We attended the Mobile World Congress last week in Barcelona along with an estimated 104,00 others from nearly every country in the world. We met with over 42 companies and nearly 200 people at the show and attended many press announcements. While most of the MWC19 headlines were about 5G, we were struck that much of the hyped growth will in fact be the result of deployments in enterprises and could be served using unlicensed (or lightly licensed) spectrum. Many of the presentations and product announcements suggested as much, if you read between the lines. We'll step through these two, enterprise and unlicensed next.
The Enterprise opportunity. A major theme we picked up at the Mobile World Congress show is simple: that for the mobile telecom market to grow, 5G must expand to the enterprise. We see ample evidence that without an expansion to the enterprise, the cellular market as we know it will likely experience declines as consumers expect more bandwidth for less in the future. The 5G narrative at the MWC19 show was straightforward: German & Chinese robots, trucks and drones need 5G to unlock the potential for future growth. There were robots, drones and trucks bleeping and whirring to make the point for visitors. We wouldn't argue with the contention that robots and very fast moving vehicles that are controlled remotely need very low latency; yet, there are so many use cases that don't actually need such low latencies.
Wireless is just a small part of "Enterprise." Enterprise 5G use cases being presented at MWC, including the wirelessly controlled robot, involved far more than just a wireless connection to succeed. To automate a workplace with robots, there is far more technology that has to be brought to market, including software, integration, wireline networking and the list goes on. None of these capabilities have traditionally been delivered by telecom equipment vendors; they have been delivered by vendors who have served the enterprise market (examples would be Cisco, IBM, Oracle, etc.).
Unlicensed Opportunity is Robust. In both the enterprise market and the outdoor market, unlicensed spectrum has tremendous potential. This goes for a) WiFi, which is already immensely popular, b) for in-building 'lightly licensed' CBRS (a US-only market), c) the soon-to-be released 6 Ghz spectrum, as well as d) outdoor mid-band spectrum like 5 Ghz (already very popular), e) outdoor 60 Ghz (like the kind relating to the Facebook Terragraph project) and f) 900 Mhz LoRa. While each of these unlicensed (or lightly licensed) frequencies was discussed at the show, 5G licensed was so overwhelmingly promoted it was hard for these exciting unlicensed markets to get any airtime. We think this lack coverage relatively speaking is a dis-service and we'll touch on just a few of them in this post.
Wi-Fi isn't going away. Related to the enterprise 5G topic, we found points and counterpoints about 5G versus WiFi interesting. Huawei's Enterprise group issued a press release about its 802.11ax (WiFi-6) expectations and how important WiFi is for the enterprise market. On the other hand, Huawei's telecom group was pursuing a press agenda about partnering with Operators to pursue the 5G market. Few companies on earth possess as broad a produt portfolio as Huawei, who has ample expertise, market share and credibility in both the mobile wireless market and the enterprise wireless market. We felt this dual-message (5g AND WiFi) was well-balanced. On the other hand, vendors and operators who have historically focused on cellular-only were pushing a "5G will displace WiFi" or at least a "5G is the only solution for mission critical enterprise" agenda. We feel that 5G-only in the enterprise message is to broad-based; we think 5G in the enterprise is far more nuanced because:
802.11ax/WiFi-6 is cellular-like. 802.11ax, which was launched commercially in 4Q18, incorporates many cellular-like capabilities. Many of the technical merits debates presented at MWC compared older 802.11ac WiFi against LTE and 5G NR. This is not a fair comparison because both 5G NR and 802.11ax actually began shipping commercially generally at the same time (4Q18 and 1Q19).
There is very little overlap between the Wi-Fi opportunity and that for cellular. The overlap in opportunities being discussed as the 5G enterprise opportunity at MWC have surprisingly little overlap with the vertical industries currently being served by Enterprise-class WiFi. Take manufacturing, which represents 9% of the Enterprise WLAN market by units in 4Q18. Or the outdoor WLAN market, which is only 3% of total Enterprise-class market in 4Q18 by shipments. The point is, there is very little overlap between the Enterprise WLAN market and the 5G enterprise market being discussed at MWC.
