most lightweight 5G network slices, and the highest dedicated level of independent private networks, but these programs are based on operators to master radio frequencies and infrastructure, enterprises are more rented related programs, frequencies and infrastructure is not owned by enterprises, with the characteristics of "public network private use", this path choice is in stark contrast to overseas allowing enterprises to build their own 5G networks completely independently.
In the context of the increasing construction of overseas 5G private networks, the domestic industry is increasingly calling for the opening of the 5G private network frequency policy. Some people believe that apart from operators, enterprises build their own 5G private networks is the best choice for 5G to empower the industry. In the author's view, from the current development situation, there is no advantage or disadvantage between the two paths, and the corresponding path decisions are based on the background of existing policies, markets, resources, etc., and choose to adapt to their own environment. We may wish to analyze it from the following two aspects.
1. The resistance of overseas 5G public networks is an important factor in choosing an independent private network
Judging from the current progress, overseas developed countries such as Europe, the United States, and Japan regard the construction of independent 5G private networks as a core path and introduce policy support. In the author's view, the construction of 5G public networks in these countries and regions is facing huge resistance, which is an important factor in its choice to promote the construction of independent 5G private networks for enterprises.
As the core infrastructure for the digital transformation and upgrading of various industries, 5G is of course highly valued by all countries. However, the progress of 5G network infrastructure construction in various countries is not smooth, various obstacles make operators' 5G construction slow, and various vertical industries have become a way out of the way out of the 5G infrastructure construction schedule.
For example, the licensing fees for 5G frequencies have become a heavy burden for operators. Taking the United States as an example, AT&T, Verizon, T-Mobile and other operators have invested $117 billion in 5G mid-band spectrum in the past 12 months, WITH&T's total debt by the end of March 2021 reaching $209.08 billion, verizon's total debt reaching $180.7 billion, and high costs and debt have made its network construction underspensive.
In the case of the slow construction of 5G infrastructure by overseas operators, vertical industry enterprises are unwilling to wait, and the government releases the 5G private network frequency, on the one hand, it meets the needs of some leading enterprises, on the other hand, it also promotes the development of domestic 5G in another way. When operators are under-invested, it is an effective strategy to mobilize the forces of multiple vertical industries to invest in 5G to ensure that the construction and application of 5G in their own countries will not fall behind.
In contrast, in China, operators have invested and built very much in 5G infrastructure, and by the end of 2021, the number of 5G base stations that have been completed and opened on the mainland has reached 1.425 million, accounting for more than 70% of the global share. According to the "14th Five-Year Plan", it is expected that the number of 5G base stations will exceed 3.6 million by the end of 2025, and the construction of 5G networks will emphasize accuracy, and will strengthen support for vertical industry application scenarios based on demand.
Although the construction of independent 5G private networks can ensure that they have network assets and higher security and autonomy, but what needs to be paid is a higher cost, if the construction of overseas 5G public infrastructure can reach the speed and strength of the country, can quickly provide a 5G-ready environment for vertical industries, I believe that a large number of enterprises are not so enthusiastic about building independent 5G private networks. It can be said that the launch of the 5G private network policy is not only considered to promote the in-depth application of 5G in vertical industries, but also the helpless choice of slow construction of 5G public networks.
2. A completely independent 5G private network is not an effective path for 5G to empower thousands of industries
In the author's view, the self-built 5G private network of enterprises must not be the norm for 5G to empower various industries. From the practice of 5G private network frequency application in overseas countries, we can see that the main body that applies for frequency and builds an independent 5G private network is more leading enterprises in various vertical industries. Building a 5G independent private network owned by enterprises requires a lot of investment, and this form is a "luxury" game, which can only allow 5G to empower a small number of head enterprises.
According to Berg Insight data, by 2026, the number of self-built 5G private networks by global enterprises will be close to 10,000, which means that by 2026, less than 10,000 companies in the world will be able to build their own 5G private networks, which is less than 10,000 enterprises are basically the head enterprises in various industries, they can enjoy the exclusive services brought by 5G, but how can the small and medium-sized enterprise groups with larger groups enjoy the exclusive services brought by 5G?
Of course, in addition to the self-built 5G private network, operators have also launched a variety of service forms of 5G private network, according to the level of service there are independent private network, hybrid private network, virtual private network and other forms of provision, can also be tailored and increased according to the needs of enterprises, the cost difference between different levels is also very large. This is similar to the different services of air travel, economy class, business class, first class, business jets, etc., the same is for travel, but the service experience is not the same, the travel efficiency is not the same, of course, the difference in charges is also very large.
According to the National Bureau of Statistics, the number of industrial enterprises above designated size in the mainland exceeds nearly 400,000, and only a few of these enterprises have the ability to build their own 5G independent private networks, but most of them may still have the ability to realize the application of lightweight private networks such as network slicing, and through 5G virtual private networks, small and medium-sized enterprises can enjoy exclusive 5G network services in digital transformation and upgrading.
Therefore, from a domestic point of view, whether to release the 5G private network frequency policy has limited influence on the application progress of various industries, after all, only a very small number of leading enterprises have the strength and willingness to build a high-investment 5G private network, and this form of network can not be scaled up to promote replication, let alone represent the level of the industry's overall 5G application.