What's driving 4G, 5G investment in manufacturing?

A global survey from Nokia and ABI Research shows what's driving manufacturers to upgrade their wireless networks. It also shows a strong interest in private wireless networks.
Written by Stephanie Condon, Senior Writer

Manufacturers around the globe are poised to shift in the next few years from fixed line connections to wireless communications infrastructure that can bring their factories into the digital era. As businesses consider investing in 4G or 5G, they're largely motivated by the need to improve existing infrastructure, as well as the benefits that could come with robotics and automation, according to a new survey from Nokia and ABI Research. 

Surveying more than 600 manufacturing decision-makers across the globe, researchers found that 74 percent of respondents are looking to upgrade their communications and control networks within the next two years. About half (52 percent) said the latest generation of 4G/LTE and 5G will be necessary tools for their future business-critical operations. More than 90 percent said they're looking into either 4G and/or 5G investments. 


The report also found that 84 percent of respondents considering 4G/5G would deploy their own local private wireless network in their manufacturing operations.

Most respondents (63 percent) said their investments in 4G or 5G would be driven by the need to digitize and improve existing infrastructure. About half cited the benefits of automation with robotics, while 42 percent cited improved employee productivity. 

The survey -- which included respondents from the US, Germany, Japan, China, India, Australia, the UK, Canada and France -- was conducted at the end of 2019, before the onset of the COVID-19 pandemic. 

Even in light of current events, ABI Research expects wireless networking investments to remain a priority. 

The top priority for manufacturers is resuming operations (if they're currently halted) and finding the "new parameters for normal," ABI Research Principal Analyst Ryan Martin said to ZDNet. "Beyond that, I think digital transformation is a top priority -- it really has to be."

IoT capabilities for monitoring equipment are already "coming through as a 'need to have' rather than a 'nice to have,'" he said. Meanwhile, more advanced capabilities for controlling operations digitally will help manufacturers run even more efficiently. 

The report provides some figures that underscore the dramatic networking changes anticipated in manufacturing. Currently, there are 260 million digital factory connections, the report notes, with 230 million of those connections made via a fixed line. By 2023, the report says there will be as many as 5.5 billion digital factory connections, with most supported by new wireless infrastructure. 

Martin said that ABI Research is in the process of updating its forecasts to reflect the impact of the pandemic. 

Before the outbreak took hold, according to the report, 4G was expected to be the dominant cellular connectivity standard for digital factories by 2021, with 9.1 million connections globally. By 2025, the report forecast 11.96 million 4G connections in the digital factory, as well as 5.23 million 5G  connections. By 2030, 5G was expected to become the dominant cellular connectivity solution, with 344 million digital factory connections. 

The 5G rollout will take some time, according to Dave Nowosiat, senior marketing manager for Nokia Enterprise, because of the timing of the release of new standards from the 3GPP, the consortium that develops protocols for mobile telecommunications. The current standard is largely designed to support consumer 5G use cases. Many industrial 5G applications wil be based on the next standards release -- which was pushed from March to June due to the pandemic. 

"What we think makes sense for these enterprises is to start with 4G, become familiar with that technology, move forward with Industry 4.0 aspirations," he said, "and then when the 5G ecosystem becomes mature they can seamlessly upgrade."

The report also explored the different priorities driving buying decisions within information technology (IT) and operations technology (OT). 

Most IT decisions are being driven by an interest in reducing downtime (53 percent), improving operations efficiency (42 percent) and enhancing security (36 percent). By comparison, when it comes to OT, just 29 percent of respondents said decisions were driven by an interest in reducing downtime, while 21 percent cited security. Improving operations efficiency was comparably important in OT at 40 percent. 

Along with improving operations efficiency, respondents said the top drivers of OT decision making came down a desire to replace aging infrastructure (cited by 43 percent of respondents), and increasing capacity (38 percent).

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