LTE will be the workhorse for many years. Additionally, let's consider the fact that many of the use-cases being discussed at MWC will initially be served by LTE, not 5G. In the enterprise market, the use of LTE in unlicensed (or lightly licensed, like the US's CBRS) bands is often called private LTE. The main difference between unlicensed LTE and licensed LTE is that with unlicensed, the enterprise can work directly with enterprise-focused VARs, resllers, solutions providers and complementary equipment suppliers, while with licensed LTE, the enterprise will need to work directly with its local mobile service provider who owns the spectrum, likely ensuring that the operators becomes the prime integrator of the project, or at least part of it. Private LTE will therefore have fewer parties involved (no operator), lower monthly costs (no operator) and will likely get the project to completion faster (fewer parties and a prime vendor/contractor/solutions-provider with expertise in the enterprise's vertical market). So, why not consider unlicensed/lightly-licensed LTE instead of licensed 5G to achieve the goals illustrated in many of the 5G use cases at MWC?
Where will WiFi lose out? If it has wheels or wings on it, Wi-Fi is not your friend - look to cellular.
To conclude, yes, 5G will fit some very exciting use-cases, especially those for low-latency applications. These are indeed exciting and deserve attention. We see it this way for the wireless industry: if the things involved have wheels or wings, or are of such high value that you must use cellular, there's a good chance LTE will cut it. And next, it makes sense to consider using unlicensed spectrum - which is just emerging as viable for many uses.
Our big takeaway from its recent global analyst meeting was that Nokia is formalizing its enterprise business. Of course, the company’s primary business, which focuses on telecom service providers, is undergoing major product updates, including towards 5G, Fixed Wireless Access and towards network slicing. We have published about these topics in other posts relating to Nokia in the past several months, having attended other Nokia events, so we focus on topics we haven’t discussed recently.
The company acknowledges that telco capex is expected to be unexciting and is redoubling efforts to gather enterprise customers. In 3Q18, Enterprise represented 5% of revenues. The company expects 8% CAGR for Enterprise Networking. Of course, the company covered many topics beyond enterprise, including its view on megatrends, the importance of spectrum instead of differentiation between 4G and 5G, residential WiFi and Fixed Wireless Access, its recent wins at major telcos, the impact of the recent re-organization, the impact of the trade war and other topics.
Enterprise market, Private cellular and WiFi. The company’s view is that private LTE will challenge WiFi for certain applications in its “strategic” enterprise markets, including for verticals such as logistics and transportation. Considering the Nokia view, we expect private LTE and WiFi will co-exist in the future. We think that Nokia can succeed with its private LTE strategy, because this is mostly a “greenfield” opportunity. Many of the cases Nokia explains it is seeing success are outdoor, not indoor, where WiFi is so popular. A number of industries are likely to adopt private LTE (mining, logistics are good examples), and later 5G, but we expect most every industry will maintain their reliance on WiFi. We keep in mind that in light of the fact that 802.11ax (which began shipping 3Q18) incorporates many more cellular-like capabilities, WiFi will have a seat at the table for some time to come even in these critical industries. Interestingly, by leveraging service provider channels, the company has plans to enter the “branch” enterprise network market, using SD-WAN as its “Trojan horse” to enter.
Megatrends. From a strategy standpoint, Nokia sees megatrends: Ubiquitous connectivity, multi-cloud, deep analytics, industrial IoT and regulatory.
Spectrum takes on new importance. On mobile radio, the company focuses on spectrum differences as much as the difference between 4G and 5G. The company’s view is all macro basestations should have mmWave. Describing its 5G ramp, Nokia’s factory capacity related to 5G infrastructure has quadrupled this most recent quarter; and the company “went to volume shipments” on its new, in-house Reefshark chips in 3Q18.
