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Realizing the potential of theInternet of Things with 5G
Agron Lasku, Hariprasad Pichai, Rebecka Axelsson Wadman, Sean McDevitt

Despite our living in a world where more and more devices
are connected, the Internet of Things (IoT) is still far fromliving up to its full promise in many industries. This is set tochange as 5G enables many of the technical requirementsthat have previously been lacking. It will unleash significant
industrial potential and enable realization of Industry 4.0 –Arthur D. Little estimates the value of 5G-enabled IoT to be
USD 1.5 trillion by 20301. So now
is the time for companies to set
their IoT strategies, and we believe
investing in private networks isimportant for companies to consider
as 5G becomes a reality. How
should companies go about this?

5G will enable a broad rangeof advanced IoT use cases
The IoT has been a buzzword forquite some time – we have allheard (repeatedly) how “everything will eventually become
connected.” Although the number of connected things has
increased exponentially over the past few years, the fact
remains that in most industries the full potential of the IoT
remains unproven and the major promised gains have yet
to materialize.
1. 5G Business potential from industry digitalization, Arthur D. Little and Ericsson

Despite the hype, theInternet of Things (IoT)
has yet to deliver its
promised benefits toindustrial companies. The
advent of 5G removes
many of the technicalbarriers to its successful
adoption, accelerating
digitalization. However,as this article explains,
realizing the potentialof the IoT requires
businesses to focus firston their needs and thenon the available options
to implement the bestsolutions for future
success.

Several factors have influenced this:•F or a long time, supporting technology and infrastructure
solutions were lacking. (See Figure 1 for key changes
between selected wireless network generations.)•M obile network operator (MNO) models for pricing
and performance were not adapted to the needs andrequirements of enterprises looking to implement and scale
IoT solutions.

•M any enterprises weren’t quite ready to adapt to digitizedbusiness and operating models.

Wireless
network
generation

2G (GSM)
3G(UMTS)
4G (LTE)

5G*

Year
established

Enabled use
cases

Peak data
rates

Major networkchanges

1991

Digital voice calls,
call and text
encryption, SMS,
picture messaging

50 Kbps

Replaced analog
radio signals withdigital signals

1998

Video calling, webbrowsing, email

2 MbpsTechnology
required major
network equipment
upgrades2008

Video streaming,
video conferening,
3D TV

1 GbpsMajor investment
required to change
to IP-based
packet switching

20 Gbps

Massive MIMO
cell sites, edge
computing, network
densification

2020(expected)

AR/VR, low-latecy
M2M
connections,connected vehicles*Note: The International Telecommunication Union (ITU) has provided “high-level” requirements for 5G, in particular through IMT2020 standard setting requirements for 5G candidate radio access technologies; the standard is expected to be completed in 2020.
Source: Arthur D. Little, ITU, 3GPP

Figure 1: Wireless network specifications by generation

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All of this is now rapidly changing. Sensors are becoming
smarter, cheaper, and smaller – thus enabling broader usage
and establishment of device ecosystems. Corporations are
increasingly digitized and have systems in place that IoT
solutions can connect to or be integrated into. Network
operators (both traditional and alternative providers) have also
realized that there is an unmet need for IoT-specific solutions
and services; many have consequently established businesscentric and/or IoT-centric divisions and offerings, such as
Sprint’s Curiosity and Telia Company’s Division X.
As digitization increases, networking requirements increase
as well. The emergence of the IoT has led to a need for
different characteristics and technical capabilities in cellular
networks, which have continued to develop and will, with the
emergence of 5G, address the key needs of the IoT. 4G LTE,the latest iteration of the fourth generation of mobile cellular
networks, has already enabled numerous new IoT solutions.
However, while a combination of cabling and WiFi enabledmany early industrial IoT use cases, 4G didn’t fully deliver infour areas:
1.	It failed to provide speeds comparable to those of
fixed broadband.
2. It did not meet significant bandwidth requirements.
3.	Latency was not adequate for mission-criticalapplications.
4.	It did not manage device density, which is key for anumber of applications.
The next “evolutionary step” will be provided through broad
implementation of 5G. In addition to being much fasterthan previous generations, 5G has a number of additional
properties that will open up new mobile-data use cases –lower latency, improved reliability, higher connection density,
low-cost and low-power capabilities, and enhanced positional
accuracy. With 5G, wireless performance will be on par with
fixed-line connections in many instances. (See Figure 2.)

