The €18m initiative aims to strengthen Europe’s digital sovereignty as telcos and hyperscalers battle it out to realise the opportunity
A partnership in the name of digital sovereignty: In 2020, France and Germany agreed to step up their cooperation in 5G. Last week, they announced the funding of four 5G projects with funding worth €17.7m, which will create a Franco-German ecosystem for private networks based on an open architecture. The initiative is a testament to these government’s strong resolve to foster digital sovereignty. One of its explicit objectives is to improve market entry for innovative network technology and promote the rapid implementation of open standards. 16 German companies and 14 French ones will participate in four projects, spanning across open and virtualised hardware and software solutions, networks in business parks not yet covered by mobile operators, and telemedicine use cases.
Germany understands the importance of private networks: The Franco-German initiative further highlights the growing importance of private networks in the 5G ecosystem. Regulators and policymakers are understanding the transformative potential of Industry 4.0 use cases for 5G, which are best served by private networks based on local use of spectrum. In particular, Germany is one of the few countries in Europe that reserved part of the 3.4–3.8GHz band for private networks. The regulator BNetzA awards 10MHz lots to applicants for 10 years. Since November 2019, 186 applications out of 187 have been accepted. Many of these permits have been awarded to automotive groups and universities, although operators such as Verizon and Telefonica also appear among the licensees.
Operators need to move quickly to seize the opportunity: The flourishing of 5G private networks represents an opportunity for many of the actors in the mobile ecosystem. Several telecoms operators are offering private networks solutions, often in partnerships with vendors or cloud providers (e.g. Telefonica with Microsoft). This is sensible, considering that industrial 5G has significant room for growth and better opportunities for monetisation compared to current consumer propositions. But they face tough competition. Small players have emerged with innovative solutions as system integrators, and hyperscalers such as AWS and Microsoft have entered the arena leveraging their cloud and edge-computing capabilities. Operators need to move quickly if they want to seize the opportunity, and regulators need to closely monitor acquisitions in this space if they want to avoid big tech becoming dominant in this market.