Residential WiFi and Fixed Wireless Access. The company’s new mesh WiFi will be made available at its first service provider customer’s stores in the month of November. This mesh technology is from the recent acquisition of Unium. The company’s first Fixed Wireless Access (FWA) customers have begun deployments, for both 4G cellular and WiGig (60 Ghz 802.11ad). We understand that the 4G cellular projects are largely at mobile service providers working to leverage existing investments in their mobile infrastructure, while WiGig is in demand at enterprises and traditionally fixed-line service providers. The company expects 5G FWA infrastructure will be ready to ship in 2019.
Recent wins at service providers. New wins announced €2B around this event include “frame wins” at major Chinese service providers
The impact of the recent re-organization. On the day of its recent earnings call, the company announced a planned re-organization, along with some reductions in force, to reduce spending so the company can hit its year 2020 financial targets. The importance of this re-org, from our standpoint, is that the Software division of the company will be in charge of managing several products that used to be part of the Mobile division beginning Jan 1, 2019. Products moving from Mobile to Software include IMS CSCF and TAS. We have verified that Packet Core (including EPC/4G and 5G Core) will remain in the ION (IP and Optical Networks) division, where it has been for years.
Trade war. According to Rajeev Suri, CEO of Nokia, Australia, UK, Korea, Japan, possibly Canada all may ban Chinese telecom gear. Suri expects that Nokia’s “working assumptions” are that: (a) around 20-25% Chinese market share is available for foreign vendors, and (b) potentially, ZTE will take more share in China, and that (c) foreigners (like Nokia) will still be able to play. Suri explained that Nokia hasn’t seen Chinese vendors get more aggressive in Middle East and Africa (MEA).
We attended Mobile World Congress Americas (MWCa) in Los Angeles, CA this week, as well as the AT&T Spark event in San Francisco. Since 5G is launching first the US, these two events became the public events where significant 5G-related announcements happened.
Additionally, discussions about spectrum in the US market were very active discussions. Some points we picked up on:
Yesterday, Ericsson and Juniper announced plans to partner to tackle 5G transport challenges together. Additionally, Ericsson announced a partnership with optical transport company, ECI. The companies said that Ericsson's Router 6000 product family will focus on fronthaul and backhaul and edge compute and will be complemented by Juniper MX, PTX and SRX Series portfolios providing edge, core and security capabilities. Additionally, in today's presentation to analysts, Ericsson showed that the overall transport capability from Ericsson will also include Optical Transport from both ECI Telecom and Ciena. The Ericsson Network Manager will be capable of managing not only Ericsson products, but also the three families of products from Juniper.
ECI will be used for Metro, and will be completely integrated with the Ericsson OSS platform. The company conceded that it is de-emphasizing its in-house metro optical product line and focusing on ECI. Ciena will be used for long-haul transport predominantly, mainly the Ciena 6500 product. Ericsson concedes that both ECI and Ciena products can move to other domains.
To enable automation for 5G, Ericsson can only guarantee that networks working with Ericsson and its partners can successfully be automated. This automation / partnership topic illustrates just how complex it will be to make 5G networks work properly.
Recall that Ericsson and Juniper had a close partnership that goes back many years. In fact, the Juniper router predecessor to the MX was used as the underlying hardware for Ericsson's very important GGSN/SGSN and later EPC capabilities. Ericsson eventually replaced the Juniper product for EPC with its own Router 6000. Subsequently, Ericsson announced a partnership with Cisco, which was more general in nature. That relationship did not result in much tangible progress, from what we have learned; and the relationship was done under previous management teams for both Cisco and Ericsson. Ericsson explained today in its analyst briefing that Cisco and Ericsson compete in several areas. So, this new Juniper relationship is important in that it re-kindles an old relationship and plays to both companies' strengths.
The main theme of the the Huawei HAS 2018 meeting keynotes was Artificial Intelligence and, secondarily, nearly ubiquitous networks connections across the world. Huawei expects 86% of enterprises to have experimented with AI by 2025 (<5% in 2018). It is leveraging AI across nearly all its products and will offer a full stack AI solution to all Huawei partners at its @Huawei Connect 2018 conference (Oct 10, 2018).
