Mengxin Li

Silicon Valley

Companies fed up with crappy Wi-Fi are deploying 5G instead

Automakers, oil companies, and shipping ports plan to build private 5G networks for faster, more reliable connectivity.

Nov 28, 2018
Mengxin Li

Someday soon, the wireless connectivity inside an Audi production facility may be as advanced as the vehicles.

The German automaker plans to build its own, private wireless network at its production sites using 5G, the next generation of cellular technology. Audi believes this private 5G network, which the company would be responsible for managing, will enable it to connect manufacturing robots and other devices faster and more securely than existing Ethernet, Wi-Fi, or 4G LTE options, says Henning Löser, the head of its production lab.

5G public networks began rolling out in the US this year and are expected to be available across the country in 2020. Like previous wireless generations, 5G will boost upload and download speeds for consumers’ phones and tablets. But the new technology is expected to popularize private cellular networks because it was designed with more capabilities than other wireless technologies. Because 5G is expected to slash data transmission delays from about 30 milliseconds to less than one, devices that need instant connections to work properly could finally join a network and exchange data as part of the internet of things (IoT). And 5G can be programmed to treat different types of data or equipment differently—for example, favoring mission-critical devices so that they keep operating even if the rest of the network is disrupted.

That should make 5G a better fit for some companies than existing options like 4G LTE, which lacks those newer features; Ethernet, which requires fixed cables; or Wi-Fi, which can be hacked more easily than cellular connections. “A manufacturer could run a private LTE network today, but it wouldn’t be able to control something like a factory robot,” says Patrik Lundqvist, a technical marketing director for Qualcomm, which aims to sell chipsets and modems for use in private networks. 

Besides Audi, BMW, Daimler, and Volkswagen have expressed interest in managing their own 5G networks, as have large chemical, gas, and oil companies; utilities; and major shipping ports, according to analysts who spoke to MIT Technology Review.

Private 5G networks could also create a huge market for technology companies that manage these networks or sell related devices. Giants like Ericsson, Huawei, Nokia, and Qualcomm, as well as smaller players like Wave Wireless, are already testing and marketing gear. Harbor Research, a US-based research and consulting firm that specializes in IoT analysis, estimates that the market will grow approximately 30% a year through 2028, when it will generate $356 billion.

Factory of the future

Manufacturers, especially those that run factories, seem the most eager to build private 5G networks. They are especially enthusiastic in Germany. Klaus Mittelbach, the CEO of Zvei, the country’s influential trade group of electrical and electronics manufacturers, says German companies view the technology as a way to maintain their leadership in advanced manufacturing—a national initiative often referred to as Industrie 4.0. “5G private networks will keep Germany competitive in times of digitization [by enabling the] factory of the future, which will be highly flexible and support a high degree of customization,” said Mittelbach in an e-mail interview.

In this vision of an uber-modern factory, 5G would provide ubiquitous wireless connectivity so that sensors could be placed everywhere, workers could stream augmented-reality videos for guidance, and equipment could be moved easily to help managers experiment with different production methods and tailor operations to demand. As Mittelbach describes it, “The walls, roof, and factory floor will probably be the only fixed components left.”

Audi is a prime example. Currently, the automaker uses Wi-Fi as the main wireless technology at its production facilities and connects its robots primarily via Ethernet. It wants to unplug its robots and make its production “more agile and flexible,” but its Wi-Fi struggles when robots need to move quickly or stream data in real time, says Löser. So in August, Audi started testing 5G as a way to control some of its robots that glue vehicle parts together. Though the trial is ongoing, Löser says results thus far have been “very satisfying.” Audi plans to deploy 5G in production facilities at its German headquarters within a few years and then expand it to other Audi Group factories; the company may even use it to replace Wi-Fi, he says.

Required gear

Of course, companies like Audi can’t do all this themselves. They need networking equipment, software, and—most important—access to spectrum, the radio frequencies that carry wireless signals. Audi got its 5G gear through a partnership with Ericsson and is counting on the German telecommunications regulator, the Bundesnetzagentur, to sell it spectrum. In May, the agency said it would distribute spectrum to manufacturing and industrial companies for local and regional use, though it has yet to release exact details. Once Audi obtains spectrum, it will decide whether to hire a company to help run the network.

In other countries, companies are likely to take a similar route to private 5G networks. Cost may limit demand to larger companies. Alex Glaser, the vice president of Harbor Research, estimates that a company would pay $100,000 for the necessary hardware, which looks something like Wi-Fi gear—a set of slim plastic boxes with antennas. Because cellular signals travel farther than Wi-Fi, companies won’t need as many of these “small cells” as they would routers, but the cells will cost more, at least at first.

There’s also the cost of operating the network and acquiring spectrum. Some companies will oversee their networks themselves, whether because of liability and security concerns or because they have large in-house technology teams. That means they’ll have to assume all the responsibilities that AT&T—or Deutsche Telekom—would normally take care of, such as designing, deploying, and maintaining the network. Some companies will outsource management to specialists. Others may use private networks to operate sensitive parts of their business and stick to public cellular networks for less sensitive areas. In the US, a spectrum band known as CBRS could be used for private 5G networks; the Federal Communications Commission will auction off licenses.

Once companies obtain spectrum and gear, they can build networks, even if mobile operators haven’t activated 5G in their region yet. “As soon as both [those things] are available, our companies will start deploying private networks,” says Zvei CEO Mittelbach.