Industrial 5G Reality Check at Hannover Messe 2022: Nothing More Than a Big Data Pipe

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By Leo Gergs | 3Q 2022 | IN-6590

5G connectivity faced a tough reality check at this month’s Hannover Messe Industry—one of the world’s largest industrial trade fairs. This insight highlights the most pertinent issues that manufacturers are facing to date and how the telco industry needs to adapt to position private networks as a key enabler to address these issues.

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The Reality Check for Private Networks at Hannover Messe


As the largest industrial trade show in the world, the annual Hannover Messe Industry (HMI) is an important seismograph of what is happening within industrial verticals like manufacturing, energy generation, or logistics. In this context, of course, 5G made its appearance at the show once again—after the last in-person addition of the trade fair in 2019 saw the inauguration of the 5G Alliance for Connected Industries and Automation (5G-ACIA) at a specifically dedicated exhibition space, the 5G Arena.

At Hannover Messe 2022, 5G connectivity had a tough reality check. The many discussions with industry experts showed that the 5G hype among industrial manufacturers (especially Small and Medium Enterprises (SMEs)) is over, and the focus now is on much more realistic use cases for the short and medium term. For example, industrial automation vendor Siemens demonstrated transmitting PROFINET via 5G connectivity. Similarly, Phoenix Contact showcased how 5G can be used as a wireless “data pipe” to transmit safety-critical information.

Manufacturers' Pressing Problems Are Not Deploying Private Wireless


While this year’s Hannover Messe identified that the hype for industrial 5G is over, the market now enters a new phase, arguably much more important for the long-term success of enterprise 5G—the realism phase, in which implementing enterprises and the supplying telecoms industry will have to work out what use cases will realistically prevail within the enterprise verticals. For the time being, it looks like 5G will indeed be used as a wireless “data pipe” to transmit existing automation protocols, as Siemens and Phoenix Contact were showing already.

On a seemingly unrelated note, the show also highlighted the immense short-term challenges that manufacturers are facing in the current geopolitical climate: On one hand, the ongoing war in Ukraine and somewhat related soaring energy prices have put a price tag on sustainability issues and are pushing manufacturers and other industrial enterprises to retain profitability of their operations in the short and medium term, given the sudden hike of production costs. This will manifest in two different considerations: 1) enterprises will drive to increase their energy efficiency, i.e., increase their output per energy consumed; and 2) enterprises will seek to reduce adjacent production costs (e.g., manual labor, streamlining processes) through enhanced automation.

On the other hand, industrial enterprises are still grappling with a highly volatile supply chain: North America and Europe are currently coming out of restrictions related to the outbreak of the COVID-19 pandemic and, therefore, have to adjust to increasing levels of economic activity. Meanwhile, countries in the Asia-Pacific region are continuously entering into new lockdowns, which continues to disrupt particularly the chipset, but also the industrial hardware industry. At its highest points, supply chain problems were extreme enough to lead medium-sized traditional gearbox and motor manufacturers to think about entering into semiconductor production and producing their own chipsets. Against this background, manufacturers and other industrial players perceive the deployment of a private (cellular) network as a less important project that—from a budgetary point of view—will have to give way to these so-perceived more pertinent issues.

Private Networks as a Solution to Manufacturers' Short-Term Problems


While digitization, supply chain visibility, and sustainability/energy efficiency dominated all forums, presentations, and discussions during the trade show, private networks (or even cellular connectivity, more broadly) are not considered as a viable technology to address these issues. In fact, in most cases, they are not even present within manufacturers’ minds as a potential solution.

All these observations underline the fact that there is still a noticeable gap between the telecoms industry and implementing enterprises. In addition to the irritating communication around The 3rd Generation Partnership Project’s (3GPP) release timeline (as discussed in ABI Insight “What Went Wrong with 5G?”), this most importantly applies to the value proposition of private networks to enterprises. Instead of trying to push for their version of the private networks story, the traditional telco industry (especially established infrastructure vendors and network operators) should carefully map how cellular connectivity can help manufacturers address the very same pain points that they are facing right now.

Sustainability: In a recent 5G Sustainability whitepaper, ABI Research found out that 5G deployments in manufacturing, logistics, transportation, consumer verticals can reduce Carbon Dioxide (CO2) emissions by 20 gigatons by 2030. In manufacturing, a single smart factory using 5G for predictive, preventative, and remote maintenance, as well as the deployment of Automated Guided Vehicles (AGVs) is expected to save energy in the range of 103 tons of CO2 emissions by 2030. Furthermore, an AGV running over a 5G network is expected to be 45% more productive than other AGVs, thanks to the robust handover of signals between different access points.

Supply Chain: Similarly, a private network can mitigate the very same supply chain problems that enterprises are facing now, particularly because proper integration into the public cellular network infrastructure and roaming agreements can give enterprises access to nearly global connectivity. This will enable the detection of supply chain anomalies and disruptions, and allow enterprises to adjust their workflows as early as possible.

These instances illustrate how important mapping the capabilities of cellular connectivity and private networks to these real-life challenges and pain points is in this “reality check” phase of the enterprise connectivity market. To do this successfully, the telecoms industry needs to break away from its consumer market legacy mindset, which is characterized most importantly by a one-directional sales process, and embrace a more consultative, bidirectional approach. Now that the hype around enterprise cellular connectivity is over, it is important that private networks start to deliver on realistic use cases. To do this successfully, they will need to work together with industrial automation suppliers to ensure interoperability. Furthermore, they should embrace open interfaces, as industrial enterprises want to avoid vendor lock-ins at all costs, and start engaging in smaller-scale deployment projects. While not all is lost for the traditional telecoms industry, now is the critical time to act, as the market defines the realistic position for enterprise cellular (and specifically 5G) connectivity for the years to come. If they fail now—even after so many warnings—they will continue to fight a very difficult (and in some cases, even hopeless) battle.


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