More specifcially, Huawei is using AI to elevate products & solutions to new levels: cloud, networks, devices, EI, SoftCOM AI, and Intelligent phones. The company's strategy has changed over time and is now AI-focused:
2006-2011: Single strategy: All IP
2012-2017: SoftCOM: All Cloud
2017+: All Intelligence: SoftCom AI (autonomous networks / services 2.0) - this reduces operating and maintence costs
The company expects that networks will be 10x more efficient in the operation of equipment as a result of AI.
By 2025, Huawei expects 440M AR/VR users, 40% of cars to be 'connected," 80% of users with access to mobile broadband, usage of 1 Gbps / user / day (versus .03 in 2018) and 20B connected devices worldwide.
Connected Devices Forecast (Huawei) by 2025: 40B sensors and 100B connections. This thinking is based on data including that there are:
The company's product lines are very diverse; to wit, the company introduced a helmet for the blind, which will be available soon.
Huawei expects NB-IoT (LTE-based IoT capability) to reach almost full coverage in China in 2018. Additionally, the company expects NB-IoT to reach 100 networks by the end of 2018 (versus 39 in 2017) and to be available on 1.2M base stations (from 0.5M in 2017) and to be connected to 150M connections (versus 10M in 2017).
The company boasted about several developments:
Q&A after keynote:
Mr. Eric Xu, Rotating Deputy Chairman of Huawei dodged several important questions relating to trade tariffs, cloud business unit revenue targets, growth rates of each major business units, specifics about AI full-stack claims made during the keynote, and instead focused generally on the AI theme. Xu did, however, however, answer a handful of questions that were quite interesting: Huawei won't acquire DRAM, Flash companies; and that 5G is not so revolutionary - it is just an evolution following LTE. Additionally, Xu mentioned that in 2H18, Huawei will launch end to end 5G solutions and by 3Q19, it will launch 5G capable phones. Xu said Huawei will continue to work with Intel on x86 for the foreseeable future.
More Q&A specifics:
Trade Tariffs and ZTE. (In a moment of levity, however, Eric Xu smiled when the words ZTE were mentioned - recall that a day earlier, ZTE was penalized by the US). We will focus on our customers and will ultimately survive.
Cloud 1.5B by 2020, will you hit the target? Will offer cloud services to telco service providers. Huawei smartphones will leverage the Huawei cloud. Enterprise customers will consume cloud services such as video, computing. In future, trend will be enterprises will move to hybrid cloud and public cloud will take a major share. Huawei cloud provides compute/storage/networking to enterprises and government. 200K x86 servers in Huawei cloud. Revenue with external customers - won't share it with you - maybe .
AI chipset question: We don't position chipset as a standalone business - won't sell to external customers. Will be used to differentiate Huawei products. Smartphone - we use multi-vendor strategy always; in other worlds; have multiple Qualcomm, NTK and others. Remain committed to multi-vendor strategy. Don't want vendor lock-in, however. If we only have one vendor, what might happen to our smartphone business, Xu asked.
Enteprise business growth? Declined to comment on specifics, but said he encourages each to grow rapidly.
How do customers get to 86% AI usage (the question was asked by an audience member by incorrectly referring to the statistic that was made during the keynote - specifically, Huawei said AI experimentation will be 86%, not AI usage)? Will give clearer answer at Huawei Connect 2018. For now, can share that we will use AI on ourselves first, then help customers on various functions such as finance, human resources, networks, etc.
Supply chain - will you acqire your suppliers? We do joint innovation with suppliers to meet Huawei's needs; push multi-source strategy, however. Will not invest in DRAM, display, flash.
5G wasn't mentioned much in the presentation, why? We don't have as high expectations as some others; 5G is just one of many products we offer and is just a natural evolution from 4G. You don't have a fundamental difference between 4G and 5G - consumers just see faster speed and lower latency. LTE already support autonomous driving. Past couple years, governments have regarded 5G as too important. June 2018, will only address eMBB - faster speeds. 2019 - will have fully 5G compliant system that does low latency. 4G is pretty robust; we don't see 5G as a national coverage network - it'll just focus on city centers. However, once one carrier announces 5G, then all others must. 50% of Chinese have wireless connection capable of 4K but there are still no 4K stations.