5G technologies aim to offer superior performance in terms of:Data rate

Mobility

Reliability &availability

Connection
density

Security

Energyefficiency

Latency

Positionaccuracy

Source: Arthur D. Little, 5G logo from 3GPP initiative
Note: Proposed capabilities are adapted from 3GPP initiative, which feeds into standards discussions,evaluations and adoption
Figure 2: 5G performance specifics2

One key feature of 5G which will significantly enable the
IoT is ultra-low latency (the time it takes for data to be sent
and/or received). Standards of 5G aim to reduce latency to amillisecond (ms), compared to approximately 50 ms for 4G.
This might seem like a small difference, but if we compare
it to human reaction times, a 50 ms lag is discernable, whileless than a millisecond is faster than a human can react. If weconsider an autonomous car responding to a pedestrian inits path or a connected drill reacting to unexpected vibration
patterns, that millisecond can be the difference that saves thepedestrian’s life or prevents a collapse in a mine.
5G is also expected to be “ultra-reliable”, which will mean
nearly no dropped calls or lost connectivity. It will thus allow
for mission-critical use cases, such as those related to digital
health, connected cars, and emergency response.
2. 5G performance specifics as per 3GPP standards

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Industries increasingly deploy and use connected sensors tomonitor various assets in real time. Doing this economicallyrequires devices that operate at low power levels andnetworks that offer low-cost connectivity options.
With more and more “things” being connected, thus
leading to significantly higher connection density, the riskof interference increases. This has been another historicalchallenge to the IoT that will be addressed by 5G. All thismeans 5G will enable an entirely new range of applications.
(See Figure 3.)

NON-EXHAUSTIVE

Lower latency requirement

Tactile internet

Autonomous driving

1ms

Augmented
reality

10ms

100ms

1,000ms

Virtualreality

Real-time
gamingDisasteralert

Automated
e-calling

Bidirectional
remotecontrolling

Deviceremotecontrolling

Monitoring
sensor
networks<1 MbpsMulti-person
video calling

Wireless cloudbased officeVideostreaming

1 Mbps

10 Mbps

100 Mbps

Increasing bandwidth requirement
Video-related
5G use cases

Remote monitoring
or control 5G use
cases

Figure 3: Advanced applications enabled by 5G

Other 5G
use cases<1 Gbps

The time to invest is now
Generational migrations from 2G to 3G and 3G to 4G required
widespread upgrades of virtually all networking equipment.
These upgrades were extremely costly, but consequently
provided the required capabilities across an operator’s entire
footprint for it to compete in an evolving market.
The migration from 4G to 5G, however, will not follow thesame paradigm, as many 5G functionalities are alreadyfeasible on 4G infrastructure, which means a complete
network overhaul is not required. In addition to lower
migration costs to operators, this means companies that areconsidering investments in the IoT do not need to wait for
full 5G to become available before they start to build out IoTapplication infrastructure. Core IoT capabilities and first use
cases can be built on existing infrastructure and then gradually
upgraded or improved as 5G capabilities become available.
How can they achieve this? Industrial IoT usage drives agreater need for cellular and 5G private network infrastructure.
As a result, we see industries moving to localized cellular
networks because of their ability to scale, future proof, andevolve over shared network infrastructure. Industrial players
will therefore need to decide whether and how to play inprivate networks.
Private networks offer an attractive alternative for corporates.
Today, the number of private networks is fairly low – expert
estimates indicate 300–400 worldwide. However, Arthur
D. Little estimates that the global market size will reach
60–70bn3 by 2025. Technology infrastructure provider Nokia
believes the opportunity could be twice as big as its current
business of building wireless networks for operators4.
3. Arthur D. Little, Private Campus Networks, February 2019
4. Nokia CTO Weldon at an investor event via https://www.lightreading.com/mobile/5g/
nokia-cto-private-wireless-could-be-2x-bigger-than-commercial-wireless/d/d-id/751839

