You can’t build the internet of things without the internet, which is why connectivity is so essential to the IoT. However, figuring out the type of network to use and how to pay for that network has been one of the thornier issues associated with large connected projects. But with the launch of several technologies, including 5G, new spectrum allocated to small geographic areas such as corporate campuses, and tools such as network slicing, it’s possible that telcos are finally able to create new business models based on their value, not their bits.
Indeed, the IoT together with new standards could help carriers assuage their fears of becoming little more than dumb pipes by becoming the providers of essential business services they’ve long argued that they are. For a hint of what this might look like, check out the recent deal announced between AT&T and Phillips 66.
AT&T together with Accenture has been working with oil company Phillips 66 to build out a private cellular network that would cover one of its refineries in Belle Chasse, La., where overall connectivity has traditionally been spotty. The private network is separate from AT&T’s public network, and Phillips 66 has the option to keep all of its data inside that network, never sharing it with either AT&T’s public network or its servers.
The test network is a mix of AT&T’s licensed 700 MHz and 1900 MHz commercial bands. However, the specific spectrum and even the technology that get deployed on it are up to the customer (and dependent on the available airwaves). Currently, Phillips 66 is testing a 5G network. Zhanna Golodryga, SVP and chief digital and administrative officer at Phillips 66, said in an email that the company is using the network to push information to workers on mobile and tablet devices. In the future, Phillips 66 hopes to use it for industrial use cases, such as predictive maintenance and those focused on worker safety.
“The private network allows [Phillips 66] an opportunity to test newer automation, safety and low latency use cases that have been not traditionally possible with other technologies,” said Golodryga. “P66 as with most industrial enterprises, must adhere to strict security standards that require secure private network capabilities as a backbone.”
This particular network is what carriers call a MEC (multi-access edge computing) network, where a carrier and sometimes its computing partners build out the telco and computing infrastructure to handle local IoT deployments. The idea behind a MEC network is that data stays on the private network, as physical proximity combined with optimizations reduces latency. Such reduced latency is especially important for industrial applications, as the time between sensing a problem and taking action on that problem needs to happen in the blink of an eye.
Jason Inskeep, director of AT&T’s 5G Center of Excellence, said via email that the Phillips 66 network will help AT&T understand how well cellular can perform in harsh industrial environments. But it’s the ability to work closely with a client to design a private computing and communication network that has AT&T and other carriers excited about MEC, 5G, and private networks.
These networks offer a way to tie connectivity to productivity and increases in safety, as well as to build critical IT infrastructure that would underlie a business’s digital transformation. In short, this isn’t something for which you charge a customer a per-gigabyte fee. And because the networks and computing will be deeply tied to critical applications, it’s going to be hard to swap providers the way a company might do when they buy traditional communications services.
This realization came to me during my conversation with Qualcomm’s John Smee (see the podcast below) as he was telling me about how carriers are seeking to provide more value as part of their 5G network expansions. They will do it using latency guarantees and private networks, as well as by deeply tying their communications and computing infrastructure to their business results.
On the consumer side, carriers may be dumb pipes for a while, but in the enterprise, new tech may help them become essential and irreplaceable players in a company’s digital transformation.