Unlocking the value of private cellular

Given the push for digital transformation across various industries, the availability of spectrum and the interest in 5G, there has been an increased demand in private cellular networks. This article explores the business value that private cellular can deliver and key use cases it can enable.

The future mode of enterprise wireless connectivity

Private cellular networks (4G LTE or 5G) offer a new mode of enterprise wireless connectivity, promising a unique combination of fixed and wireless capabilities that alternative technologies, such as Wi-Fi, Bluetooth and ethernet, cannot deliver.

There are clear benefits that private cellular can deliver for enterprises. These include enhanced security, reliability, coverage, control, mobility, ultra-low latency, all of which can be tailored to each customers’ specific requirements.

While these benefits apply to all industry verticals and applications, some of these benefits are more of a “must have” for certain industries. For example, industries such as oil, gas and mining may be particularly interested in the coverage offered by private LTE/5G in rural and/or offshore areas where Wi-Fi is problematic and building out fibre is not feasible. Private cellular can also provide the reliability that is crucial for industries with mission critical applications, where there is risk to either personnel, production or the environment.

Different degrees of cellularity and deployment pathways

Different industries are also at different levels of maturity when it comes to the interest and deployment of private networks. This can depend on whether private cellular is a “must have” i.e. my requirements cannot be met by existing solutions (e.g. Wi-Fi or ethernet), or more of a “nice to have” where private cellular may be able to serve these requirements better than other alternatives.

The need for a private cellular network depends on the technical requirements, which we refer to as the “degree of cellularity”, which we explore in detail in our report here. This includes factors such as:

• The nature of the operating sites: Is it indoor only or outdoor or hybrid? If it is indoors, does it have higher ceiling spaces? Is it in a remote, rural or offshore location where public cellular is limited or in an urban area?
• The need for mobility on-premises for seamless handover between different access points within the operating site, in order to minimise any potential connection loss if any

For example, the mining industry has unique connectivity requirements that are underserved by public cellular, problematic for Wi-Fi to provide outdoor coverage and expensive for fibre given the topography, meaning the case for private cellular is well established in this vertical. The remote locations of mines and the mission criticality of most use cases, given the hazardous environment, has meant that private cellular networks are increasingly seen as a “must have”. Similar issues are also found in areas like seaports, oil wells and airports.

Other industries are less mature in the exploration and deployment of private cellular but are increasingly interested in understanding the value of deploying a private cellular network for their operating sites, the expected return on investment and impact on key business metrics (e.g. Overall Equipment Effectiveness in manufacturing). Many enterprises are also looking at private cellular as an innovation platform and how it can play a role in driving greater flexibility and transforming the way they operate, as part of their wider digital transformation initiatives. However, this latter approach requires much greater stakeholder alignment within the enterprise organisations that is often challenging to secure.

The private cellular adoption is still in its early stages and the market is still nascent. Although we have seen a number of announcements, which we will dive into further, many of these deployments today are early stage ones – proofs of concept, pilots or trials – that have yet to scale.

Key verticals and use cases enabled by private cellular

We see a number of different use cases that private cellular can enable, some more horizontal and applicable across a number of industries, and others much more vertical-specific. We highlight a few examples below and their applicability to key industries that are looking to adopt private cellular.

Note that even horizontal use cases such as video analytics can have very vertical-specific flavours.

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Case study examples

Intelligent process automation with video analytics

ABB, a power and automation technology manufacturer, are piloting the use of 5G technology to enable intelligent automation in the assembly of its drives. This use case demonstrates the business benefits derived from the reliability of a private 5G network. The pilot was undertaken in partnership with Telia, a Nordic operator and Atostek Oy, a software engineering firm that provides computer vision and AI capabilities. During production, cameras monitor the assembly of drives. Video analytics is deployed on the production line, automatically triggering alerts if issues arise in real-time. The low latency of a 5G network enables mission-critical real time feedback for process automation. As Wi-Fi is prone to interference, it could not be relied upon to deliver real-time analytics. For that reason, ethernet cables would typically be used, but reconfiguring cables is time consuming and costly. 5G offers a clear advantage in terms of latency and reliability for automating manufacturing processes.

