Power

The new type of network that could be huge for small businesses

Newly approved shared spectrum could power innovations.

The new type of network that could be huge for small businesses

If you're a company that wants to be able to accurately track thousands of items in your inventory, you'd need a network that can handle all of those individual sensors, as privately as possible. That's where CBRS comes in.

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I'm not saying you need to connect 30,000 sensors to a single network — but what if you did?

The average grocery store stocks around 33,000 items, and generally more than one of each of them. It's tough to keep track of where they all are at any given time, but what if they could all talk to you and tell you where they were, and how long they'd been sitting there? That could soon be a possibility.

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A newly opened part of the wireless spectrum, called CBRS, coupled with an innovative cloud-computing infrastructure, aims to be the underlying connective tissue for companies looking to develop private networks to help them monitor their businesses. Any company could, theoretically, connect anything in their business they want to track the way they want to on this new network. And when it's fully deployed, 5G will supercharge those capabilities with the amount of information that will be able to flow through from countless sensors and devices, giving companies a true window into how their business is faring at any given moment.

All of those fantastical applications bandied around for 5G — from remote-controlled vehicles to telesurgery and autonomous robots — need someone to build a network to support those devices. Major networks are starting to roll out their 5G offerings, but what if their plans don't match up with what you want for your business? With CBRS, it's like building your own private network, just the way you want.

What is CBRS?

We are constantly devouring more data. In the U.S., we consumed 28.58 trillion megabytes of mobile data in 2018, an 87% jump over the year before, and 73 times more than in 2010. During the Obama administration, advisers told the president that more wireless spectrum would be needed to meet the growing data demand. In the U.S., there are myriad parts of the electromagnetic spectrum that are reserved for government or military use.

One band in particular — between 3550 MHz and 3700 MHz — was identified as a possibility. It was primarily used for U.S. Navy radar operations that generally only needed access near the coasts, Dave Wright, president of the CBRS Alliance, the industry group working to open up the spectrum, told Protocol.

Traditionally, setting up cellular networks requires huge investment. The FCC licenses parts of the spectrum in the U.S. to the highest bidder, but the CBRS approach allows anyone to get in. Instead of the millions or billions that major cellular networks pay the FCC to own exclusive access to certain parts of the spectrum, any company could build an application for their business on top of the CBRS, for far less.

In 2015, the FCC and the NTIA proposed creating the Citizens Broadband Radio Service, or CBRS, out of the underused Navy band, with the government and private companies sharing access. It created a three-tier system for accessing the CBRS: The top tier is for grandfathered-in access (mainly the Navy); followed by a tier where companies pay for priority access to the spectrum; and then a general-access tier where companies could request access as needed. With other parts of the spectrum, there's usually just exclusive access for whoever paid for it.

"It kind of gets us past this bipolar situation that we've been in," Wright said of the CBRS' new approach.

A Spectrum Access System (SAS) is cloud software that ensures CBRS subscribers can access their network when they need it, wherever they are. A CBRS-enabled device will request access from an SAS, and then determine whether it has access (based on where the device is and what it needs). It'll then establish a connection if it's allowed, all within the blink of an eye.

The only other option for companies was unlicensed spectrum, which is generally used for things like Wi-Fi and Bluetooth connections. But Wright pointed out there's no protection against radio interference in those bands, which isn't particularly useful if you're trying to build mission-critical communications systems for a business.

In September, the FCC approved the first trial applications of the CBRS, and by the end of 2019, major handset makers, cable companies, telecoms and several trade associations had joined the alliance. The latest iPhone 11, Google Pixel 4 and Samsung Galaxy S10 phones all featured native support for CBRS spectrum access. There are 45 CBRS-certified radio devices and 40 end-user devices (like phones or walkie-talkies) on the market, Wright said. "You don't have to have extremely deep pockets to access this spectrum," he added.

On Jan. 27, the FCC fully approved CBRS, allowing anyone access to the spectrum. The alliance announced that CommScope, Federated Wireless, Google and Sony had agreed to run Spectrum Access Systems.

Full commercial approval makes it easier for anyone to set up a network, without having to move at the speed of government bureaucracy. "If you wanted to deploy a system you could, but you'd have to lodge your network plans through with NTIA and DoD prior to launch," said Chris Stark, CBRS Alliance chair. "Now we're in a place where essentially all you have to do is have a business plan, a place to go open up the network, and then connect to a SAS, ask for an allocation of spectrum, and away you go."

Who can use it — and how?

Pretty much any business that wants to connect anything in its facilities could use CBRS. But building a network from scratch isn't something many companies will likely want to do. That's where companies like Federated Wireless and CommScope come in: providing custom setups for businesses.

Federated Wireless CEO Iyad Tarazi told Protocol that the company has 31 customers in the process of rolling out CBRS-based systems. What companies will need varies on what they want to do. Telecom companies can use the network to get access to more spectrum for cheaper than an auction, cable companies can offer wireless phone subscriptions, and enterprises can build private networks to their exact specifications. In those cases, they'll need the sensors or devices they want to keep track of, along with the radio stations that will allow them to talk to the network.

"It's not a Wi-Fi replacement, it's not a carrier replacement," Tarazi said of CBRS. "It really is just meeting a massive niche in the market that a lot enterprise customers want to just deploy the next generation IoT capabilities that are overwhelming for Wi-Fi networks and require control models that don't fit today with carrier subscriptions."

Federated recently announced it had partnered with Amazon and Microsoft to offer its services on their respective AWS and Azure marketplaces. For companies that already use one of these cloud services to run other parts of their business, they can add on a private CBRS-based network through Federated with one click.

The service, bought through either marketplace, will have a one-time service fee and a monthly cost based on what you want to connect. Tarazi said the company will eventually be able to offer everything you'd need to set up a private network — the equipment, designing and installing the network, hooking it up to a business' existing systems — through AWS and Azure as well. (Right now, Federated is just offering the wireless subscription.)

Any business, even if it just wanted a few security cameras that can be watched remotely from a phone, could work on CBRS solutions like Federated. The company, like the other SAS providers, is still in the process of getting things up and running, given that the band was only approved a few weeks ago. Tarazi said smaller companies would make the best partners for now: "Smaller- to medium-size is our preference right now to get the model perfected," he said.

Who is using it?

Some of the earliest CBRS adopters are the niche applications that both Tarazi and Stark mentioned, as well as traditional telcos looking to add capacity to their networks. "What we see is the people who want to use it to supplement downlink bandwidth, they look like they're raring to go," Stark said.

Dallas Love Field Airport partnered with Boingo Wireless to use CBRS spectrum to increase the Wi-Fi capacity at the airport, and Verizon is using the spectrum to shore up its capacity in environments dense with people and cellular connections, such as near hospitals or stadiums. And it can stream 360-degree video from the cab of a car traveling 160 mph around a race track, too, if that's something your business needs.

"I think we'll see a break-out series of deployments start in the next six months or so as it becomes clearer as to what people are starting to do," Wright said.

And those sorts of applications seem to be on their way. Tarazi wouldn't go into specifics, but said that Federated Wireless planned to show off two companies using its offerings, one through Azure, and one through AWS, at MWC Barcelona, before the conference was canceled. The two companies, an "automaker" and "a warehousing company," Tarazi said, had custom solutions designed by Federated, one testing out a barcoding and warehouse-management system running on the CBRS spectrum and Azure, and the other on AWS managing robots and push-to-talk devices.

Instead of having to fit into a specific enterprise subscription model, companies can create something that works for them. "You don't have to pay a massive amount of money up front, and you don't have to create special handsets," Tarazi added.

This is useful, and probably more cost-effective when dealing with a few hundred or thousand workers or robots in a business, but when you start talking about tens of thousands of sensors, it's an entirely different proposition.

What will be different with 5G?

The Industrial Internet of Things is a term that's thrown around a lot these days as a potential panacea for transforming everything a company touches into usable data. With IIoT, every foot of oil pipeline, every item on a pallet stored in a warehouse, every person coming in and out of a store, or every robot autonomously completing its predetermined tasks, can be monitored.

Devices that need a real-time connection to a network, such as remotely operated vehicles or augmented-reality displays workers wear out in the field, will require a sturdy 5G connection to operate reliably, research suggests. That amount of data would be too much for today's Wi-Fi routers to handle, and would be hamstrung by LTE networks, Tarazi said. He ran off a list of problems — analyzing high-definition video feeds, connected digital signage, replacing or adding connectivity infrastructure to a building, to name a few — that need a "a lot of data, low latency and a lot of security."

If you're a grocery company that wants to be able to accurately track the freshness of every item sitting in your warehouse, out for delivery, and on its way to your stores, you'd need a network that can handle all of those thousands individual sensors, as privately as possible.

And that's beyond what a CBRS-based network can easily do today. LTE networking hardware has been available for years, so prices are far lower than that of newer 5G models, according to Wright. Using affordable hardware and handsets, anyone could spin up a small private LTE network to suit their needs, with the cloud-based SAS systems ensuring that there's a slice of network available for paying customers.

"You don't have to be a mobile operator," Wright said. "Now you can go and buy LTE or 5G equipment, and you can deploy your own private network for your internal communications needs."

It might be a while before the more futuristic applications for 5G and CBRS technologies start to proliferate, but more of the straightforward gap-filling solutions, like stable wireless at stadiums or airports, will likely continue to hit this year.

"People have been talking about it for a long time, and finally somebody's doing it," Tarazi said.

