Safety. Productivity. Reliability. These are the three axioms that govern the mining and oil & gas industries. I have been researching the potential for private networks in these verticals to determine what role, if any, could LTE and 5G networks play. Looking back over the past 10+ years, private networks held much promise, but showed little success. Will the future be different? 4G/5G private networks have to answer to these axioms for any chance at market traction.
The Past
Private networks in the O&G and mining sectors are not new. They can date back to the mid-2000’s when companies started developing SoCs for small cells. These were 3G systems in the earliest days, followed by WiMAX. 3G could not ‘scale-down’ to support private enterprise. The WiMAX ecosystem was short-lived and largely collapsed with the advent of LTE.
Along a parallel track, Wi-Fi was growing, but not without its failures. Many companies failed to scale as few winners cornered the market. Municipal Wi-Fi attracted many of the failed companies until that market failed too. The energy sector became a niche for these companies to adapt their technology and give it another go. Wi-Fi did succeeded in carving a niche failed to dominate. Many different technologies exist to serve different purposes.
As LTE matured, a few niche players opted to focus on the oil & gas and mining sectors with custom solutions. They solved the end-to-end network cost challenge by ‘scaling-down’ the LTE core network to accommodate hundreds of devices; unlike in carrier networks where the core supports millions of broadband hungry subscribers. Many of these ‘scaled-down’ cores were hardware-based solutions used for testing and verification. But they were reasonably good in meeting the performance requirements.
The Present
Digitization is a common theme in the O&G and mining sectors, as it has been for the past few years. Many of the large mining and oil & gas companies created positions for ‘innovation officer’ to plan the integration of new technologies. This activity cannot be viewed in isolation of the latest trends and development in these verticals. The economic cycle has a major impact as companies tighten their spending and new investment slows when commodity prices fall. For example, oil prices increased from the lows seen in 2016, but remain well below the levels seen in 2014. Following the initial period of belt-tightening, companies are looking for means to improve production efficiency and workforce safety.
In the meantime, LTE became hugely successful and virtualization became the main theme for telco infrastructure solutions. Virtualized core infrastructure brings down the cost of deployments with greater scalability – up or down. Small cells have matured and vendors are hungry to look for new markets following disappointing deployment volumes by service providers. This brings the cost of the end-to-end network to the lowest price seen ever!
As carriers reduce spending to maintain profitability, telecom equipment vendors are looking for new growth opportunities. Private enterprise networks became integral to many of these companies’ strategies – such as Nokia and Ericsson. As spectrum regimes become more friendly in markets such as the US and Germany, these vendors are pressing ahead in promoting private networks as platform to base many applications: location tracking, equipment management, worker safety, broadband connectivity, etc.
The Future
There are many trends that work in favor of private networks in oil & gas and mining, but many barriers persist. Awareness tops the list, especially among the smaller energy and mining enterprises. Many lack the understanding of what solutions are available and how they can be deployed, or have a distorted view of the technology could deliver. Similarly, many in the telco space are lack the understanding of the developments and pain points in O&G and mining industries. Their approach is biased from long years of catering to the consumer market and working with large scale service providers. Education – both ways – is important to break these barriers.
The mining industry, like the telecom industry, is an aging industry where old habits take long to die. Doing things differently entails a new level of risk in an environment dominated by safety and reliability (there’s enough risk in exploration!). Underground mines are among the few remaining places where ‘leaky feeders’ are still used: in telecom terms, this is ancient as fiber and distributed antennas and radios are common. Given macro-economic trends, one cannot expect a ‘rip-and-replace’ strategy of existing solutions, but growth in line with the global business cycle. The wireless industry needs to be patient in approaching the energy and mining sectors – similar to many other vertical markets.
Finally, I wanted to mention that mining and oil & gas sectors are experiencing a confluence of technologies such as automation, robotics, and AI to deliver on safety, reliability and productivity. Private networks will need to integrate with these developments (mutual reinforcement!).
