Germany has issued 67 local spectrum licences for private LTE and 5G to enterprises since November 2019. What should we make of this number, and the run-rate so far for industrial-grade cellular in the home of Industrie 4.0?
Because 67 does not sound like that many, on the face of it. Just Germany’s noisiest industrial 5G evangelists could probably count such a number between them. And there are supposed to be 10 million-odd global candidate sites for private cellular in the manufacturing sector, alone.
At the same time, and despite the guff in the consumer market, industrial 5G – 5G-proper, as an agent of industrial change – is a couple of years away yet. The terms of these new ‘vertical’ licences in Germany, set by the Federal Network Agency (BNetzA), dictate they can be revoked if the airwaves are not filled within a year, or remain vacant for such a period. As such, applicants are testing the water still, and the flood is yet to come – indeed, if it ever does.
But firstly, that statistic, and the background that goes with it. The 67 local licences, which BNetzA quoted to Enterprise IoT Insights this week, each cover a single site. They make for a 10-month running total since Germany opened applications for local licences in the 3.7–3.8 GHz range, in arguably the most decisive regulatory shift for the global telecoms industry in an age.
Moves by the Federal Communication Commission (FCC) to refarm the parallel 3.55-3.7 GHz ‘CBRS’ band for private and shared usage in the US date back as far as 2010, and had a head of steam at least a year before Germany liberalised spectrum for industry. The influence of the CBRS regulation, now falling in place with the Priority Access License (PAL) auction, is seismic, for sure.
“The US set the whole scene for ‘vertical’ spectrum; the rest of the world has followed,” Nokia told Enterprise IoT Insights recently. Germany, included. But CBRS activity has slowed because of the complexity of the spectrum access system (SAS), to manage overlap and interference between incumbent users. Germany, by contrast, has ruled quickly on 100MHz of prime 5G spectrum, and is doling it out for the price of a phone contract.
The pace has quickened as a result. The likes of Bosch, Siemens, Lufthansa, and BMW have piled in. In France, frequencies in the 2.6 GHz band have been offered to metropolitan businesses by regulator ARCEP. Paris airport operator ADP has a 10-year licence; so does Air France, by extension, and electric company EDF, separately. SNCF and Airbus are in discussions, by all accounts.
Ofcom in the UK has released a tranche of spectrum at 3.8-4.2 GHz for local deployments, requiring national operators to hand over unused licensed spectrum to enterprises; plus the lower 26 GHz band will be reserved for private and shared access as well. The Netherlands has set aside spectrum at 3.4-3.45 GHz and 3.75-3.8 GHz; Sweden has done the same at 3.72-3.8 GHz.
Japan, Australia and Hong Kong will allocate spectrum for localised 5G setups variously in the 3.7 GHz, 26 GHz, and 28 GHz frequency bands.
With such a rush of activity, what are we to take from the German system, as a platform and bellwether for the original Industrie 4.0 vision? BNetzA is not about to comment on momentum or forecasts, in terms of licence numbers. Manufacturing appears to be the key sector, cited alongside more nebulous sounding disciplines and locales – “trade fairs, airports, universities, and research [centres]”.
BNetzA states, simply: “5G will be an indispensable requirement for the ‘factory of the future’, and [will] help to strengthen the international competitiveness of German industry, to drive technological development and to create and secure jobs.”
We put the same question to analysts. “That seems a reasonable number,” responds Dean Bubley, founder at Disruptive Analysis, of the local licence count in Germany.
The longish 3GPP delivery schedule for 5G is noted, as well; the latest Release 16 was only frozen in early July, and Release 17, containing much of the key real-world industrial mechanics – notably, ultra-reliable low-latency communications (URLLC) and time-sensitive networking (TSN) – will not come until the middle of next year. It will take until then to raise 5G above other wireless tech, notably Wi-Fi, as a connectivity workhorse for Industry 4.0.
Bubley reflects: “Companies may wait until they really are sure.”
He goes on: “The key thing to remember is Release 16 has only just been finalised, which means proper industrial 5G can only start to be ‘tested’ now. It will only get deployed in anger in a couple of years – assuming all goes well. Timelines are protracted, especially in terms of getting Release 16/17 gear that is good enough for prime time in a proper commercial plant.”
It is the same message from Pablo Tomasi, principal analyst for private networks at Omdia (formerly Ovum). The industrial market is kicking the tyres on 5G, still; 67 is a decent number, he implied, and the real rush will come in time, with Release 17, if the tyre-kicking delivers the right grip and roll.
Tomasi comments: “Despite the hype surrounding private networks, this market is effectively at a trial stage. This is particularly clear in areas such as industrial and manufacturing, where there are serious concerns and challenges on the role of private cellular networks. Here we will see a relatively slow and steady growth over many years, not a spike from one day to another.”
It might be noted, as an aside, the fanfare with industrial 5G, in whatever form it takes, appears to play into a universal chorus, with operators, industrialists, and market watchers all lending their voices. Private 5G will outrun public 5G for spend and spectrum, said ABI Research recently. It will just take time, as the technology comes up to par, and the natural conservatism and paranoia in industry is overcome.
But the industrial jeopardy in the private LTE and 5G market is very real; Bubley and Tomasi both note the influence of Deutsche Telekom in the German market, and the position of the operator community, at large, in the networking battle for industrial hearts and minds. “Deutsche Telekom is trying very hard here. It wants to show regulators the German model of spectrum set-asides is not optimal,” says Bubley.
The GSMA’s policy position states: “Most verticals do not need dedicated, fully isolated private networks. In general, only operational isolation is required which can be fulfilled by public 5G networks in which verticals are able to independently monitor and even fully control a network slice or slices.” Deutsche Telekom’s position is the same; its opposition is just heightened, as it faces-off in Germany.
And it is worth noting, of course, both Deutsche Telekom and Vodafone have found a way into private 5G deployments by Lufthansa and BMW, respectively. For its part, Deutsche Telekom has said in these pages both that the industrial market underestimates what it takes to manage a private cellular network, that only the 20-30 largest industrial companies (not venues) in Germany will go their own way, and that it expects to manage most private 5G networks at 3.7-3.8 GHz, anyway.
But then, the operator community must jump through the same hoops with 5G slicing and local sub-letting, as Tomasi observes. “Service providers in Germany are attempting to target the market demand with flexible campus solutions. But they still face the same challenges as the rest of the industry in proving the technology and business model, plus they also face some category-specific obstacles. There is no certainty yet on what will be their ultimate role in the market.”
It might be noted, the shadow of 5G (New Radio) in unlicensed spectrum (5G NR-U) is lengthening, as well. Included in Release 16, the FCC in the US has just released a staggering 1,200 MHz of spectrum in the 6 GHz band for Wi-Fi and 5G NR-U. “NR-U can advance private networks with the power of 5G and alleviate spectrum constraints to deliver better 5G experiences,” says Qualcomm.
But Bubley puts it best, as far as the industrial intrigue for the operator set goes. “Mobile operators can’t do proper 5G slicing yet, at industrial scale, as they have also had to wait for Release 16. Also, what capacity do they really have for custom builds? Can an operator do 10, 50, 100 projects a year, if each one is ‘special’? What happens if 1,000 companies want one? ‘Take a ticket and take a seat’. Expected wait time: 15 years.”
