5G private networks: tsunami approaching with the “Cloudification” of corporate telecoms.

By Mr. Louis Naugès Managing Director of DHASEL Innovation in France (*)

Mr. Louis Naugès (*) and A.Khaouja

15 years ago, in 2006, we witnessed the birth of the Public Cloud in its infrastructure dimension, IaaS (Infrastructure as a Service), with AWS, Amazon Web Services.

At the time, “serious” people questioned the relevance of this decision by Jeff Bezos, CEO of Amazon, as this article from the BusinessWeek magazine shows.

This breakthrough innovation changed the global IT industry forever; Public Cloud solutions, of which AWS remains the leader, have become essential for almost all companies.

At the end of November 2021, during the re:Invent 2021 conference week, AWS announced that it was entering the world of enterprise networks.

I predict that this “cloudification” of professional telecommunications will have as strong an impact on the telecom industry as IaaS did in 2006 on that of traditional computing.

Like any “exponential” change, the impacts will be weak during the first years, until 2025. Only a few “Early Adopters” companies, in the “Gauss curve” sense of the term, will make the leap.

In 2030, this cloudification will become the norm, and will be implemented by the “Majority” of companies.
(A minimum knowledge of network technologies is useful to fully understand the scope of upcoming revolutions. They are not essential, but they make the reading easier).

Networks: Disruptive Announcements at AWS re:Invent 2021:

The highlights of re:Invent are the “Keynotes”, plenary conferences which last about two hours and during which major announcements are made.

This year, for the first time, Adam Selipsky, the new CEO of AWS, took over from Andy Jassy, who was appointed as new CEO of Amazon to replace Jeff Bezos.

Two of these important announcements were related to business telecommunications:
● Creation of private 5G networks. The key word is “private”: 5G networks that companies can manage themselves, without needing telecom operators.
● The presentation of new ads from Dish Network company.
Important: the rules concerning the management of radio frequencies being currently very different between the United States and Europe, these announcements concern in priority the United States.

I will come back at length to these differences between Europe and the United States later in this post; it is an essential subject.

5G private network, by AWS:

(In the video of this Keynote, the announcement is made during the minutes 40 to 43)
It is worth recalling the advantages of 5G networks, valid both for consumer networks and for these new private networks:
● Speed up to 10 Gb/s downlink.
● Very low latency, between 1 and 10 ms.
● Larger capacity to connect millions of objects.
AWS has announced that it is becoming… a provider of turnkey 5G private network solutions provider.

AWS offers companies the opportunity to install the necessary elements in their office buildings, factories, or warehouses to have a private 5G network.

It is important to understand why this announcement is a major break:

1 – AWS is able to provide all the components needed to build this 5G private network:
● Materials.
● Software.
● SIM cards.
● Software allowing the automatic configuration of the network.

2 – This solution uses free frequency bands: as with WiFi, the company can deploy its private 5G network without requesting authorization from telecom regulatory bodies.

A minimum knowledge of frequency regulation is necessary to understand its importance. My professional telecom friends will forgive me if I simplify too much during my demo.

Qualcomm, in a webinar and the corresponding documents, from which I extracted some graphics, presents the techniques used to build 5G NR-U (Next Radio-Unlicensed) networks

There are three possible modes of use of a 5G network by companies:

● Anchored NR-U: frequencies are used simultaneously by telecom operators and businesses.
● Standalone NR-U: the company builds a completely autonomous 5G network, for its sole use.
● 6 GHz spectrum greenfield: the 6 GHz frequency range has been made available for free uses, both for 5G and next-generation WiFi 6E. The number 6, used for 6 GHz and WiFi 6 is a coincidence.

The expression “Greenfield” used for this range of frequencies means that everything is possible there without having to undergo the constraints of existing networks.As this graph shows, the 1200 MHz freed up in this 6 GHz frequency range represents a gigantic data-transport capacity. For comparison, 2.4 GHz WiFi band has 100 MHz bandwidth.

