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1 © Nokia 20161 © Nokia 2018

INFRASTRUCTURE VENDOR VIEWS Industry needs, barriers and opportunities

uO5G project final seminarAalto University, EspooTuesday 18th of December

Dr. Seppo Yrjola, Nokia Corporate Strategy & Development

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100+ years of interference avoidance – from macro to micro operators

The Halifax Morning Chronicle, 24 October 1907Fleming's transmitter for Marconi's transatlantic transmission

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Megatrends

Ubiquitous connectivity

Multi-Cloud

Deep analytics

Industrial Internet of

ThingsRegulatory

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The world’s most valuable resource is no longer oil

The Economist, May 2017

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Stagnation in productivity growth

M. Mandel. “Long-Term U.S. Productivity Growth and Mobile Broadband: The Road Ahead.” Progressive Policy Institute, March 2016.

US Productivity Growth

20161900 1950 1960

ELECTRICITY & EARLY NETWORKS AGE INFORMATION AND COMMUNICATIONS AGE

PP4%

3%

2%

1%

0%

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30% 70%

Physical industries

Digital industries

Share of GDPInvestment in ICT Annual productivity growth

(15 year average)

2.7%

0.7%70% 30%

Source: The Technology CEO Council

M. Mandel. “Long-Term U.S. Productivity Growth and Mobile Broadband: The Road Ahead.” Progressive Policy Institute, March 2016.

Tale of two industries

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The best versus the rest

2001

40

30

20

10

0

50

-10

%

02 03 04 05 06 07 08 09 10 11 12 13

5% most productive service firms

5% most productive manufacturers

All other manufacturers

All other service firms

Productivity growth since 2001

Source: OECD, Wall Street Journal, July 2018

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ICT & OT come together ‘IOCT’

Use case Availability Cycle time (ms)Payload size

(bytes)# of

devicesService area

Motion control

Printing machine >6 x 9’s <2 20 >100 100 m

Machine tool >6 x 9’s <0.5 50 ~20 3 m

Packaging machine >6 x 9’s <1 40 ~50 3 m

Mobile robots

Cooperative motion control

>6 x 9’s 1 40-250 100 <1 km2

Video-operated remote control

>6 x 9’s 10-100 15-150 100 <1 km2

Mobile control panels with safety functions

Assembly robots or milling machines

>6 x 9’s 4-8 40 -250 4 10 m

Mobile cranes>6 x 9’s

12 40 -250 2 50m

Process monitoring >4 x 9’s >50 Variable 10,000 devices per km2

Supplymanagement

AGV Assembly line

Sensors

Sensors

AGVInventorymanagement

Deliverymanagement

Robot motion controlOperations

Factory

“5G for Connected Industries and Automation.” White Paper, 5G Alliance for Connected Industries and Automation, April 2018.

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Dependability - Ability to perform as and when required

OT ICT

Mission-critical Carrier-grade

Business process controlMedia delivery & information services

SpecializedGeneral-purpose/standardized

Dependability General-purpose/Centralized

Availability &Reliability

Technologies

Service(s)

Operations

Slow (decades) Rapid (months to years)Rate of tech change

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Evolution to mission-critical applications - Precision & Augmented Intelligence

Ba

nd

wid

th

Latency

10kbps

1Mbps

100Mbps

10Gbps 360 Video VR+VRAN+Vehicles

People & Things System Control

1ms10ms100ms1s10s 100us

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Evolution to Internet of Skills

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Ex Machina 2015 written and directed by Alex Garland.

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New investors unlock 5G potential

The Industrial Opportunity

The Mobile Broadband Opportunity Early Adopters

Industrials

CSPs Disruptors

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Modernization of industry drives massive economic impact

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Industry Sites

Transport venues & ports 50,000

Military bases 10,000

Warehouses 3,300,000

Industrial & manufacturing 10,710,000

Oil & gas 8,000

Power generation 47,6000

Water utility plants 140,000

Mining 54,000

Hospitals & labs 263,000

Total: 14,582,600

Comparison: Global base stations sites: ~7M

Source: Harbor Research

$3.8T to $11TEconomic value of IoT

(by 2025)

up to

11%of global economy

(in 2025)

Source: McKinsey

Source: McKinsey

Health 1590

Factories

Worksites

Cities

Logistics& Transport

1660

850

1210

930

930

560

170

3700

Low Estimate High Estimate($B)

160

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The future architecture – Defined by physical limits of spectrum and distance

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Exclusive Use

Dynamic Use

GlobalLocal

Spectrum Model

Licensed spectrum Proxied Licensed (MVNO)

Sub-licensed/tradedLocal allocation

Unlicensed spectrum

Shared spectrum

Regional micro-licensing

Hyper Local Networking Service

Global Networking Service

Macro Mobility Service

Federated Mobility Service

Connectivity Service Model

GlobalLocal

Different spectrum models for different business models

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Factors influencing resource valuation and prices

Suppliervaluation

(NPV)

Demander valuation

Transactioncosts

Transactioncosts

Negotiated price

Supply side competition

Demand side competition

Option value

Option value

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New value architecture: distributed, deterministic & dynamic

Spectrum

The opportunity is here and now