Autonomous Intelligent Vehicles in manufacturing

This case study demonstrates the transformative power of the increased mobility offered by private 5G. The Nokia 5G factory in Oulu, Finland manufactures and designs production processes for telecoms products that are tested on site before being scaled in other production facilities. Increasing automation levels in the material flow was a key objective, enabled by the Omron LD Autonomous Intelligent Vehicle (AIV) which automates the delivery of material from storage to the production line.

The AIV was previously connected to Wi-Fi and operated along a fixed route. However, due to the length of the AIV route along the factory floor, several Wi-Fi access points were required to deliver adequate coverage, which in turn led to frequent disconnection during handovers. Manual reconnection was a time consuming and ultimately costly endeavour. Installing a private wireless solution, the Nokia digital cloud automation platform, enabled wide area connectivity for the AIVs meaning they can be used anywhere on the factory floor with no need for network reconfiguration as they moved into different zones. It has led to a 30% improvement in material feed operation efficiency and a 40% improvement in overall equipment effectiveness.

Aircraft traffic control and passenger connectivity

A number of airports including Helsinki Airport, have begun to pilot and deploy private networks to improve their operational efficiency, financial success and deliver enhanced passenger experience. Delivering on these metrics requires a converged communication system with high levels of capacity and security to support the connectivity requirements of thousands of employees – retail, air traffic control and customs, as well as a constant flow of passengers.

In the past, airports have tended to deploy multiple separate networks. This leads to siloed networks with distinct technology requirements. Having a single dedicated private network allows airports to connect all fixed and wireless technology, including IoT platforms, mission critical services and cybersecurity. This helps to reduce OpEx, as maintenance and optimisation is only required for one network.

It also benefits airports in increasing their revenues, as they can sell fixed and wireless connectivity to a range of clients that run their businesses through the airport’s network – from airlines to retail outlets. Furthermore, as customer expectations continue to grow, being able to provide uninterrupted connectivity through the airport will be seen as a key differentiator for airports trying to improve the customer experience.

Precision control and monitoring for health and safety in mining

Where other industries tend to be in the trial/PoC phase, the mining industry has several use cases already in live production environments. Telstra’s partnership with Ericsson to provide a standalone private LTE network to South32 Cannington mine in Australia was delivered via a private, virtualised core and LTE radio technology. The pervasive connectivity offered by private networks is extremely mission critical in safety and productivity outcomes in the mining industry. As underground coverage is not possible through Wi-Fi or public cellular, private LTE is the obvious option as it offers high throughput and low latency. This enables the connection of staff to vehicles and sensors around the mine. The ability to control equipment without interruption has led to safety and production improvements for staff, machines and systems both in this specific use case and across the industry.

What next?

It is clear that private cellular networks can enable new use cases across a variety of industry verticals, delivering new possibilities for enterprises. However, enterprises today still face challenges when deploying private cellular. Many lack of experience, know-how and expertise in enterprise-grade cellular networking in comparison to Wi-Fi, and securing stakeholder alignment for private cellular adoption is often challenging with the number of stakeholders involved and complexity in decision-making processes.

Enterprises also look for partners that bring industry-specific expertise and credibility and understanding of their business and industry, which many telecoms operators today lack. Private cellular also requires a more consultative solution-based approach, rather than a transactional-based one-size-fits-all approach that customer-facing telco teams are accustomed to.
We highlight three broad steps that telco operators can do to position themselves for success in private cellular networking in our article here and represent the private networking opportunity in more detail across two dimensions here, looking at 4 archetype situations for deploying private LTE/5G.

At STL Partners, our insights are based on a continuous research programme with enterprises, telecoms operators and other ecosystem players in the private cellular landscape globally, and we focus on the future for telecoms and network stakeholders and how to get there.

Yesmean Luk

Yesmean Luk

Principal Consultant

Yesmean is a Senior Consultant at STL Partners and has led and managed client projects with both operators and technology companies across a number of domains, including private networks, telco cloud, network slicing, edge computing and IoT. Before joining STL, she held various consulting roles at Deloitte and IBM. She holds a Global MSc in Management from the London School of Economics, specialising in strategy and international business.