2H18, end to end 5G solutions available. 3Q19, will launch 5G capable phones.
Share trends for Huawei at operators. Revenue growth of telecom services is a challenging topic. This revenue growth topic is why titan operators express concern about moving to 5G; instead, Huawei thinks moving to improved intelligence will assist operators. Video will become more and more important as telcos become media companies too.
Will AI become a privacy concern? Any technology has double-sided effects. With AI, some believe it can be dangerous. Xu believes in the wisdom of man. Look back to history of mankind, and our humanity can do same for mankind.
Will Huawei find alternate suppliers for data center products? (Xu also smiled about this question before answering). Today, Intel is dominant player. Our point of view, we look forward to more diversified landscape; but we work with Intel mainly now.
Arris held its annual investor day late last week on March 28, 2018. It was interesting: the company said "Everything is going wireless," which is an interesting admission for a company that, until about a year ago, was essentially a pureplay on wired broadband. To be sure, the company has diversified into wireless with its acquisition of Ruckus and has benefitted from the inclusion of Wi-Fi capabilities to its broadband CPE. The company sees this wireless future - and is pivoting towards it.
Arris management highlighted that it expect its future to include the following growth avenues:
Additionally, the company discussed its expectations for each division, which using its 2017 mix and various projections, calculates to a 4.7% CAGR from '17 to '21.
Enterprise Networking (Ruckus). Overall, the company's Enterprise Networking division, also known as Ruckus Networking, includes its Enterprise WLAN business (formerly Ruckus Wireless), the Brocade ICX Ethernet Switch product line (referred to by the company as Campus Switching), and other revenue streams such as CBRS 3.5 Ghz LTE Small Cells, as well as IoT radio modules that plug into the Ruckus Access Points like Bluetooth, LoRa and Zigbee. The company is targeting 20%+ growth for the Ruckus Networking group, which is far above the industry growth rates we expect for Enterprise plus Outdoor WLAN and Campus switching. This aggressive growth rate either implies share-taking, or growth in other products such as CBRS, Bluetooth, LoRa and Zigbee, or the the non-WLAN parts of what used to be Ruckus Wireless, such as Cloud-managed Wireless LAN services (that, for instance compete with Cisco's Meraki, Aerohive services and Mojo Networks). The company cited an expected Enterprise WLAN revenue growth projection slightly above our projection for the period '17 to '21, even if cloud-managed WiFi services were included.
Network and Cloud Segment. The company said this market is growing 5% annually, and described the market generally as the Cable Modem Infrastructure, optical nodes and cable video networks market. The company generally expects to take share, compared to this market viewpoint, projecting a 4-7% long-term annual growth expectation for this business segment. It was interesting that the company said that the "mobile device explosion [is] driving offload demand," because it has been several years since "Wi-Fi offload" was a growth driver, but dissecting the comment a bit more, the company is pointing to cable operators as being "well positioned to handle [the] offload." We think Arris' strong supplier position with the major Cable MSOs in the US, especially, may indicate that there should be a strong build up of WiFi and cable infrastructure coming in the future. And, this corroborates with our own research and statements from MSOs such as Comcast. In fact, the company showed a "future" network diagram that indicates it expects its MSO customers will be delivering 5G radio, Remote OLTs (PON) and Fixed Wireless Access instead the of cable modem (DOCSIS) equipment that was indicated in the "now" chart. This implied shift from DOCSIS to PON/5G/FWA would be a dramatic shift in the company's product portfolio. Very interesting, indeed.