3 – The cost of the solution is independent of the number of connected objects. This is particularly important for connected IIoT (Industrial Internet of Things) objects.

4 – AWS offers its private 5G solution in OPEX mode, “Pay as You Go”. We find in this characteristic one of the major breaks in Cloud Computing: the switch from CAPEX (Capital Expenditure) or investment, to OPEX (operational expenditure).
In summary: a company can ask AWS to install a private 5G wireless network in its locations without needing telecom operator’s services!
The announcement is “preview available today”, in short, this means that this service should be launched during the year 2022.

Dish Network, with AWS

Dish Network is an American telecom player specializing in satellite broadcasting of television and Internet content. It is a company with about 15,000 employees, 10 million customers for its television services and 5 million for its wireless network which they acquired in 2019.

Dish Network’s intervention can be seen in the video of this Keynote between minutes 43 and 52.
Cock-a-doodle Doo ! The person presenting the Dish Network offer is Marc Rouanne, Chief Network Officer, French and CentraleSupélec engineer.

Once again, we find ourselves in a disruptive offer, made possible by the arrival of a new technology, 5G networks in free and abundant frequencies.

Dish Network’s ambition: to become the AWS of wireless telecommunications.

It is important to clearly understand where the breaks are: for the first time, it becomes possible for Dish Network to build wireless networks without being a telecommunications operator, without buying licenses, and all over the world as the same free frequencies can be used in all countries.

What are the main advantages of this new generation of wireless networks:

● A “network of networks” can be built instead of a single network. Each company will be able to configure its customized network addressing its needs and make it evolve constantly.

● Companies will be able to manage their data in an optimized way.. The network is natively “data centric”, which allows companies to directly use the data obtained and stored in… the AWS Cloud.
● It makes it possible to deploy IIoT solutions without any limit on the number of connected objects.

● Coverage of a region or a country can be achieved in a few months, with maximum flexibility, in time or space. It is conceivable that some of these private 5G networks could be deployed temporarily, to cover a sporting event or for the duration of a major public works project.
This announcement by Dish Network is a great illustration of what I have been saying for a long time: cloud infrastructures will increasingly be the foundation on which innovative companies will be able to create new activities that were impossible before.

This photo shows that Dish Network is using to start a dozen AWS services.

I have detailed the announcements made at re:Invent 2021 in the area of 5G private networks. In the coming weeks and months, other players will rush into this gigantic market and launch similar offers.

The incumbent operator AT&T also announces that it wants to provide private 5G networks to large companies. When asked about the arrival of AWS, we are get the classic response from established players: “they are not competitors, they are addressing another market”. This denial of competition is unfortunately classic; we have seen the results in the IaaS sector for IBM, Dell, HP, and others.
Another example, the American operator Verizon announces the deployment of a private 5G network in Great Britain, for the port of Southampton, with Nokia and Microsoft as partners.
Reminder: neither Verizon, nor Nokia, nor Microsoft have telecom operator licenses in Great Britain!

Once again, Europe is lagging behind

This new generation of private 5G networks is creating a major breakthrough in the potential uses of digital solutions in businesses, both private and public.
By 2030, innovative companies will have deployed solutions to improve both their external competitiveness and their internal efficiency.
To do this, they need immediate access to these free 5G frequencies.
Everyone knows that getting 27 countries to agree is anything but easy, but the delays it creates in the digital world have catastrophic impacts.

This long article explains the difference between the European and American approaches.
I extracted this sentence:
“The delay in finding a common, harmonized shared spectrum regime “will not necessarily delay the rollout of 5G networks, but some specifics — for instance, the wider deployment of private 5G networks — will unfortunately lag behind other regions”

This European text of June 2021 presents the decisions taken for the 6 GHz frequency band.

The 5945-6425 MHz frequency band will be licensed for private 5G network deployments. That’s 600 MHz, half of what’s allowed in the US.
Europe is not totally absent, fortunately. The first achievements are in progress or planned, as shown in this article, from which I have extracted the French and German examples.