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The advantages of a private network are many, with security
and customization as the main drivers:•F ull control of network investments, including CAPEXand OPEX, with flexibility for ad hoc expansion.
•B etter security as the data stays within the private
network.
•F ull coverage where needed, even where it would not be
economical for a traditional wireless service provider.
•D ecentralized architecture with multi-access edge
computing (MEC) for low-latency applications.
The key question for industrial players to answer is whether
they should rely on operators or vendors (such as Ericsson
and Nokia) or new entrants (such as AWS) – or build the
networks themselves. The solution deployed will dependon companies’ business needs (including security andflexibility requirements), as well as the availability of regional
spectrum for corporates or the regulatory reality aroundusing unlicensed spectrum. In Germany, where spectrum
has been made available locally (namely, for private-networkuse), multiple corporations are developing their own private
networks. In the US there is the opportunity to use unlicensed
spectrum released from the Citizens Broadband Radio
Service (CBRS), while in other regions, an operator or another
unlicensed spectrum will be required.
For industrial players looking to build private networks, there
are now a number of options available because multiple
players in the ecosystem have spotted this opportunity toserve them. (See Figure 4.) Telecom operators, traditional
wireless equipment vendors and new entrants alike areoffering attractive solutions.

X

01 Analysis of business needs•F aster data transfer•S ecurity•F ull network control

X• IoT applications• Future 5G-enabledapplications			

...

02 Spectrum
A: Acquire

B: Lease

Multiple countries are offering
Campus network providers offer turnregional spectrum for corporates
key solutions that include spectrum

03 Network deployment & operation
More options now available: Multiple vendors with “network in a box”
solutions have recently entered the market and offer considerable OPEX
and CAPEX savings on deployment compared to classic MNO solutions
Figure 4: The recipe to create a private network

Given the availability of multiple service providers we see threemain options for companies seeking to create a private network.
(see Figure 5)

1

Partner with
an operator

2

Partner withnew vendors

Build own

3 private network• Partner with an existing
operator to develop atailor-made solution• Innovative vendors are
generating tailor-madeindustrial solutions• Offers full control over
network structure,layout, and cost

• Operator manages the
network, which means
reduced control, but also
reduced complexity, forthe corporate customer• Simplified connectivity
with limited technicalcapabilities required fromthe network user

• Requires technicalcapabilities to control
and operate

Figure 5: Private network deployment and operation options

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Option 1 – Partner with an operator: The first option isperhaps the most straightforward – partner with an existing
operator to develop a private network solution. (See Box 1.)
Here the operator typically takes end-to-end responsibility forbuilding the network and on-campus infrastructure, including
bringing in the right technology partners and, once the private
network is up and running, managing its operations. Thismeans the level of complexity for the corporate customer
is similar to what it would have been had it used a public
network.
However, this also means the opportunity to control the
network is reduced and the corporate customer is dependent
on the operator for network changes and adaptations.

Box 1 – OSRAM used its existing telco operator toprovide tailored campus network solutions
With the end goal of enabling implementation of automated(and AI-controlled) guided vehicles (AGVs) as a steppingstone towards Industry 4.0, OSRAM commissioned acampus network in its Schwabmünchen factory to prototype
and test mobile robotics solutions. OSRAM’s existing telco
operator, Deutsche Telekom, provides and manages a dualslice campus network solution that combines the public
LTE network in the wider area of activity with a private LTE
network layer within OSRAM’s campus, for which Ericsson
provided system technology. In addition to the campus
network, a local edge cloud is being deployed, which shifts
complex computing processes from a remote data center
to a computer on the shop floor to enable faster dataprocessing. This means data from the AGV’s sensors can betransformed into control data so the transport system canreact autonomously in real time.

Option 2 – Partner with new vendors: In the second option,
the company partners with one of the new innovative service
providers that have started offering private network solutions.
(See Box 2.) Similarly to operator-run solutions, this offers
customers simplified connectivity and limits the technicalcapability demands on the customer’s organization. Service
providers such as AWS also typically offer lower prices andcould be a good compromise for smaller companies that need
the capabilities of a private network within limited budgets.

Box 2 – Amazon Web Services corporate network ina box
Together with three partners – Athonet, Ruckus, andFederation Wireless – Amazon Web Services (AWS) is
offering corporates in the US a private LTE solution hosted inits cloud. The solution consists of BubbleCloud, a mobile core
designed for private mobile networks, a Citizens Broadband
Radio Service (CBRS) 3.5 GHz indoor LTE access point,
and massive CBRS shared spectrum. It also includes full
integration with the AWS IoT and plug-and-play experience,
which makes it easier to connect, monitor, and manage IoT
assets at scale. AWS created this solution to take advantageof “the upcoming launch of unlicensed spectrums globally,
including CBRS in the USA (and later MulteFire globally), sXGP
in Japan, and LAA in France.” The four partners are marketing
their solution as a lower-cost, more efficient way of building a
private mobile CBRS network.

Option 3 – Build own private network: The third option is
to turn to a technology vendor such as Ericsson or Nokia tobuild a proprietary private network. (See Box 3.)This option
gives the customer full control over the network structure,layout, and cost. However, the technical requirement for theorganization is higher – having the right technical capabilities
in place within the organization becomes imperative toensure network operations. Corporates with high or very
specific technical demands on their networks, as well as theorganizational capabilities to design, control, and operate their
networks, should consider this option.

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Box 3 – Ambra Solutions, together with Ericsson,
provided the deepest private LTE network in the world at
Agnico Eagle Mines in Canada
Agnico Eagle commissioned an LTE network to work at a
depth of three kilometers in the LaRonde mine in Canada to
improve communication, safety, and operations. Deployedby Ambra Solutions, a provider of wireless technologies forremote areas, and Ericsson, it runs in the low-frequency 850
MHz spectrum band to allow better propagation.
With the network in place, a single LTE radio was able tocover six kilometers of tunnel, effectively replacing up to 60
active Wi-Fi access points.
In addition to establishing reliable communications, data andvoice-mobility services, even in the remotest areas of themine, the network enabled a number of critical IoT solutions,such as connected sensors that monitor air quality andremote-controlled operation of machinery. This enables
more efficient operations and a safer working environment
for miners.

Insight for the executive
The time to accelerate your digitization journey is now. For
industrial enterprises, 5G will solve many technical limitations
impeding IoT development, and with its advent, newopportunities for IoT use cases will open up. While we arestill some time away from full 5G deployment, enterprises
planning to build or scale up IoT applications need not wait toinvest. In order to gain first-mover advantage, IoT solutions
can be built on existing 4G LTE networks and scaled up, or
updated once full 5G capabilities are available.
Executives need to take a broad prospective with regard to
the IoT in their planning. We envision four key questions to
consider in this evolution:
1. W
 hat is your digital vision? The starting point is thecorporate enterprise’s vision for digitalization. Whichelements of the customer engagement journey, uniqueproduction environment (whether physical or virtual goods),
and internal decision-making processes and procedures areto be digitized?
2. W
 hat roles do the IoT and network play in realizing thevision? Next, consider the role that the IoT and network
performance play in enabling the digital vision. These arenecessary steps which should be rooted in improving and/or enhancing customer experience, operational efficiency,
and improved speed and efficacy.
3. W hat, therefore, are the requirements for corporate
network and IoT performance? Not all devices andnetwork operations require the same levels of security,
speed, bandwidth, and responsiveness. An assessmentof the desired performance attributes will show which use
cases can be initially enabled and justified. It can then be
determined whether public network/operator solutions
are sufficient, or a more controlled, high-performance andsecure internal network is necessary.

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4. W
 hat is a cogent implementation approach? There istypically no one-size-fits-all approach – building a greenfield,
private IoT corporate network from scratch may be ill
advised. Instead, consider incremental use case-driven
approaches to leverage technology (such as 4G initially,
and then evolving to 5G) to address specific enterprise orcustomer use-case solutions. Typically, the next stage ofinvestment use cases can leverage existing investments
by building on shared infrastructure to enhance financial,
operating and customer performance.
Once the executive team has evaluated these four steps,
you can then consider how best to move forward with IoT
and private network options, balancing internal capabilities,business requirements and willingness to invest.

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Agron Lasku
is a Partner in Arthur D. Little’s Stockholm office anda member of the Telecommunications, Information
Technology, Media & Electronics Practice.
Hariprasad Pichai
is a Principal in Arthur D. Little’s Boston office anda member of the Telecommunications, Information
Technology, Media & Electronics Practice.
Rebecka Axelsson Wadman
is a Principal in Arthur D. Little’s San Francisco office anda member of the Strategy & Organization Practice.
Sean McDevitt
is a Partner in Arthur D. Little’s Boston office and a memberof the Telecommunications, Information Technology, Media& Electronics Practice.