Image: Yuanxin

Yuanxin Technology doesn't hide its ambition. In the first line of its prospectus, the company says its mission is to be the "first choice for patients' healthcare and medication needs in China." But the road to winning the crowded China health tech race is a long one for this Tencent- and Sequoia-backed startup, even with a recent valuation of $4 billion, according to Chinese publication Lieyunwang. Here's everything you need to know about Yuanxin Technology's forthcoming IPO on the Hong Kong Stock Exchange.

What does Yuanxin do?

There are many ways startups can crack open the health care market in China, and Yuanxin has focused on one: prescription drugs. According to its prospectus, sales of prescription drugs outside hospitals account for only 23% of the total healthcare market in China, whereas that number is 70.2% in the United States.

Yuanxin started with physical stores. Since 2015, it has opened 217 pharmacies immediately outside Chinese hospitals. "A pharmacy has to be on the main road where a patient exits the hospital. It needs to be highly accessible," Yuanxin founder He Tao told Chinese media in August. Then, patients are encouraged to refill their prescriptions on Yuanxin's online platforms and to follow up with telehealth services instead of returning to a hospital.

From there, Yuanxin has built a large product portfolio that offers online doctor visits, pharmacies and private insurance plans. It also works with enterprise clients, designing office automation and prescription management systems for hospitals and selling digital ads for big pharma.

Yuanxin's Financials

Yuanxin's annual revenues have been steadily growing from $127 million in 2018 to $365 million in 2019 and $561 million in 2020. In each of those three years, over 97% of revenue came from "out-of-hospital comprehensive patient services," which include the company's physical pharmacies and telehealth services. More specifically, approximately 83% of its retail sales derived from prescription drugs.

But the company hasn't made a profit. Yuanxin's annual losses grew from $17 million in 2018 to $26 million in 2019 and $48 million in 2020. The losses are moderate considering the ever-growing revenues, but cast doubt on whether the company can become profitable any time soon. Apart from the cost of drug supplies, the biggest spend is marketing and sales.

What's next for Yuanxin

There are still abundant opportunities in the prescription drug market. In 2020, China's National Medical Products Administration started to explore lifting the ban on selling prescription drugs online. Although it's unclear when the change will take place, it looks like more purely-online platforms will be able to write prescriptions in the future. With its established market presence, Yuanxin is likely one of the players that can benefit greatly from such a policy change.

The enterprise and health insurance businesses of Yuanxin are still fairly small (accounting for less than 3% of annual revenue), but this is where the company sees an opportunity for future growth. Yuanxin is particularly hoping to power its growth with data and artificial intelligence. It boasts a database of 14 million prescriptions accumulated over years, and the company says the data can be used in many ways: designing private insurance plans, training doctors and offering chronic disease management services. The company says it currently employs 509 people on its R&D team, including 437 software engineers and 22 data engineers and scientists.

What Could Go Wrong?

The COVID-19 pandemic has helped sell the story of digital health care, but Yuanxin isn't the only company benefiting from this opportunity. 2020 has seen a slew of Chinese health tech companies rise. They either completed their IPO process before Yuanxin (like JD, Alibaba and Ping An's healthcare subsidiaries) or are close to it (WeDoctor and DXY). In this crowded sector, Yuanxin faces competition from both companies with Big Tech parent companies behind them and startups that have their own specialized advantages.

Like each of its competitors, Yuanxin needs to be careful with how it processes patient data — some of the most sensitive personal data online. Recent Chinese legislation around personal data has made it clear that it will be increasingly difficult to monetize user data. In the prospectus, Yuanxin elaborately explained how it anonymizes data and prevents data from being leaked or hacked, but it also admitted that it cannot foresee what future policies will be introduced.

Who Gets Rich

  • Yuanxin's founder and CEO He Tao and SVP He Weizhuang own 29.82% of the company's shares through a jointly controlled company. (It's unclear whether He Tao and He Weizhuang are related.)
  • Tencent owns 19.55% of the shares.
  • Sequoia owns 16.21% of the shares.
  • Other major investors include Qiming, Starquest Capital and Kunling, which respectively own 7.12%, 6.51% and 5.32% of the shares.

What People Are Saying

  • "The demands of patients, hospitals, insurance companies, pharmacies and pharmaceutical companies are all different. How to meet each individual demand and find a core profit model is the key to Yuanxin Technology's future growth." — Xu Yuchen, insurance industry analyst and member of China Association of Actuaries, in Chinese publication Lanjinger.
  • "The window of opportunity caused by the pandemic, as well as the high valuations of those companies that have gone public, brings hope to other medical services companies…[But] the window of opportunity is closing and the potential of Internet healthcare is yet to be explored with new ideas. Therefore, traditional, asset-heavy healthcare companies need to take this opportunity and go public as soon as possible." —Wang Hang, founder and CEO of online healthcare platform Haodf, in state media China.com.

Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.

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