In Germany, 100 MHz has been reserved for private companies, between 3700 and 3800 MHz. As a result: 33 companies have already reserved private licenses, including Bosch, BMW, BASF, Lufthansa, Siemens and VW. Priority is clearly given to industrial companies, which are essential in the German economy.
France has a much more cautious approach, on a case-by-case basis, piloted by ARCEP (French regulatory authority). Two examples:
● 40 MHz, in the 2600 MHz band, has been allocated to Hub One, a subsidiary of ADP (Aéroports de Paris), for deployment at Orly and Charles de Gaulle airports.

● EDF also obtained 20 MHz in this same 2600 MHz band for the Blaye nuclear power station.
I reread the title of this article several times thinking that there was a misprint: it talks about a private network… 4G! We are promised a possible evolution towards 5G. And we are in 2022…

These procrastination on authorizations to create private 5G networks will have a very negative double impact in Europe:

● Companies will fall behind in implementing the innovative uses made possible by these private 5G networks.
● New entrants to this private 5G market, such as AWS or Dish Network, will have time to consolidate their new skills in the United States and other countries. When Europe wakes up, they will have acquired a lead that European players will not be able to catch up. I am very concerned about a repeat of what happened in Europe between 2006 and 2011 in the field of IaaS solutions.

CIGREF report on 5G

CIGREF, Club Informatique des Grandes Entreprises Françaises, published in June 2021 a file on 5G in France and Europe. This 65-page document analyzes five possible scenarios, from now until 2030.

As this diagram shows, the analysis focuses on the supply of 5G solutions, emphasizing the possible roles of the three major global economic players, the United States, China and Europe. This is a recurring subject in all areas of digital, which I have often dealt with in this website.
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On the other hand, the topic I cover in this post, the disruptions made possible by the arrival of private 5G networks, is not addressed in this document.

I hope that CIGREF, which brings together the large French companies that should be most interested in 5G private networks, will produce a follow-up to this report.

Companies, growing independence from telecom operators

It has been several decades since companies began to take control of their network destinies by freeing themselves from telecom operators’ offer.
I will take three examples to illustrate this, WiFi, internal telephone networks and MPLS (Multi Protocol Label Switching) networks.

The precedent of WiFi

WiFi, the wireless version of Ethernet, was born 20 years ago, in 2001.

In 2001, the V1 version offered a maximum speed of 11 Mb/s.
As of 2009, the V6 version allows for 10 Gb/s.
The data transmission speed of WiFi has increased 1000-fold in 20 years, another great example of the exponential growth of digital tools.
In companies, the success of WiFi was rapid, despite the reluctance of some CISOs who refused to use it under the false pretext of lack of security.
Pressure from employees and the obvious advantages of WiFi have broken down these barriers:
● Free frequencies, 2.4 and 5 GHz: no need for telecom operator licenses.
● Cost independent of the number of connected objects.
● Under the direct responsibility, control and management of the companies.
● Rapid switchover of the management of WiFi networks in the Cloud.

The end of wired telephone networks in companies

The good old wired telephone network is on the way out in businesses.

I find that in new office buildings, companies are skipping the installation of PBXs and wired networks.
They are being replaced by smartphones, which most white-collar workers use.

The disappearance in France, by 2023, of the RTC network, Commuted Telephone Network, will further accelerate this movement.

When companies still need high-performance telephone solutions, as is the case for call centers, they now turn to software solutions… in the cloud.

The announced death of MPLS networks

As early as 2015, I published a post on my website announcing the end of the golden age of MPLS networks used by companies for their intersite exchanges.

Since then, the spectacular progress made by SD-WAN solutions (Software Defined Wide Area Networks) has accelerated the movement. It is new players like Aryaka, not telecom operators, that have pushed these new generations of inter-site or inter-company networks.
Complex, inflexible, expensive, MPLS solutions represented an important source of revenue and profit for telecom operators. This source is drying up.

