China is first out of the gate to Industry 4.0
NEW YORK - 5G networks that run factories, warehouses, ports and urban transportation can increase productivity tenfold or more, industry experts believe.
asiatimes.com
NEW YORK – 5G networks that run factories, warehouses, ports and urban transportation can increase productivity tenfold or more, industry experts believe.
Chinese industry leaders claim that thousands of 5G industry applications are now installed, mostly in the pilot stage, compared to hundreds in the rest of the world. The race towards the Fourth Industrial Revolution is still in early days, but China appears to have an impressive head start.
Telecom giant Huawei alone is building 5G applications for almost 2,000 Chinese manufacturing firms and 5,300 Chinese miners, according to a senior company executive. Enterprise solutions providers and industry consultants promise productivity gains of an order of magnitude and more with the application of Big Data/Artificial Intelligence technology to manufacturing, healthcare, logistics and even agriculture.
What its promoters call “Industry 4.0” promises to solve the great economic policy problem of the past three decades, namely stagnant productivity. Total factor productivity growth (see chart at bottom) has tapered out in all the major industrial economies. The IT revolution had minimal impact on productivity in other sectors. The country or countries that learn to transform other industries with AI and Big Data will dominate the 21st century.
Industry skeptics, though, point to several high hurdles before such gains can be realized, including high upfront investment costs, turf wars between telecom companies and technology solutions companies, fragmented technological standards and regulatory uncertainty.
Huawei’s Western competitors have also bet heavily on “Industry 4.0.” The Finnish telecom equipment manufacturer Nokia, now number three in global sales after Huawei and Ericsson, wrote on its website, “Critical communications solutions based on industrial-grade private wireless offer unimaginable possibilities to power Industry 4.0 use cases, from machine remote control, to cloud robotics, process automation, predictive asset maintenance, assisted/autonomous vehicles, CCTV monitoring and mission-critical push-to-talk and push-to-video — all on a single network infrastructure.”
The German industrial giant Siemens announced on its website, “The company has set another milestone on the path to Industrial 5G at its own Automotive Showroom and Test Center in Nuremberg, Germany: a private standalone 5G network in an industrial environment that is based exclusively on Siemens prototypes. Expectations are running high for the potential of 5G wireless communication for industrial applications.”
Other Western companies, including IBM and Cisco, are marketing 5G enterprise solutions aggressively. But the Western competition remains in proof-of-concept territory, while China is deploying 5G productivity applications in depth. Regulatory issues, including the allocation of radio spectrum to 5G applications, are a leading concern for prospective investors in 5G networks.
America’s Federal Communication Commission (FCC) auctioned US$81 billion worth of spectrum for telecom companies’ provision of 5G broadband last February, a first step towards a national 5G buildout.
The same month, China’s Vice Minister of Industry and Information Technology Liu Liehong had said that 5G standalone networks served all of the country’s prefecture-level cities (with more than 250,000 people). China thus appears to have reached the steep part of the learning curve.
According to ABI Research, a digital consulting firm with offices worldwide that provides “strategic guidance” to various tech companies, “Taking manufacturing, with its estimated 1 million factories (with more than 100 employees), as an example, typical business cases revolve around controlling the production process, improving material management, improving safety, and introducing new tools.
“ABI Research has shown that manufacturers can expect to see a tenfold increase in their returns on investment (ROIs) for cellular Industry 4.0 solutions, while warehouse owners can expect a staggering fourteenfold increase in ROI.”
Estimates of investment in enterprise-level 5G systems vary widely, in part because many networks now use older LTE technology. Last year the global consulting firm predicted “that more than 100 companies worldwide will have begun testing private 5G deployments by the end of 2020, collectively investing a few hundred million dollars in labor and equipment.”
But a January 2019 report by the Massachusetts consulting firm International Data Corporation predicted that “worldwide revenue attributable to the sales of private LTE/5G infrastructure will grow from $945 million in 2019 to an estimated $5.7 billion in 2024 with a 5-year compound annual growth rate (CAGR) of 43.4%. This includes aggregated spending on RAN [radio access networks], core, and transport infrastructure.”
