A recent 5G private networks announcement is of greater significance than it might appear at first glance. The launch of a 5G-SA private network in Taiwan was important as much for who is not  involved as who is.

Manufacturing company Inventec has turned up a 5G network to support industrial automation on a live production line. So what’s so special about this news?

Private Networks: 5G’s Killer App?

There has been lots of noise about 5G.  It will upend the world, power self driving cars, deliver gigabytes to your iPhone 13, support VR from remote locations and give life to fights between Marcus Weldon and Elon Musk.  But here’s the problem: only the last of these is occurring in the near term.  Most of the sexiest use cases for 5G suffer from run-ins with the laws of physics and economics and will only be realized over time.

Today, and for the next few years the industry will only succeed through a focus on more mundane solutions that don’t demand 100s of 1000s of tiny millimeter wave cells supporting URLLC over wide geographies – such as highways and byways.  Inventory tracking, analytics, and non-real-time instrumentation are already being deployed, using lower throughput and latency networks such as (well engineered) WiFi and LTE.  Cars are certainly becoming connected, but the driving and affordable applications range from diagnostic data from OBD2 ports, to communications with service computers, to infotainment.

Those interested in more detail, background and the “why” can find two extensive Market Outlook reports on 5G in Industrial Automation and 5G After the Hype Fades.

The Inventec solution, powered by Affirmed Networks (now part of Microsoft) and ASOCs (cloud based 5G RAN) is different – it does in fact deliver very high throughput, reasonably (but undefined publicly) low latency and does demand 5G.  And that’s why it’s a private 5G SA network.

Edge, Cloud, Private 5G, Industrial Automation…Hold the Telco!

The Inventec solution embodies all the buzzwords.  It is 5G-SA.  It employs edge processing.  Its software (RAN and Core) is delivered in a cloud-native architecture, and the core portion is in fact cloud-delivered “aaS“.  It is being employed to drive manufacturing automation to the next level – a significant step in the “4th Industrial Revolution”.  It delivered high (let’s not say “ultra”) throughput and modest-to-low latency.  It is a primer for tomorrow’s Industrial Automation rollouts, and a vindication of 5G’s value beyond MMBB communications.

It’s only a single point of light, but it points the way to the future

However, it is not being delivered by a mobile operator on a public network. As we predicted in our 5G-IA report, it is a private 5G network, in private spectrum, utilizing a private core and employing local (on premises) edge computing.  There is no telco MEC here nor a new revenue stream to support 5G public network deployments.  Rather there is a blueprint for a new market to provide turn-key private communications, possibly with the ability to roam onto public networks as necessary.

. . .  And the new ecosystem emerges

The key vendors of this solution are Affirmed Networks (now Microsoft) and ASOCS, an independent O-RAN 5G vendor based in Israel.  Neither are “the usual suspects”, but as we have argued, neither is this 5G deployment.  It may be tempting to think that this is “operator bypass” by Microsoft, and yet it more closely fits their traditional model – selling (historically) software and now cloud-delivered software or platforms, on an “aaS” model, to enterprises, through VARs. In this case that VAR is Wave-In Communications, a local private network integrator.

Microsoft recently announced its telco-Azure strategy, named “Azure for Operators” which Appledore previously commented on. But the key take away relevant here is that Microsoft is carefully positioning itself as a vendor to, not a competitor of, mobile operators.  Azure for Operators provides what could be a cloud-scaled (both up and down) and attractively priced asset that Mobile CSPs can employ to deliver myriad solutions — from “slices” to turn-key and managed solutions such as Inventec’s.  In this case Microsoft is reaching the smart manufacturing market in Taiwan through a local integrator.  That said, it’s up to the operator community whether they work with Microsoft (and others) to reach these many niche markets, or watch as others do so.

Worth paying attention to

Appledore believe that this announcement, lying somewhat buried among the din of press releases, is a great proof point for many things we have been covering and in fact advocating over the past 18 months.

We have commented that 5G is the first “G” that really breaks the telco business model of MMBB and MM voice/text: a single shared network, selling various services on that network, and delivering a combination of communications and mobility. As we argue in our research, the incremental revenues promised by 5G are different; they demand customized, vertical-tailored and often private solutions. They demand knowing another industry intimately (or selling through those who do). Yet there is money in each and every one.  Here’s one glimpse of how to get it.

Related Research: