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Today's big news from the FCC is that it will open up 6 GHz to Wi-Fi and other unlicensed uses. The FCC authorizes "1,200 megahertz of spectrum in the 6 GHz band (5.925–7.125 GHz) available for unlicensed use," and further explains that it authorizes "standard-power devices in 850 megahertz in the 6 GHz band. An automated frequency coordination system will prevent standard power access points from operating where they could cause interference to incumbent services." We see that this vote is very beneficial to Wi-Fi chip and systems companies that serve both consumer and enterprise markets. We also expect that outdoor systems that take advantage of this new spectrum may benefit wireless ISPs (WISPs) and their equipment suppliers. And, also, the FCC's statement that an automated frequency coordination (AFC) system will be used to prevent interference from existing microwave transmission systems. With that background, we have compiled a list of companies that will benefit from the FCC's vote.
WLAN Semiconductor companies Broadcom, Qualcomm, ON Semi, Celeno, and Intel. In our research of the WLAN Infrastructure semiconductor market, these are the vendors we expect to sell Wi-Fi radio chips to devices such as Access Points, Broadband Customer Premises Equipment (CPE) with WLAN, and Consumer Routers. A new class of Wi-Fi that takes advantage of 6 GHz is now called Wi-Fi 6E. Broadcom and Qualcomm have already made statements about Wi-Fi 6E in the past month or two, and others somewhat more recently. Historically, Broadcom and Qualcomm have enjoyed significant market shares of the enterprise WLAN Access Point market, while players in the consumer AP/router/CPE have included a wider list of players including Broadcom, Qualcomm, ON Semi (formerly Quantenna), Celeno, Intel, Realtek, Mediatek and others. Enterprise WLAN companies Cisco, HPE Aruba, Commscope, Extreme Networks and Juniper. While each of these companies has launched Wi-Fi 6 products over the past couple of years that operate in 2.4 GHz and 5 GHz, we expect this group of companies to release Wi-Fi 6E products that connect over 6 GHz over the next year. We expect initially that 6E enterprise products will sit at the high end of product portfolios, selling at higher prices than 5 GHz and lower products. The FCC commented in today's press release that "The notice also seeks comment on increasing the power at which low-power indoor access points may operate," which means that there is still some work to do in figuring out whether these Wi-Fi 6E devices can operate at powers levels more common in enterprises without needing to connect to an AFC. We are sure there is more to come on this topic. Consumer WLAN Infrastructure companies NETGEAR, Commscope, Technicolor, Amazon and Google. We expect NETGEAR to be an aggressive player in Wi-Fi 6E, just as it released super high-end Wi-Fi 6 products in its Nighthawk product line. We expect Broadband CPE vendors such as Commscope (through its Arris brand), Technicolor and others to benefit as they seek to capitalize on the new spectrum, which should allow the delivery of Wi-Fi at higher speeds and to more devices in the home. We wouldn't be surprised to see consumer mesh vendors such as Amazon (through its eero acquisition) and Google to offer Wi-Fi 6E products, but these probably come a bit later than traditional router and Broadband CPE devices. Wireless ISPs such as Etheric Networks and Common Networks (both located near the 650 area code that we used to name our company, 650 Group) will likely benefit as they will be able to offer new WISP services over the new 6 GHz spectrum. Since the spectrum is new, essentially unused and there's lots of it, we expect that these, and other WISPs in the US market, can benefit by expanding beyond the current unlicensed spectrums commonly used today, such as 60 GHz, 5 GHz, 2.4 GHz and 900 MHz spectrums. We think it might take a year or two before the WISPs can capitalize on these spectrums, but we see it as a windfall. WISP suppliers such as Ubiquiti Networks, Cambium Networks, Airspan, and others will be likely beneficiaries. These suppliers sell to WISPs and other operators to enable "last mile" services that compete with fixed-line broadband services such as cable modem, DSL and PON. As we alluded to above, the 5 GHz spectrum is quite crowded, and thus, as 6 GHz becomes available for outdoor use, we expect that a new class of equipment will take advantage of this ample spectrum to deliver broadband to a more significant number of business and consumers. The FCC has a "goal of making broadband connectivity available to all Americans, especially those in rural and underserved areas," according to its 6 GHz press release today, and we see WISPs as one of the main constituents of serving this goal. Mobile network operators AT&T, Verizon, T-Mobile, and US Cellular. Similar to WISPs, we expect that mobile operators will eventually leverage 6 GHz to deliver Fixed Wireless Access (FWA) services (and potentially mobile services) to consumers and businesses. In suburban and rural areas, we have already seen some operators, notably Verizon, deploy FWA in licensed mmWave spectrum (in 20 GHz and 40 GHz ranges) - we have seen operators pare back on plans to deliver services, though they haven't stopped deployments or anything. But, we see 6 GHz could puff some new life into FWA plans because this is a lot of new frequency and since it is lower frequency than mmWave, does not suffer as much from immovable obstacles such as tree leaves, windows and precipitation. Additionally, we see mobile services could benefit as well, as we have already seen operators such as AT&T leverage 5 GHz unlicensed spectrum in delivering mobile service on its small cells in locations such as New York City, so we would expect mobile operators to eventually take advantage of 6 GHz in a similar fashion. But, incumbent services (point to point microwave systems) are more likely to interfere with mobile operators' plans in urban areas, where paradoxically, there is more need for this extra bandwidth, so we think operators will take some time to sort this interference out. AFC services operators such as Federated Wireless. Given that the FCC announced a specific need for AFC services in its media blitz today (see above), we point out that Federated Wireless has already announced an AFC service. Just as Federated has competition in its CBRS SAS service from players such as Commscope, we would not be surprised to see new competition in AFC services.