Customer Premises Equipment (CPE) Segment. The company claims a #1 Set Top Box (STB) market share, and #2 Broadband CPE market share, with a mix of 60% video CPE and 40% broadband revenues in 2017. The company expects to grow broadband CPE to a mix of 50%+ by the year 2021, consistent with the market growth rates it cites - 4% CAGR for broadband and -.8% for video. Generally, the company is projecting long term sales trend of -5% to +1%, indicating that it lacks the direct to market exposure that would get it to a growth expectation in this segment. The company confirmed it is using NBASE-T (Multi-Gigabit Ethernet) interfaces on its home networking devices and it is planning to release 802.11ax capabilities on its portfolio, as well. Arris CPE will also include Extenders / Adapters to, at least partially, address the growth now occurring in the Consumer Mesh market.
Nokia was bullish on its technology developments and cautious on telco capex. CEO Rajeev Suri described the telecom market as having tough market conditions and expects telco equipment market revenues down in 2018. He said the Swedish competitor pricing aggressively and that it will be difficult to keep share in China with 5G ramp. He said Nokia is executing on plan to grow non telco verticals – and it will take 3+ years before it is sizable enough to potentially offset telco challenges. He emphasized a key strength is its focus on cost reductions. He highlighted success in cable MSO market and that its FP4-based router will ship in a few days. Suri thinks 5G could roll out in China first, maybe tied with US. Nokia CEO's comments were quite similar about 5G rollout timing expectations compared to comments made at Huawei’s recent conference (2019 initial deployments; chipsets 2019; broadening deployments in 2020).
Some more details from Rajeev Suri's presentation:
Ericsson. We were surprised that the CEO of Nokia took the opportunity to take some digs at Ericsson. He said that Ericsson is pricing aggressively; it also shared some quantitative statistics about competitive take-outs of Ericsson installed base. He argued that it has broadest portfolio in industry (fixed, software are examples).
China. Two interesting comments about China – a) will be difficult to maintain share in China as 5G rolls out, b) China might be first to deploy 5G.
Emphasized that Amazon Web Services is making a presentation at this conference. Said its new FP4-based routers are more efficient than any competitor and will be so for at least the next year.
Other presenters made comments about 5G mainly. Here are some interesting comments:
Artificial Intelligence. The company has a lot of network automation technology that is it working on but would not share details about this technology. We guess Nokia is more open with its customers and that it'll make announcements at MWC '18 in Barcelona.
5G Radio. Beamforming is a key technology that will be highlighted in 5G. Also, the company's separation of Stage 1 and Stage 2 MIMO processing makes the bandwidth needs from baseband to array be much less than competitors. Additionally, the company explains that its expected systems will have dramatically higher efficiency than competitors - again, the company kept its secrets here under wraps. Late 2018 will see first 5G deployments, going into 2019.
IP/Optical. Basil Alwan, President IP/Optical division said the first FP4-based product went to production end of the last week. Major customers will take shipment before the end of this quarter. The company will ship its 57 Terabit router during 1Q18. SD-WAN will replace MPLS VPNs over time, perhaps at a rapid pace.
Service Provider presentations:
Amazon Web Services IoT. Satyam Yadav, GM of AWS IoT made a presentation at this meeting. The presentation focused on how Amazon's IoT software and its services would be used in a partnership with Nokia to deliver Amazon IoT services.
Sprint. Ron Marquardt, CTO. He is not sure how much customers might pay for lower-latency connections available from 5G. Now that the uncertainty of the T-Mobile US acquisition is beyond us, Sprint says it is rapidly focusing on spending to upgrade its network. Sprint also said it plans to deal with fewer vendors in the future.
Elisa. The Finnish operator presented data about its extraordinary data traffic growth and its per-subscriber data usage being far above competitors as well as other service providers in the world.
This week, we attended the Global Mobile Broadband Forum, held in London, and found several interesting points we thought we would share. Much of the focus of the conference was about 5G wireless networks, and since the show was in London, many of the service providers who we met with and listened to were European. The sponsor of this event was Huawei.
We attended the Nokia analyst meeting for its Fixed Access business, where the company explained its priorities for the upcoming year. these include: (a) an expansion to its In-Home WiFi focus, (b) an aggressive push to move all but physical layer functions into the Cloud, and (c) the launch of fixed broadband wireless. Last year's priorities included a push into the Cable broadband market (through the acquisition of Gainspeed) and Internet of Things (IoT). The business leaders seem to be focused on what we'd consider to be the current trends in broadband, and Nokia is taking advantage of the competitive environment as the broadband market is consolidating around a shrinking number of players.
In-Home WiFi. While some of the the company's Passive Optical Network (PON) Optical Network Terminals (ONTs) are currently shipping with Wi-Fi capabilities, it represents a growing trend among operators to offer a full function gateway. The company plans to enhance its In-Home WiFi capabilities to entice its Service Provider customers to purchase these slightly more expensive devices. The company ships something on the order of 3 million ONTs each quarter, generally on par with the number of in-home WiFi devices sold by one of the leaders of in-home WiFi, Netgear. There has been a long-running trend whereby cable modems and DSL modems have incorporated WiFi, which has reduced the market opportunity for stand-alone WiFi routers, mainly in North America and European markets (where cable and DSL are popular). However, where PON is popular, like in Asian countries (China included), PON modems have generally not incorporated WiFi until recently and WiFi capable ONTs represent a small fraction of all ONTs that ship. Nokia plans to introduce a solution that extends and enhances WiFi beyond the gateway at some point - we've seen WiFi Extenders and now WiFi mesh experience significant growth in recent years. What Nokia may be able to bring to the table, though, is WiFi extending products with deeper integration to the Service Provider operations. This is a capability that will likely be embraced by operators in order to reduce the number of customer service calls to the operators themselves. We have seen vendors like Arris make similar pronouncements of enhancing their WiFi strategies to include devices such as Extenders (but mainly for cable and DSL), so Nokia is not alone in being a broadband modem vendor recognizing the 'whole home' trend. From a consumer WiFi perspective, Nokia's move to enhance its WiFi capabilities will put most pressure on standalone WiFi vendors that sell to Asian countries - these include D-Link, TP-Link, Buffalo, and Zyxel.
Broadband to the Cloud. The Network Functions Virtualization (NFV) trend has now hit full steam, with nearly all mobile operator RFPs requiring vendors to offer software-based functions such as EPC, routing, IMS and other functions that can be run in so-called "Telco Clouds." The broadband group at Nokia is expected over time to deliver on a portfolio that, where possible, will be running on these server-based environments. We, similar to Nokia's expectation, expect that most fixed broadband "NFV" systems will be run in separate "clouds" from the mobile "clouds" for the next few years.
Fixed Wireless. We've all heard a lot about fixed wireless broadband trials at telcos in recent months. Yesterday, for instance, AT&T announced an expansion of its trials. Nokia will deliver on Fixed Wireless through its Fixed Broadband business group, an organizational acknowledgment that this is quite different from mobile wireless and will more likely be used to augment wired broadband strategies in difficult-to-reach locations. Generally, Nokia's view is that fixed wireless is relatively more expensive than many wired broadband systems - we share this view. It is hard not to be somewhat skeptical about fixed broadband wireless given the failed attempts to bring it to market going back as far as the early 1990's (AT&T's Project Angel), and then MMDS and LMDS efforts in the early 2000's, and of course WiMAX (more recently). Nonetheless, Nokia is smartly positioning its plans to support fixed wireless as a way to augment wired broadband. And, we know that fixed wireless works - Ubiquiti Networks has shipped tens of millions of fixed broadband wireless links to its customer base of Wireless Internet Service Providers (WISPs).
At the Ericsson Media and Analyst Briefing today, Ericsson's new CEO Borje Ekholm made his first MWC presentation, and then ceded the stage to well-known T-Mobile USA (TMUS) Chief Technology Officer, Neville Ray. We learned several things that were interesting: T-Mobile's plans for 5G rollout and 2G/3G shutdown, and Ericsson's high-level view on its strengths as 5G rolls out.
Neville Ray's comments conveyed a pragmatic and agile service provider's views: