Hyperscalers, Open RAN, Private 5G and chip announcements were top news at the MWC show in Barcelona last week. Based on disclosures at the show, Open RAN looks to go commercial in 2023 and 2024, hyperscalers are obtaining contracts to carry an increasing amount of telecom-related workloads, Rakuten Symphony is amassing a growing list of partners, Qualcomm/Marvell and other chip companies are taking front-stage at MWC, and there were a variety of new private 5G-related announcements including those from Cisco, Huawei, Mavenir and Federated Wireless. We took some time to compile some of the most noteworthy announcements, sorted by company.
DISH chairman says 5G deployment is 6 months behind schedule. DISH says it fell behind on a technical level and that it realized it has to become the systems integrator. Expects to light up 25 metro regions in June, representing 20% population coverage.
Huawei is pivoting towards fiber in certain markets like the home market. It announced, for instance, Fiber to the Room (FTTR) and contrasted it to Wi-Fi which it claims has a variable experience. Huawei's wireless Chief, Ryan Ding, keynote speech noted several points. By the end of 2021, Huawei signed more than 3,000 commercial 5GtoB contracts with Chinese operators and partners for industry applications (implies operators involved in all), including coal mining using remotely controlled shearers communicating over 5G.
Mavenir showcased End-to-End 5G Core, IMS and automation hosted on AWS. The company calls this a "pilot" and asserted that using a core on AWS system would reduce TCO and speed up rollouts. Mavenir also announced 5G Radio Units from 8T8R to 64T64R (Massive MIMO) that use Qualcomm chips and that it plans to develop vDU RAN software based on the Qualcomm X100 5G RAN Accelerator Card, both systems of which are expected to be available for global deployment in 2023.
Telefonica advocated for OpenRAN and explained its selection of technology suppliers such as radio/RRU/AAU (NEC, Comba, Airspan), Baseband (Altiostar/Rakuten Symphony), Small Cell (Node-H, Askey, Qualcomm), RIC (Nokia), as well as Intel, Mavenir, Parallel Wireless, IBM/Red Hat and VMWare. It says it selected NEC as the systems integrator. The pan-European operator said that Open RAN reduced vendor lock-in and is most cost-efficient over the medium/long term, however suffers from integration with OSS and the time to carry out interoperability tests until Open RAN is mature. It expects Pilots to continue during 2022, then initial deployments in 2022/2023, followed by "massive deployments" beyond 2023 (we think this means 2024).
Rakuten Symphony announced it had acquired San Jose, CA based Robin.io, an automation and orchestration software company. Rakuten Symphony also announced an Open RAN trial at MTN that includes Accenture and Tech Mahindra. Symphony also said AT&T will use Rakuten's Site Manager, a software system that designs workflows for network deployments; additionally, AT&T's proprietary capacity planning tool. Cisco and Rakuten announced a partnership described as a joint go-to-market model. Nokia is Rakuten's first "Symworld" partner, whereby Nokia's core software will be made available to Symphony customers.
Qualcomm. Made announcements about private 5G automation, a partnership with Microsoft about Private 5G, Mavenir portfolio expansion (also discussed elsewhere in this article), Fujitsu mmWave, and 5G FWA.
Orange announced plans to use Ericsson 5G SA core for Belgium, Spain, Luxembourg and Poland, Nokia 5G SA core for France and Slovakia and Oracle for 5G core signaling in all countries. It plans to launch SA commercially in 2023.
Microsoft Azure announced Operator Distributed Services, which is a combination of its 2021 acquisition of AT&T Network Cloud Services and Azure for Operators tools. The company explains that it will enable operators to run all their workloads, including RAN, core, mobile and voice core, OSS and BSS, on a single carrier-grade hybrid platform. Microsoft also announced that AT&T is integrating its 5G network with Microsoft Azure Private Multi-access Edge (MEC) computing to develop AT&T Private 5G Edge. Telstra collaborates with Ericsson and Microsoft to begin 5G-enabled edge compute trials.
Cisco announced ORAN partnerships with private 5G vendors like Airspan and JMA Wireless and said it is in customer trials with both vendors. As it had said a month earlier with its private 5G launch, this is being offered as a subscription service operated by Cisco, and Cisco will allow customers to use their own brand to market the service. Cisco announced it is on a variety of Private 5G projects including at Chaplin, Clair Global, Colt Technology Services, ITOCHU Techno-Solutions Corporation, Maderia Island, Network Rail, Nutrien, Schaeffler, Group, Texas A&M, Toshiba, Virgin Media O2, and Zebra Technologies.
ZTE announced lighter Massive MIMO radios, its UniSite NEO and a new "Gen 2" FWA CPE based on Qualcomm Snapdragon X65 and X62 5G Modem-RF platforms.
Marvell announced 5G-related product line enhancements, including a reference design with DELL technologies that creates a server based baseband processing system.
Nokia’s Global Analyst Forum this week highlighted two main trends. First, the company says it has caught up to rivals in its 5G radio development. Furthermore, the company expects its wireless systems to become increasingly technologically differentiated from competitors. Second, the company emphasizes its message that it is the “green partner of choice.” We read that the company is making more power-efficient communications equipment. Apart from its significant themes meant for headlines, the company also highlighted that: (a) it’s experiencing strong private wireless growth, (b) its RAN systems are in the pilot phase with hyperscalers like AWS, GCP, and Azure, (c) it is embracing Open RAN faster than other established competitors, (d) it expects the Remote Radio Unit (RRU) to take an increasing fraction of total RAN spending, (e) it sees the RIC as a market expansion, (f) it expects to differentiate in radio in 2022 with its growing Carrier Aggregation capabilities.
Nokia, which has significant revenue exposure to Mobile RAN, is in an interesting phase of its corporate development. With having brought on new CEO, Pekka Lundmark, recently, it abandoned its end-to-end product portfolio strategy. Yet, in recent times, the company’s non-radio portfolio has outperformed radio access network growth trends, which reinforces the idea that its broad portfolio serves it well. One of the company’s primary messages from the conference was that its RAN portfolio has caught up to competitors and that next year it will deliver significant improvements, including Carrier Aggregation and a broader portfolio of Massive MIMO systems. The company also said that it is working with a broad set of infrastructure providers and infrastructure software companies that will be able to support its RAN and core portfolio; examples include Anthos, Kubernetes, VMWare Tanzu, AmazonEKS, OpenShift, among others, operating on AWS, Azure, Google Cloud or on premises-based infrastructure. Nokia is investing in broadening out the appeal of its RAN and core systems both by embracing these various non-Nokia systems, as well as supporting Open RAN. The company says it expects an increasing amount of value to accrue to the RRU and away from baseband, which we see as consistent with its support of so many different infrastructure systems that would run baseband. The company sees revenue upside in the RIC market, part of the Open RAN architecture. The company’s support of Open RAN will lead to the commercialization of Open RAN systems in about two years, according to Nokia.
Furthermore, the company’s telecom core business is experiencing an acceleration in business trends. Like the RAN architecture support for various cloud systems, Nokia is even further along in offering support for its core systems like 5G Core. Management made two comments during its discussions that did an excellent job of explaining how far along the core market is in moving towards a hyperscaler-based infrastructure. First, Nokia said that “50% of RFQs include an option to run on top of the Hyperscaler.” Second, Nokia explained that of 82 of the engagements, 20 have serious public cloud investigations and dialog going.
We are also encouraged by the company’s leadership in Fixed Wireless Access (FWA) and 25G PON. In 5G FWA, the company has some significant antenna and software algorithm capabilities, and we expect new, cutting-edge products in 2022. In 3GPP 5G FWA, the company holds a significant revenue market share lead as of 3Q21, illustrating its robust capabilities. The company made a bet on 25G PON and was a significant contributor to an MSA Group called 25GS-PON. Additionally, Nokia developed its own semiconductors, called Quillion, to support 25G PON (backwards compatible to lower 10G and 1G speeds).
Mavenir held its annual analyst event this week and highlighted some important information highlighting its progress in transitioning to a maturing ecosystem player in the telecom equipment industry. The company highlighted its recent Koch Brothers $500M investment; existing investors include Intel/Nvidia and Siris Capital, who remain majority equity holders. The company highlighted that it grew revenues and bookings in the mid 20’s percent year-over-year in its Fiscal 2020, an impressive figure. Two main themes came from the show. First, the company’s RAN portfolio is picking up steam. Second, the company’s portfolio now spans very wide, from telecom core to RAN.
The RAN portfolio has made significant progress. The company claims over 20 deployments in 14 countries. And, Mavenir has demonstrated the capability to deploy on AWS, IBM Cloud, Microsoft Azure, Oracle Cloud, Google Cloud, and VMWare. The company spent a great deal of time reviewing definitions of various Open RAN terminology, to address confusion, spanning from vRAN, O-RAN, C-RAN, Cloud-RAN, and Open vRAN. We’ve seen many public statements from Mavenir, its competitors, operators and pundits, alike, espousing the various benefits of some or all of these systems. We think the point Mavenir was making at its conference is that Open vRAN is the most open, interoperable system. When operators enable open systems, of course, it allows Mavenir and other vendors to bid on deals for networks that have existing equipment from traditional vendors like Ericsson, Nokia, Huawei, and ZTE. We see Mavenir’s efforts to work with various infrastructure companies and systems like AWS and VMWare as a means of gaining a foothold with operators who are trialing or in the early stages of deploying these various infrastructure systems. Speaking of partners, the company claims it has relationships with nearly 15 Remote Radio Unit (RRU) players. The company says it can deliver Massive MIMO capabilities to customers, which means that its RAN systems can satisfy what would be considered mainstream 5G use-cases; this represents very significant progress over last year’s RAN capabilities.
Mavenir’s portfolio is extensive. The company made separate presentations about the following topics: RAN, OSS, Radio, Packet Core, Mobile Core, BSS/Digital Enablement, Security, Private Networks, and Enterprise over three days. With over 5,000 employees spanning the globe, exposure to the most relevant parts of the mobile infrastructure industry, Mavenir is a serious contender for deals. The company also highlighted that its telecom core technology uses modern programming techniques that enable it to operate on cloud infrastructure; among these are fully containerized micro-services design. The company shared that most microservices file sizes are under 25 Mbytes, evidence that the systems are designed as microservices (and can load fast).
The fact that in April 2021, well-known Koch Bros made a $500M “strategic minority” equity investment in the company is an important validation of Mavenir’s place in the telecommunications industry. We see the investment as a reinforcement of the company’s balance sheet and an opening to new customers.
This week's MWC Barcelona 2021 had several themes; the most important was that several outsiders to the telecom industry were ever-present. The new entrants – the party-crashers - included Starlink, Microsoft Azure, Amazon Web Services, Google Compute, and NVidia. These new players are forcing change either through economics, new technology, or new regulatory frameworks, or combinations thereof. We’ll touch on the importance of these crashers and then circle back to a few other ongoing themes that continue to remain relevant in this article.
Satellite broadband, while not exactly a mobile technology, will catalyze significant changes to the mobile industry. Low Earth Orbit (LEO) satellite services, evangelized today by SpaceX-owned Starlink, announced plans to spend as much as $30B in building out its constellation over its lifespan. Yet, it will reach users across the globe. Elon Musk said Starlink is in beta in 12 countries, and it plans to have ½-million users in the next 12 months. The billionaire highlighted that Starlink’s ability to reach rural populations is unlike that of terrestrial players. We think the rural reach of LEO broadband is precisely why Starlink will be so important. Musk’s pitch to the mobile industry was that of a partnership – he said that Starlink is partnering with 5G MNOs to offer satellite backhaul and rural broadband services. We view satellite broadband, and later 3GPP satellite, as critical components in the telecommunications industry, and therefore we chose to write about satellite first in this article.
All three hyperscalers, Azure, AWS, and GCP, made a splash at MWC21. As a group, these infrastructure providers have already changed the way telcos operate. In fact, the hyperscalers’ architectures were the inspiration behind the decade-old telco push for Network Functions Virtualization (NFV). But, these days, hyperscalers’ operations are more than an inspiration to the telcos. MNOs are now moving some of their workloads to hyperscaler infrastructures. The evolution of these workload migrations to hyperscalers is moving in three phases, phase 1, the back-office, then phase 2, telecom core, and last, phase 3, the access layer. In the weeks leading up to MWC21, we’ve seen progress on all three workload migrations, including that on Mobile RAN. Incoming AWS CEO Adam Selipsky said at MWC that AWS is talking to “virtually every telecom operator.”
Some examples of announcements made surrounding the MWC show include:
With Open RAN capabilities come the possibility that MNOs can source various RAN components from multiple vendors. Rakuten has already technically demonstrated multi-vendor sourcing (Altiostar baseband and Nokia and NEC radios). In addition to system-level multi-vendor interoperability, in previous years, multiple semiconductor companies had been bolstering their RAN offerings (Marvell, Qualcomm, EdgeQ). Marvell had previously crashed MWC (MWC19 and MWC20) and is now a RAN supplier to Samsung and Nokia. For MWC21, we saw yet another entrant to the RAN chip market, NVidia. NVidia has received pubic endorsements from Ericsson, Fujitsu, Mavenir, and Radisys. NVidia’s current chip offering is called “AI-on-5G,” and the company’s offering starts in 2021 as an “on a server.” NVidia’s next offering is expected in the 2022-2023 era and will be an “on a card” offering. Then, after 2024, NVidia will offer its “on a chip” offering.
In a briefing with Rakuten Mobile today, we learned two neat things: It is experimenting with 3GPP on satellite, and it hopes to announced a full-stack Rakuten Communications Platform (RCP) customer as early as next quarter. The company also shared some plans that it has for improving coverage to 96% by the end of the summer '21, and that it believes it has a 50% total cost of ownership advantage for its 5G infrastructure versus a traditional network operator.
So, what's so important about "3GPP on satellite?" If satellites are able to communicate with all cell phones and other cellular devices, this would mean that coverage could be enabled where we might need to have placed macro base stations. If we don't need macro base stations everywhere as satellites provide that coverage in sparse areas, or maybe even along highway routes, then a future cellular operator might be able to build its network with far fewer macro towers and rely more on a "barbell" approach, with small cells providing high throughput in busy areas and satellites providing coverage between busy areas. This would reduce demand for 5G base stations. Rakuten expects that its satellite partner, AST, may offer satellite coverage for Japan at the end of 2023 or the beginning of 2024 - that is a ways off. But, this means that in 3 or so years, the need for base stations may be considerably reduced.
Also, Rakuten spokesperson, Tareq Amin, said he thinks it is possible that Rakuten may announce its first RCP customer as early as next quarter. We published about RCP in November 2020, around when the team first started making RCP known to the public. This means that a division of a mobile operator, Rakuten Mobile, may be selling its know-how, technology and services to another telecom operator, presumably outside of Japan. This is a big deal in that most operators buy from vendors and systems integrators, not from others who are in the same business as them. It is also a big deal because cloud companies like Amazon, Microsoft and Google all want to sell their cloud services to operators, too. And, if RCP gets there first, and sells its full stack (radio, core, billing, orchestration, OSS) it would represent a first-ever full stack services deal.
Google, the largest US Hyperscaler by revenue, reported Search and Social results that declined Y/Y for the first time while IaaS revenue grew nearly $1B Y/Y. We were a little surprised at Facebook’s robust growth compared to Google’s. Google’s results were in line with our overall expectations for Search and Social decline in 2020 as consumers and advertisers resetting to the new normal. We expect more targeted ads throughout 2020 as consumers live and work from home, and many students live and study from home during the fall semester.
Google has made big bets and investments in IaaS, and we continue to see AI as an area where they will attack AWS and Azure. It is unclear if IaaS is compatible with the culture withing Google, which could put an upper limit on the verticals and companies Google can sell to. During 1H20, Google was surpassed by Amazon in our supply chain interviews as the company with the most influence on the technological direction of industry-wide future products.
We see a passing of the guard as AWS CAPEX is now much higher than Google’s, and the supply chain sees Amazon as more significant revenue potential. We expect this change to reverberate throughout the supply chain, primarily based on how each Cloud provider uses custom or semi-custom semiconductors in their data center infrastructure. This is something we are happy to talk about as we prepare our 2Q20 results and our fall readouts.
-- Alan Weckel, Founding Analyst, 650 Group
Microsoft acquired Israeli startup, CyberX Labs today in a move that gets Microsoft Azure into the IoT security market. We have been tracking CyberX for a couple years and have generally categorized it as an emerging player in the Operational Technology Access Control (OTAC) market. More recently, it has smartly repositioned itself as an IoT network discovery, posture assessment and management company. We see OTAC as an adjacent market to an existing, more IT-oriented security market called Enhanced Network Access Control (ENAC). Microsoft explains that CyberX will extend its Azure IoT security capabilities towards devices used in industrial IoT, Operational Technology and infrastructure scenarios, and that, it will allow customers to discover their existing IoT assets, manage and improve security posture of these devices.
We see this move by Microsoft as encroaching into the network security space a bit further than it had before. And, it is using IoT and industrial operations as a means to enter. We sill see the CyberX portfolio as an OTAC company, but since many IoT devices are just Internet Protocol (IP) connected devices, the CyberX portfolio can perform many of the tasks of that of an ENAC system. And so, this puts Microsoft quite closely in competition with the existing leaders in the much-larger ENAC market, namely, Cisco, HPE Aruba, Forescout and Fortinet (listed as a partner on the CyberX Labs website). Cisco and Forescout have announced OTAC products recently, as well. HPE Aruba, a big player in ENAC, had integrated CyberX into its Clearpass ENAC product in 2019 and featured CyberX at its user conference in 2019.
So, given Microsoft is acquisitive these days and clearly has an interest in beefing up its Azure IoT capabilities, and given that Forescout is in the midst of a failed merger bid from investor Advent, perhaps it is time for Microsoft to take a closer look at Forescout.
Microsoft announced that it had acquired privately-held Affirmed Networks today. This isn't the first software/services based telecom acquisition it has made, with the 2011 acquisition of Skype being the most prominent one. Other competitors to Microsoft have made forays into the telecom market, including Facebook's 2014 purchase of WhatsApp, Oracle's 2013 acquisitions of Tekelec and Acme Packet.
Microsoft's acquisition can be viewed as both collaborative with mobile network operators or competitive with them, and it certain pits the giant against telecom equipment vendors like Ericsson, Nokia and Huawei. Let me explain.
Federated Wireless announced that it will offer a managed service that will be offered to enterprises that plan to operate private cellular networks (both 4G and 5G). For companies to use Citizens Broadband Radio Service (CBRS) spectrum (3.5 GHz) in the US market, a service provider called a SAS is required; Federated is a pioneer in this SAS market. What the company announced today, though, is that not only is it going to offer SAS services to customers, but it will now offer discovery, planning, design, building, operations and support services that will allow enterprise to get the benefit of cellular coverage in their facilities.
Another very interesting facet to the Federated Wireless entry to managed services is that it has also announced selling partnerships with Amazon Web Services and Microsoft Azure. In summary, customers can visit each AWS or Azure sites, click some buttons and then Federated will show up and build and operate the cellular network to allow services such as critical communications (like employee-to-employee communications), mobility services (such as trucks moving onsite), Wi-Fi backhaul (without the need for installing new conduit and wires), IoT sensor deployment, and many other uses.
Federated will be an enabler to companies who don't want to work with traditional mobile network operators in order to expand cellular coverage to their corporate locations. What this means is in the US market, companies may contact AT&T, Verizon or T-Mobile to get licensed cellular, but now they can contact Federated Wireless to get their own shared-spectrum, in this case CBRS, network that carries only their traffic.
There were two main announcements, a new relationship with Google Cloud Platform and a new flash device - the AFF A800. Also, in our interviews with NetApp, we learned about the future of Fibre Channel at the hyperscalers.
Google. Google Cloud Platform now integrates NetApp Cloud Volumes as a drop-down menu capability as part of the Google console. This allows enterprise customers, for instance, to use Cloud Volumes to manage their data on Google's cloud service while simultaneously managing their data on premise. This relationship with Google now rounds out the NetApp relationships with the main hyperscalers - it already has in place relationships with both Amazon (AWS) and Microsoft (Azure). NetApp Cloud Volumes on Google Cloud Platform is currently available as a "preview" capability (sign up at www.netapp.com/gcppreview) and is expected to go to commercial status by the end of 2018. Customers will pay Google for the use of NetApp Cloud Volumes.
AFF A800. New flash hardware available from NetApp, which besides having impressive density and low-latency capabilities supports NVMe-over-Fibre Channel. Of course, the product also supports 100 Gbps Ethernet. From a historical standpoint, it is interesting that NetApp, a company whose heritage was driven by storage over Ethernet, is touting Fibre Channel. But, that's what its customers are asking for in order to accelerate their on-premise workloads such as database (Oracle), ERP (SAP) and other mission-critical enterprise workloads. In our interviews with NetApp, we were told that Fibre Channel is growing faster than Ethernet - this makes sense given the company's foray in recent years to flash and low-latency workloads.
Fibre Channel at the hyperscalers? We asked about what is going on with the hyperscalers' architecture to adapt to AI/Deep Learning workloads. NetApp executives explained that AI workloads are different from traditional workloads; they are random, low latency workloads connecting to GPUs. This type of workload, we were told by NetApp, works very well when attached to Fibre Channel. From NetApp's perspective, if customers want to run AI workloads fastest, they would likely do so on-premise, using Fibre Channel. Yet, many customers run their workloads on hyperscalers, all of which use Internet Protocol and the underlying Ethernet infrastructure. We have always been skeptical that hyperscalers would adopt Fibre Channel. We believe the hyperscalers may work with vendors such as NetApp to develop additional software capabilities to address the changing workloads relating to AI/ML/GPU workloads in the future - on top of IP/Ethernet infrastructures.