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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, a pioneer in the CBRS SAS market, just announced its plans for an AFC for the upcoming 6 GHz spectrum in the US market. The company expects that 6 GHz products and its AFC to be commercially available sometime in 2021, and potentially as early as late 2020. For those who are unfamiliar with what is behind this announcement, let us explain. Citizens Band Radio Service (CBRS) is a 150 Mhz wide broadcast band from 3.55 GHz to 3.7 Ghz in the US market, and Federated Wireless is one of main companies offering SAS, which enables multiple spectrum-users to share the 3.5 GHz spectrum. So, now that the US FCC is planning to open up the 6 GHz spectrum as unlicensed, allowing Wi-Fi 6E and 4G/5G cellular (or other systems) to operate, there’s an emerging need to coordinate what exact frequency bands in the 6 GHz range should be allowed on a per device basis; this service is called an AFC (automated frequency coordinator).
We think the timing for Federated Wireless’ AFC announcement is good. There is considerable excitement about Wi-Fi 6E (the version of Wi-Fi 6 that will operate in this new 6 GHz spectrum). Consider that two significant Wi-Fi infrastructure chip companies, Broadcom (on January 7, 2020), Qualcomm (February 25, 2020), announced products that operator in this 6 GHz spectrum. There is some controversy as to whether the AFC service will be needed for some or all of the working device types, installation locations (indoor or outdoor) and device power output levels. There are two camps, which can be summarized as “what the Wi-Fi companies want,” and “what the incumbents want.” The Wi-Fi companies have repeatedly explained that requiring an AFC for very-low power or low-power 6 GHz use in the US will slow down the market (VK Jones, VP Technology of Qualcomm Atheros said so last August, 2019, for instance). However, Federated Wireless has studied multiple major cities in the US and found that there are some cases where, in populous areas, the new 6 GHz devices could interfere with incumbent services like microwave links of mobile operators, public safety, utilities and transportation. We understand the FCC is reviewing this information and may communicate with the public as soon as April 2020. We expect the various parties (Wi-Fi players, incumbents, FCC, AFC players) to make some concessions in the coming months. Aruba Air Pass Enables 5G Mobile Operators To Extend Coverage to Enterprises by Using Wi-Fi3/10/2020 Today, HPE Aruba announced its Aruba Air Pass cloud service that allows for a hand-off between cellular and Wi-Fi networks. The service is enabled by Passpoint, which is a standard created by the Wi-Fi Alliance. The idea is that a mobile operator customer can go into a building with Wi-Fi coverage and, without having to "log on" to the Wi-Fi, the user's phone will automatically connect. Using Air Pass means that mobile operators won't need to build a cellular infrastructure in these buildings for customers to continue with their phone calls.
For mobile customers to see the benefit of seamless roaming from the Air Pass service, mobile operators will need to engage in a relationship with the property owners of the building. While this seems like a lot of work, connecting to Air Pass will be far easier than it would be for a property owner to install a cellular network inside the building. Examples of in-building cellular that can operate either on licensed, shared or unlicensed spectrum is a Distributed Antenna Systems (DAS) system or licensed small cells. Building owners or operators have to build new, in-building cellular if they want cellular coverage. Managed Service Providers, such as Federated Wireless, have begun selling a service to property owners where they will manage the cellular infrastructure for the owner. Aruba has some competition for its service to allow Wi-Fi sharing to mobile operator customers. In February 2020, Cisco announced its Unified Domain Center as a means of sharing Wi-Fi coverage with mobile operators, as well, and claimed that it is at the proof of concept stage with operators. Also, Swedish software and services company, Aptilo, has created systems that allow SIM-based device users to roam onto Wi-Fi, as well. We applaud the efforts of Aruba, Cisco, Aptilo and many others who have built systems to allow device users to roam between cellular and Wi-Fi networks. There has been a lot of excitement by mobile operators and cellular equipment suppliers about the 5G opportunity to expand to enterprises. In November 2019, for instance, Nokia discussed how enterprises are adopting its Private LTE systems to allow cellular coverage at customers such as utilities and shipping ports. We have been cautious on the idea that mobile operators will get lots of new revenue from providing cellular coverage to the enterprise; a year ago, we laid out our thoughts on the 5G Enterprise hype at the MWC19 show. The implications of the emergence of services like Air Pass and the capabilities of Unified Domain Center is that Enterprise Wi-Fi coverage will be leveraged in the 5G era far more than all the hype about "5G" wiping out the need for Wi-Fi. However, we also feel that cellular systems will see growing popularity in certain enterprise verticals, as was evident at the MWC-Americas 2019 show. 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. |
CHRIS DePUY
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