We attended media briefings at the Keysight World conference held near San Francisco, California, yesterday. Keysight World San Francisco showed a more integrated Ixia as well as a further push towards 5G, automotive and energy, and data center and telecom. Much of the companies conversations during the event related to synergies between these technologies. Such as how to push the automotive industry forward using 5G and the need for edge computing in 5G. As Keysight is involved at the beginning of the launches of many new cellular technologies, it has good insights into the timeline and progress of the 5G market.
One of our key takeaways from the show is the increased pervasiveness of Ethernet in the telecom and automotive industry as well as the significant increase in constant data creation. All this data will need robust, and more intelligent networks to transport it. We were also impressed that Keysight World will actually take place in 10 cities around the world, with San Francisco being the first.
Another interesting observation was just how global Keysight was in looking at products, for example in one session that we attended, much of the automotive effort in the company was located in Germany.
The main message of Ribbon keynotes was that Ribbon has moved from a voice and SBC focus to a broader scope including data and analytics, such as UCaaS, Security-as-a-Service, Service Assurance-as-a-Service, SIP Trunking-as-a-Service, SD-WAN, and analytics. The company identified two major catalysts to the change in company scope: the August 2018 acquisition of enterprise SBC company Edgewater and the February 2019 acquisition of analytics company, anova. Additionally, the company confirmed that it is not pursuing service provider mobile market opportunities such as EPC or “full IMS” that are components of larget mobile equipment larger vendors. Instead, Ribbon is pursuing the mobile market by offering overlay analytics services that allow SP customers to derive value from mobile operators using monetization, network, marketing, and customer care.
The company’s core business is evolving. For instance, the company has doubled down on the Enterprise market with its Edgewater acquisition, and a result, it emphasized that it is unique because it has both service provider and enterprise SBC product offerings. The company has offered SBC on public cloud and reiterated that this capability has been available for one year. The company highlighted that it has a Tier-1 Mobile Network Operator VoLTE Interconnect contract win.
Analytics. The company sees its opportunity in the analytics market is to deliver technology to the customer for the following cases:
• Monetization (Targeting, Advertising, Sponsored Data, Campaign Efficacy)
• Network (Reduce Network Cost, Improved Quality of Experience, Proactive Alarms, Network Service Assurance)
• Marketing (Service bundles, churn reduction, product insights, inferred demographics)
• Customer Care (customer experience, bill shock, most probably cause)
We are impressed with Ribbon’s technical capabilities when it comes to using GPUs. The company has previously discussed the performance of its GPU based media interworking function as being 3.5x more powerful than a DSP-based system, or 9x more powerful than a CPU-based system and over 2x more power efficient. The company says its GPU-based systems are generally available for its D-SBC and i-SBC functions. It has evaluations at three operators: Tier-1 US MNO, Tier-1 US CSP, and Tier-1 Japan CSP. We would not be surprised if some of these customers begin deploying soon. One of its Tier-1 operators found that the GPU-based system costs half as much in capital spending and is 800% more power efficient.
Kandy, the white-label voice/messaging services brand of Ribbon discussed its success with customers such as BT, NUWAVE, AT&T, Hong Kong Broadband, Optus, and ecosystem partner, Five9. It enables UCaaS, CPaaS and WebRTC services. The company reiterated that it plans to go to market with partners, mainly service providers, instead of opening its own store-front that would compete with service providers. The company says its customer pipeline is growing.
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).
Mid-band spectrum shortages in the US was the main thrust of the 5G Americas sponsors. The idea is that the rest of the world has lots of mid-band spectrum available and service providers in countries that could be considered economic leaders (Japan, Korea, China, Western European countries) have plenty of available mid-band spectrum that is ideal for 5G, while the US does not. This group at 5G Americas, which includes service providers, vendors and standards bodies, is saying that US leadership in cellular infrastructure and the entire app economy that relies upon it may be at risk as 5G get deployed.
Other topics discussed: AT&T is currently out for bid on its 5GC infrastructure, and this caused some interesting posturing by the vendor attendees (like Ericsson, Nokia, Cisco, Mavenir) at this conference, with each trying to identifying their strengths. It seems the consensus is that all mobile operators in the US market are using Option 3X, an EPC anchoring system. And, the consensus seems to be that US operators will need to move to 5GC once most traffic is coming over 5G Radio (“New Radio”). Vendor selection appears an open field, once again, as 5GC has 13 different microservices, each which could theoretically be parsed out to different vendors. Operators are saying, though, that while this multi-vendor selection may lead to savings on purchasing, it will increase integration spending, so these two have to be balanced out.
Mobile Edge Computing: The consensus is that a 50 mile radius (or others are saying 100 km) is considered the ‘edge,’ or the ‘low latency’ zone. We expect, however, that the data forwarding plane (‘user plane’) will be distributed to, say, 100 locations within a territory like the US market, while the control plane will be much more centralized (perhaps as centralized as it is currently, where it might be considered to be like 1/4th the number of locations).
CBRS. The consensus is that testing will be done by mid November 2018 and Initial Commercial Deployment by 1Q19, potentially spilling into 2Q19. PAL auctions are expected by attendees to be a 2019 event, with 2020 traffic running on PAL spectrum. Commscope represented the views from a SAS standpoint for this discussion.There were discussions about the C-Band (6 Ghz) potentially using the same type of Automatic Frequency Coordination system, but the consensus is that it is too early to declare that the path forward.
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: