By Catherine Stupp
German car manufacturers, chemical companies and other
industrial firms are taking steps toward creating their own private
5G networks, leapfrogging Germany's telecommunications carriers,
which haven't yet deployed the superfast networks for widespread
BMW AG, Robert Bosch GmbH, Volkswagen AG, BASF SE and Deutsche
Lufthansa AG are among the companies that have applied to set up
local 5G networks in recent months after Germany's network
regulator began accepting applications for the radio spectrum last
November. So far, 33 companies have bought licenses, a spokesman
for the regulator said.
Private 5G networks are especially useful for industrial
applications such as operating robots and driverless vehicles
inside factories, which need fast, reliable connections that can
perform critical tasks in real time, experts say.
"You wouldn't be comfortable putting your industrial
applications on a Wi-Fi network because there's no reliability,"
said Petar Popovski, a professor of wireless connectivity at
Aalborg University in Denmark. Seconds-long delays might not matter
in an office, but being able to control precisely when a heavy
machine processes materials, for example, can make a big difference
to an industrial company.
The private networks will also help strengthen cybersecurity,
the companies say, because they will be able to configure the
networks to fit their needs, use custom security features such as
encryption and avoid sharing bandwidth with other firms.
"We decide where the data is stored. We don't have any external
influences," said Fabian Berger, a board member of Mugler AG, a
company based in Oberlungwitz, eastern Germany, that provides
enterprise telecoms services. Mugler is setting up a local 5G
network that will span two office buildings and two
fabrication-and-logistics facilities across 40,000-square meters.
Mugler may save money by building its own 5G network rather than
using a public network, Mr. Berger said.
In the U.S., Walmart Inc. is in talks to test a 5G network
provided by Verizon Communications Inc., The Wall Street Journal
reported last month. The network would support new digital health
services in Walmart stores. Verizon and other U.S. carriers are
setting up the networks in some cities and sports arenas.
German manufacturers and other industrial firms can deploy 5G
networks without a telecom operator, and can choose the suppliers
that provide equipment. Britain started a similar process last year
to sell licenses for companies' 5G networks. The U.S. hasn't opened
up applications for 5G spectrum licenses to industrial
A spokesman for the German Federal Network Agency said the
agency decided to allow private 5G networks in part because of the
potential benefits for industrial companies. Companies have so far
paid between around EUR1,000 and EUR1 million for the licenses,
depending on the bandwidth and the size of the area that will be
covered, he said.
Discussions about potential cybersecurity weakness in equipment
from Huawei Technologies Co. sparked companies' interest in running
their connections independently, said Jochen Reinschmidt, senior
manager of political affairs at the German Electrical and
Electronic Manufacturers' Association.
The U.S. government considers Huawei a national-security threat
and claims the company could use its products to spy on behalf of
the Chinese government. Huawei has consistently denied the claims.
In January, the U.K. approved the use of Huawei equipment in
so-called noncore parts of the country's 5G network, which include
base stations and antennae.
Mobile carriers choose where to buy network equipment, and their
corporate customers and consumers must accept those decisions or
switch carriers. By building their own 5G networks, industrial
companies can make their own supplier decisions.
Mr. Berger of Mugler said the company will use equipment from
several suppliers, but declined to name them.
BMW bought spectrum for a private 5G network at one of its sites
in Bavaria. M3connect GmbH, a German telecommunications software
company, will set up the network and is testing different
suppliers' equipment in a lab, a BMW spokesman said.
BMW didn't respond to a question about whether the network will
use Huawei equipment and m3connect declined to comment on whether
it will use Huawei products.
Local 5G networks come with other security benefits, Mr.
Popovski said. Companies can keep a close eye on activity crossing
private networks, he said.
"Any intruder in the area will be detected simply because you
own it," he said. "It's the same as if you bought a parking place
and see someone else park there."
Lufthansa's maintenance subsidiary, Lufthansa Technik AG, in
February said it set up a private 5G network operated by Vodafone
Group PLC, using Nokia Oyj equipment, for remote engine inspection
and remote 3-D cabin design. Lufthansa Technik said the network
increases security and provides more configuration options,
allowing the company to adapt the bandwidth for uploads and
downloads for specific projects.
Chemicals firm BASF is discussing plans to build its local 5G
network, and aims to decide by the end of the year which network
operators and equipment suppliers will manage it, a spokeswoman for
the company said. The network will be used for BASF's production
facilities and logistics, she added.
Germany's industrial giants can protect valuable information by
maintaining control over operational data and deciding where it is
stored, said Gabriel Brown, a principal analyst at Informa PLC's
research business, Heavy Reading. Companies operating a local 5G
network choose whether to store data in their own data centers or
in the cloud, for example.
More reliable connections at industrial production sites are
another potential benefit. A Volkswagen spokesman said the company
wants to buy a license for a local 5G network, and that a dedicated
network is the only way to guarantee transmissions will be
Volkswagen wants to use 5G for bandwidth-intensive industrial
tasks such as managing the 5,000 internet-connected robots in its
Wolfsburg, Germany, plant. In the future, the auto maker will need
5G to coordinate robots and driverless cars in production sites and
transmit volumes of data in real time, the spokesman said. The
company would prefer to operate the network itself, and is in the
process of hiring mobile-technology experts, the spokesman
Write to Catherine Stupp at Catherine.Stupp@wsj.com
(END) Dow Jones Newswires
April 06, 2020 13:03 ET (17:03 GMT)
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