Germany's telecom regulator has defended its controversial decision to reserve 5G spectrum for industrial groups, saying it was taken because numerous German companies want to build their own 5G networks and avoid using a telecom operator's public service.
Responding to recent criticism of the plans by France's Orange, the Bundesnetzagentur said its consultations in the run-up to the decision had revealed "huge demand" for 5G spectrum outside the telecom industry.
"Many verticals stated that they would need networks with heightened security regarding data and business secrets," said a spokesperson in response to questions posed by Light Reading. "Because of that, they aspire to build their own networks and avoid a connection to public networks."
The remarks came days after a senior 5G executive at Orange slammed Germany's scheme as inferior to France's planned approach of awarding all spectrum to operators while requiring them to meet business 5G demands.
Speaking at Light Reading's 5G Networking Digital Symposium last week, Arnaud Vamparys, Orange's senior vice president of radio networks, said Germany's decision to reserve 100MHz of 5G spectrum for industrial use would disadvantage smaller companies that lack the resources to build their own private 5G networks.
By limiting the amount of spectrum licensed to operators, it will also affect the quality of services they can provide to their customers, said Vamparys. "Quality is really proportional to the size of the band. You can divide that in three or four depending on the number of operators in your country."
German operators including Deutsche Telekom and Vodafone have also previously lashed out at the regulator's move, blaming high prices during the country's 5G auction last year on the shortage of spectrum that authorities made available.
In June 2019, service providers agreed to pay nearly €4.2 billion (US$4.7 billion) for 300MHz of "midband" spectrum in the important 3.6GHz range plus another €2.4 billion ($2.7 billion) for airwaves in the 2GHz band. The midband haul would have been 400MHz if Germany had not reserved frequencies for industrial use.
The Bundesnetzagentur's spokesperson rejects the criticism and insists that "a substantial part of the 3.6GHz band" is available for nationwide assignments.
"It may cause criticism by MNOs [mobile network operators], because part of the spectrum is not awarded on a nationwide basis," he said in emailed comments. "Nevertheless, combined with the award of nationwide spectrum, the provision was suitable to incorporate the diverse spectrum demands regarding possible 5G use cases."
He also denied that it would cut operators entirely out of the business. "This does not mean that the MNOs cannot use the 100MHz," he said. "It is possible for verticals and MNOs to cooperate and use their combined spectrum to build local networks."
Even so, Germany's move does allow industrial groups with their own spectrum to avoid using operators in private networks built for manufacturing plants or offices. Instead, they could choose to partner directly with an equipment vendor such as Ericsson or Nokia and operate the system internally.
Nearly one third of enterprises worldwide have already bypassed operators and ordered private 5G networks directly from vendors, according to recent research carried out by Omdia, a sister company to Light Reading, and commissioned by BearingPoint//Beyond, a consulting firm and software specialist.
Omdia cites Germany's Volkswagen, which has now issued a request for proposal for private 5G networks across all of its 122 factories, as a possible example of an industrial group trying to minimize dependence on a telco. Its pilot uses equipment from Sweden's Ericsson, while data analytics and applications are being developed under a contract with Amazon Web Services.
"It is still open whether the networks will be managed by a CSP [communications service provider], by an alternative provider, or internally," say the report authors.
While some companies appear motivated by security concerns, operators including Orange say they can mitigate these and guarantee high service levels through a technique called network slicing, which reserves a part of the 5G service for a specific vertical market or even for an individual customer.
But Omdia's research findings suggest some companies have not been swayed by the argument about network slicing, and the practical details of the technology have still not been worked out.
Vamparys says only about 35 companies have so far applied for "local use" 5G licenses, with earlier press reports identifying BMW, Bosch, Volkswagen, BASF and Lufthansa as some of the applicants.
Gabriel Brown, a principal analyst with Heavy Reading, thinks government moves to reserve spectrum for industrial use could reflect some concern that large businesses have been overly dependent on the telecom sector and the pace at which it moves.
"If it is all operator managed, it is also on an operator's timeline and processes, which isn't what everyone wants," he said.
- German 5G industrial plan will punish smaller firms, says Orange exec
- Telcos are making a mess of enterprise 5G, says new research
- For Deutsche Telekom, private networks offer glimpse of 5G growth
- Faulty towers? Orange rubbishes Germany's 5G DIY scheme
- 5G? C'est formidable, say French industrial groups
— Iain Morris, International Editor, Light Reading