Q&A: Why freight railroads need private networks to run technology applications

Menlo Park, California-based Ondas Networks (NASDAQ: ONDS) is a wireless network company that designs telecommunications platforms for industries with critical infrastructure needs: utilities, oil and gas, transportation and government.

But what does Ondas’ work mean exactly for the railroads, especially in light of recent cyber attacks? FreightWaves chatted with Ondas’ leadership to find out. Featured are CEO Eric Brock and President and co-founder Stewart Kantor.

This question-and-answer interview was edited for clarity and length.

FREIGHTWAVES: Tell us about Ondas. What role does it play in the rail industry?

BROCK: “At Ondas, we provide this wireless network platform — and it is a platform. It’s an end-to-end system. We do this for railroads, but more broadly, we do this for critical infrastructure markets. … These critical infrastructure markets, industrial markets, industrial IoT, mission critical IoT: They have the common characteristic that they’re operating their businesses over wide, extremely wide, vast field areas that are oftentimes very hard to connect.

“Because of that, they’ve been running private networks for decades. All this industrial activity takes place outside the coverage area of Verizon, AT&T. This is a challenge and there’s this huge install base of private networks. … They run their businesses over private networks. They need to connect to their assets, their people. They want to adopt intelligent equipment that we call ‘The Edge.’ They want to have edge computing, put more computing on the track, on the locomotive. They want to adopt sensor-based systems that collect data from their operating environments, bring that back to the cloud so that they can analyze it, do all their data analytics and essentially become data-driven businesses so they can run more efficiently.

“The problem that the rails and all these other critical sectors are finding is that we’re in a digital economy. As computing power and all the capabilities to do really good things at The Edge emerge, the bottleneck to adopting these new technologies is the network. You need more bandwidth. … We live in a broadband world. We have WiFi. We have LGE. We have a cable company delivering us internet. However, our customers are in a narrow-band world. In that context, the capacity for narrow band is really low, and that’s the problem we’re solving. We’re bringing capacity to the network. It’s a network upgrade. The same radio frequency. These are all licensed networks, and they’re dedicated to the rails … . They have four separate wireless networks that are huge. They’re nationwide systems and they run the businesses. …

“Rail in particular has been starved of that bandwidth for a long time, and it’s limited that ability to adopt new technologies. We have really a lot of potentially very valuable technologies that bring value to safety and efficiency and ROI.”

FREIGHTWAVES: Does each freight transportation mode have unique problems, or do they all need more bandwidth?

BROCK: “They all have an increasing need for bandwidth. Bandwidth and data and capacity requirements go only one way: They go up.”

KANTOR: “One of the key reasons why there are private networks is quality of service and security. … Take the cyber break with SolarWinds. We’ve got a huge problem out there in terms of security. One of the things that has not come out is … all the electric utilities use that [SolarWinds] network [tool], in addition to the government.

“As you get into transportation, that’s why they have the private networks to begin with, to keep them off the public networks. Security and reliability are common [needs] across all these segments that have industrial applications. I’m not so sure we would need this for the automated vehicle that has its own special requirements, but I do see a chance to adopt a technology for specialized HOV lanes and anything where there’s a potential large impact for disaster and where reliability is important.

“That was the thing with industrial drones. When you’re looking at those large drones that can do a commercial delivery of a payload or carry something that weighs over a hundred pounds, that’s something that can’t fall out of the sky. It’s more like an airplane.”

FREIGHTWAVES: What can the freight rail industry learn from the Colonial Pipeline hack?

KANTOR: “The work we do at Ondas relates to all critical infrastructure situations including pipelines. Our customers mostly use exclusively held licensed radio frequencies for their critical data traffic and operate their private wide-area networks with greatly limited access to the public internet. No public IP addresses. The rails specifically have access to four exclusive radio bands. Today these networks are single-purpose. With our technology, they are now able to bundle all the frequencies under a private umbrella and support all applications. This greatly increases the efficiency of the network (much greater capacity) without risking security by turning to cell operators, satellite providers, etc.

“It seems like this hack occurred at the network operating center which then made it to the control systems. With the rails, the control systems are air-gapped, as they should be with critical pipelines. When control systems are air-gapped, the control system never physically touches the corporate public network. There is no cable, wireless or external hard drive/thumb drive access.

“Sometimes mistakes do occur but with our type of network, the operator can cut any connectivity and remain in control. I assume we will learn more whether the pipeline was relying on public network access. Under this scenario, the operator can lose control. This is what happened in the Ukraine grid attack several years back.”

FREIGHTWAVES: How does strengthening the private network for the rails work for cross-border operations?

KANTOR: “When it comes to North America, it’s viewed as one service area. … Industries in Canada are well coordinated with the U.S. and FTC [Federal Trade Commission] rules. There are slight differences with Mexico: Different frequency bands are used when you go into Mexico. However, the interesting thing about our technology and what is appealing is that it’s a platform. So, we’ve designed the radio to work over a very large range of frequencies.

“The railroads operate four or five frequency bands that have been allocated to them, and in different parts of the country, there’s different usages. Our radio adapts to all those frequency bands. That’s what unique about our radios: They serve as a single platform that can adapt to all the frequencies the rails already have. … It allows them to move applications around. They have these networks that are application-specific by frequency. That was just something that evolved over time. … What we’re disrupting here is, we basically are able to take all these applications, make the network redundant and add capacity instead of making them single-purpose networks. …”

“How do the rails stay competitive with these other emerging, evolving modes of transport? It’s clear that rails have a lot of advantages, but one of the big disadvantages is that they’ve been hamstrung by 30-, 40-year-old networks. Data is so important for competitive advantage across these various modes. The rails have not been able to access that advantage. You recognize that there’s a lot of institutional inertia. That’s why having a partner like Siemens, who is so tightly embedded with the Class I rails and can drive adoption, suggests that there is a future here for data in the rails and that’s where Ondas sees itself fitting in.”

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