5G private networks, a super WiFi?

To visualize what a private 5G network will be like, the easiest way is to imagine a boosted WiFi network.
I use the new 6 GHz frequency band which can be deployed simultaneously for WiFi V6 and 5G private networks to highlight the complementary potentials of these two private networks. For purists, we are talking about WiFi 6E.

Private WiFi 6 and 5G networks are complementary; it is possible to deploy them independently or simultaneously on the same sites. For the majority of uses and users, they offer similar and exceptional performance:

● Very high speed, in practice greater than 1 Gb/s.
● Low latency, less than 10 ms.
Many articles, such as the one published by Le Monde Informatique in March 2021, detail the advantages and disadvantages of these two technologies.

Advantages of WiFi:

● Well-mastered technology, with a large number of vendors as seen in the Gartner Group Magic Quadrant for September 2021.
● Places already equipped with WiFi.
● Office environments.
● Small or medium-sized installations: a few dozen to a few hundred people or connected objects.
Advantages of 5G private networks:
● Well suited for large factories; warehouses, logistics;and industrial facilities spread over a large area, airports, seaports, marshalling yards, hospitals, etc.
● Large number of objects to connect, and in priority for IIoT.

The main drawback of private 5G networks today remains the low maturity of the technologies used and, above all, the uncertainties that Europe has regarding the concrete conditions of their deployment in an industrial and stable manner.

It is to be hoped that Europe will not wait until 2025 to establish a solid legal and technical framework allowing companies to invest in these private 5G networks knowing that the solutions adopted will be sustainable.

This simple diagram summarizes what the network architecture of a large enterprise might look like from 2025:

● Almost all digital uses are in public clouds.
● In the main business locations, all communications are supported by private 5G and WiFi networks. These networks are managed directly by the company and do not need telecom operators.
● Exchanges between the main places of activity and the public clouds are carried out by “private” optical fibers, provided more and more by specialized players, and at a reasonable cost. All the major players in the Public Cloud having hundreds of PoPs (Point of Presence), the distance between the places of activity and these PoPs is short, and therefore economical. These are more MANs (Metropolitan Area Networks) than WANs (Wide Area Networks).
● In all other places of activity, small offices, hotels, at home (WFH, Working From Home), WiFi 6 networks connected to the public Internet will be used. “Zero Trust” tools will guarantee good security of exchanges.

No matter how hard I look, I can no longer find any trace of the solutions that traditional telecom operators used to offer to their professional customers.

What future for professional offers from telecom operators?

For decades, enterprise offerings have been the goose that lays the golden eggs for telecom operators.
They were charging exorbitant prices, which I had already denounced in 2010:

The decade 2020 – 2030 will see several tsunamis hit these professional offers that will all, one by one, be swept away by the new solutions that I have presented in this post.

Between 2022 and 2025, a very small number of companies, the “early adopters” will make the leap and this will have little impact on the telecom operators’ revenues.

The most innovative telecom operators have understood that the disruptions that are coming are irreversible and profound. Like AT&T or Verizon that I mentioned at the beginning, they will use their current advantage, their presence in companies, to offer them 5G private network solutions very quickly.

This proactive approach will slow down the penetration of new entrants such as AWS and Dish Network.
The others, those who burry their heads in the sand, will wake up in 2030 wondering why they no longer have business customers.

Summary:

My predictions, before the end of this decade, in 2030:
● The majority of large organizations, private and public, will have regained control of their communications and will have broken free from incumbent operators.
● The “cloudification” of networks will have become a reality. The current champions of the Public Cloud, AWS, GCP and Azure will have become the dominant providers of network solutions for enterprises, and primarily for large and medium ones.
● Most importantly, companies will have exceptionally high-quality private network solutions at very competitive prices.

(*) Mr. Louis Naugès Managing Director of DHASEL Innovation in Paris, France and a world-renowned digital transformation expert, co-author of the book “Leaders, Actors of Digital Transformation”.