Huawei Technologies’ Chief Technology Officer Paul Scanlan told Asia Times, “In China, we have about 820,000 5G base stations, against one million globally, and 320 to 400 million consumers using 5G. In China, we built 5,000 industry solutions. We are piloting and testing them. But these things are already making money.
“We are piloting in mines, coal, iron and steel factories, chemical factories, auto, cement factories, agricultural sites. And the agriculture applications range from strawberries to rice planting. 5G was designed for this sort of thing and we are trying it out,” Scanlan said.
The Huawei executive said, “5G was designed for this sort of stuff. China understands that some of the operational efficiency comes from 5G. Hospitals treat patients faster, mines are safer, manufacturing is more efficient. We are trying to show that these things are practical and possible.”
Other Chinese tech companies are more cautious about 5G as a business-to-business technology. Last year, Tencent executive Wang Yachen said that Tencent was conducting 5G trials, but worried that high costs were a barrier to entry and that parts of the technology weren’t ready for market.
Speaking to an online conference, Tencent’s Wang said, “Our enterprise customers are looking for a private 5G network, whether it’s virtual or physical. But the physical network cost is a very big challenge.”
The tech giant, though, conducted successful trials with factor inspection robots that benefited from high download speeds and low latency (nearly instantaneous communications.) The Tencent robots used 5G to allow engineers to inspect operations with Virtual Reality.
Another speed bump for 5G applications has been the stance of Chinese telecom providers, who want to sell operator networks rather than private networks. Writing in the trade publication Light Reading,
Robert Clarke reported last year, “The operators themselves are defending their monopoly with some familiar arguments: that allocating spectrum to verticals is wasteful, difficult and costly, and that operator networks are more advanced.
One China Unicom researcher, An Gang, has even asserted that private networks are one and a half generations’ behind the operators’ 5G networks.” Clarke reported that the three major Chinese telcos had built
800 private networks as of the end 0f 2020.
The telcos have come under fire from other Chinese experts. Professor
Li Shaoqian of the University of Electronic Science and Technology, for one, argues that the telcos aren’t the best providers of enterprise solutions given the complexity and varying needs of individual applications.
By February 2021, though, China’s telecom providers appeared to be singing from the same hymnbook as the tech companies. A catalyst for the new mood of cross-industry cooperation was China’s all-country effort to suppress the Covid-19 pandemic, which drew in major tech companies who provided smartphone apps to track location and vital signs, as well as extensive application of AI to analyze infection trends and identify prospective virus hotspots.
Speaking on February 23 at the
Mobile World Live conference in Shanghai, “China Unicom and China Mobile executives highlighted Covid-19’s role in accelerating digital transformation efforts across industries, urging players to work together to meet increased demand for digital services faster,” the organization reported.
The Covid epidemic prompted Chinese authorities to apply a suite of new technologies, including Artificial Intelligence analysis of public health data to identify prospective virus hot spots (see “
Covid-19 Launces the Fourth Industrial Revolution,” Asia Times, October 19, 2020).
Mobile World Live reported, “During the opening keynote, China Unicom SVP Mai Yanzhou outlined the operator’s plans to pursue innovation across 5G, big data, cloud, AI and IoT, but said it planned to promote sharing of key resources including infrastructure and R&D. He urged industries to ‘work with each other in a deeper manner,’ noting ‘as long as we work together, we can win together.’”
China Unicom chairman and CEO Wang Xiaochu added that joint efforts to develop a firm digital foundation would help “empower high-quality growth of society and the economy.” Yang Jie, China Mobile chairman, struck a similar note arguing “all industry stakeholders need to open your arms and work with each other…to promote the digitalization and the intelligent transformation of society.”
This display of cooperative spirit probably reflects government efforts to suppress turf wars that threatened to slow the proliferation of 5G productivity applications. Huawei and the Chinese telcos have tried to underscore their cooperation.