Industrial companies are building private networks because they have to, says Nokia
Industrial companies will invest in their own private LTE and 5G networks because the business case for digital change is irresistible, and because they want control of their own infrastructure. This leaves operators, betting on new revenue from enabling industrial transformation, in the cold, potentially. Vendors like Nokia, meanwhile, are positioned to serve these enterprises direct.
This is the gist of a conversation with Nokia at MWC 2019 in Barcelona, at the end of last month. “The race to digitise industry is going at such a rate that if enterprises can’t get help, they will do it themselves. Because the returns are so big,” explains Richard Kitts, vice president of enterprise and IoT services at the Finnish vendor.
Of course, the message from Kitts was more nuanced. Operators, the big ones especially, are very able to serve industry, and have invested to do so in many cases. But the sums for building new network infrastructure are less clear for operators than for industrial companies, which will use LTE and 5G connectivity as a baseline for transformative efficiency drives and producivity gains
Kitts explains: “It’s the operator business-case in reverse. Operators invest in networks when it makes sense, whereas industry is investing because it doesn’t make sense not to – they are cutting their own throats if they don’t.”
Certain industrial markets, notably manufacturing, are compelled to modernise in order to keep pace with demand from customers and advances by rivals. “It’s so competitive. They are facing 100 times the complexity and 10 times the time constraints, compared with the status quo,” says Kitts.
He gives the example of automotive design, from ideation to production. “It used to be seven years; it has been cut to five, three, two-and-a-half years.” The concept of physical prototyping has almost vanished, he says.
He cites Lucid Motors, the luxury electric vehicle (EV) startup, founded by Peter Rawlinson, Tesla’s former chief engineer: its first model was developed from scratch in three years, with hardly a real-life mock-up, just computer-aided design (CAD) and engineering (CAE), and various digital twinning and additive manufacturing phases.
“In manufacturing, this is the phenomenon,” he says. It is not just the quickening pace of development that raises the need for dynamism on the factory floor, but the spiralling expectation from end-markets to make products highly bespoke and take rapid delivery of them.
Nokia is a fan of private LTE, even when it sidesteps the operator set by running in unlicensed spectrum. It is closely involved in both the MulteFire Alliance, which has specified LTE for unlicensed usage in the global 5GHz band (and more), and the CBRS Alliance, which is focused on LTE in the 3.5GHz band in the US.
Its position, or tone at least, has appeared somewhat different to Ericsson’s, even as its Swedish counterpart has been similarly positioned in these new tech alliances. Ericsson told MWC 2019 it will stand behind its old operator customers at every turn, at least until they step aside for it to engage directly.
Finnish vendor Nokia appears bolder. It is seeking to engage directly with enterprises on private LTE networks, having sized up the market, rated its potential, and invested in industrial know-how. Even so, Kitts sounds more cautious, initially.
“We have an affinity with service providers, of course. Why would we not go them – when we already have a relationship, and we can add value together? So our default approach is to work with them, where we can,” he explains.
But a perfect storm has been unleashed for industry, and its tech servants, by the combination of 5G, IoT, and AI. The opportunity for industrial revolution is knocking for the wireless community, and yet operators are not in position, or mood even, to open the door – even when it is blowing off the hinges. Kitts acknowledges this, to an extent.
“Enterprises have requirements that aren’t always served by operators,” he says. “In those cases, we’ll probably have a chat with an operator first, to say this is of interest. It might be we need help to get some frequencies, even. But if it ends up as a direct engagement, then it’s a question of what is driving it.”
So, what is driving the interest in private LTE, whether in licensed or unlicensed spectrum? Some companies are just massive, says Kitts; their industrial campuses stretch for miles and warrant high-grade, blanket wireless coverage. The business case might even stack up for operators.
More than this, enterprises want LTE to orchestrate their operations. “They want low latencies because OT protocols are demanding in terms of feedback, and they want high fidelity positioning because machinery and assets get moved around,” explains Kitts.
“LTE delivers these things – alongside high resiliency and availability, and benefits from being untethered.”
But while the door is slamming open for some, it is out of reach for others. The biggest operators are in a position to push through it, he suggests, and mix advanced LTE with industrial control.
“Normally the number one and two operators in a country have the capability in terms of system integration and enterprise know-how.”
He qualifies this last comment. “It’s not black-and-white,” he says of the types of operators capable of serving the industrial set. “It is a question of whether it fits their business model,” he adds.
But is there even a choice for them, really – between the playing for ever-decreasing returns in the consumer market and the rich promise of the enterprise sector? What operator would not choose to to help forge a new industrial revolution with private networks?
Back to our open door analogy: barriers of culture and funding stand in the way, before the threshold can be reached; most operators will be deterred or defeated by one or the other. Nokia is investing in order to gain the same access. It has earmarked five verticals: transportation, energy, manufacturing, public sector, and web-scale companies.
“You need solution managers that can speak the language and translate back into the organisation. You need horizontal technology expertise, across connectivity, which is our main play, as well as across applications and platforms, and third-party devices and device testing. And you’re going to need strong partnerships because you can’t do everything alone,” says Kitts.
“When you put all this together, it is a big investment. It’s not a carriage, voice, or data play; a solution’s involved. The risks are different, the scope of work is different, and the mindset is different. We have that mindset at Nokia because we’ve always served customers that way. Some operators have that mindset, but not all of them.”
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