Before the consolidation in the Mobile Radio Access Network (MRAN) market that occurred in the past decade during Huawei’s ascendancy, there were a dozen major RAN vendors. They included Motorola, Lucent, Alcatel, Siemens, Nokia, Ericsson, NEC, Fujitsu, Samsung, Nortel, Huawei and ZTE, and they hailed from the US, France, Germany, Finland, Sweden, Japan, Korea, Canada and China.
As Huawei entered the market, using a price aggressor strategy, it catalyzed mergers, resulting in the elimination of Motorola, Lucent, Alcatel, Siemens, Nortel, plus a reinforcement that led to the Japanese and Korean players to sell primarily to their home markets. The result is that in many markets during recent years, there were only two vendors left, and that left operators with little choice but to look elsewhere.
The punchline is that going forward, due in part to Open RAN, and in part to the response of operators looking outside their traditional supplier base, we now have 10 RAN players who can bid on projects. And there is a multiplier on top of the 10 players, because going forward, operators can buy radio heads from different vendors than their primary RAN baseband vendor, essentially doubling the number of choices an operator has when making mobile RAN vendor decisions.
Here is how we arrive at the conclusion that there were only two players per major geography. Just a couple years ago, the state of affairs was quite different; we had only Nokia, Ericsson, Huawei and ZTE as players, and last year, it became clear that in the US, only two major players were left. In China, the same could be said, with Huawei and ZTE as main suppliers (Ericsson has won business there and Nokia ceded the market in 2019). And in 2020, we’ve seen much of Europe and English-speaking Asia whittle down to two suppliers, as well.
And here is how the procurement teams at operators have much choice in the future. The “Open RAN” vendors are now deemed viable given the success at Rakuten and the push by operators to demand Open RAN compliance, and these include Altiostar, Mavenir and Parallel Wireless. Nokia and Ericsson are invited to most, if not all bids worldwide.
Huawei and ZTE are invited to many, but a declining number of bids in markets that are siding with the US viewpoint. We saw a turning point in late 2018 when AT&T announced it will buy from Samsung, who has now gotten a strong foothold in both India and the US. And, more recently, we have seen two Japanese players, NEC and Fujitsu, in some way filling in the void left by Huawei and ZTE’s woes in the US/China spat, as they get wins (Fujitsu recently won DISH) and get invited to bid (NEC and Fujitsu are being asked to bid on UK projects). Add these up and we have Altiostar, Mavenir, Parallel Wireless, Nokia, Ericsson, Huawei, ZTE, Samsung, NEC, Fujitsu.
There are other factors at work that are adding to more RAN choices, as well. Two such trends are Facebook’s efforts, ONF’s efforts and the variety of radio head vendors who are now viable with Open RAN/FB/ONF efforts. Facebook has promoted projects such as Telecom Infra Project (TIP) that have many goals, including one that supports the goal of $1,000 radio heads (these cost much more from the major vendors).
The Open Network Foundation (ONF) supports projects such as SD-RAN and Aether.
Radios can be purchased from non-traditional sources, as well because with all three projects we have mentioned above (TIP, ONF SD-RAN and Open RAN), these allow radio purchases to be made separately from baseband purchases, literally doubling the choices that operators have when building out a roster of vendors.
The trends in mobile RAN have changed significantly. Vendors with little to lose (startups and players entering new markets) are getting aggressive to grow their businesses. Incumbent vendors are at risk, as their business practice of selling baseband and radio simultaneously to captive operators is coming to an end. We may look back at this early 5G era and say there was a lot more to it than just the upgrade to 5G, and it begs the question, who will acquire whom to consolidate the market once again and get pricing under control.
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.
Last week, at Nokia's analyst meeting in Helsinki, it discussed its achievements and its challenges. The company’s successes include its traction and product introductions on the enterprise market, its market traction in selling Nokia’s end-to-end portfolio, and its 5G market momentum. Management reiterated that Nokia has signed 50 5G deals and its products are involved in 16 live 5G network. The company addresses some of its challenges, as well, including its delays in Systems on Chip (SoC) development progress, its diminished operating margins, competitive challenges in China, and an acknowledgement of increased price competition in the 5G era. We focus our writeup on two main topics: Enterprise and semiconductors.
Enterprise. The company leads with private LTE in selling to mostly outdoor environments where mobility needs are key. Nokia calls these networks “private wireless.” Generally, the target companies are those that are asset-intensive businesses, and Nokia has no current plans to go down-market. Nokia has sold to 120 enterprise customers as of September 2019, up from 80 as of June 2019.
Semiconductors. The company discussed semiconductors at great length at the meeting. Here is a summary of the main chips that were discussed.
ORAN and CBRS were the main themes at Mobile World Congress Americas, held in Los Angeles. I have to say, though, that unlicensed was the third most important theme, though it will emerge to the main stage in future years.
ORAN encompasses several topics woven together. ORAN is a set of common interfaces that describe how various devices in mobile RAN work together. ORAN may also represent a new way of building radio networks. Recently, new vendors are being invited to bid on major mobile network projects, including Mavenir, Altiostar, Parallel and others. And, the major market share players in mobile RAN, which include Ericsson, Nokia, Huawei, Samsung, and ZTE are being asked by operators to support ORAN. The incumbent vendors are responding in various ways: Samsung, a challenger in the market, has whole-heartedly embraced ORAN, while Huawei has only recently acknowledged the existence of ORAN. Ericsson and Nokia have embraced ORAN with the view to embrace and extend - in the sense that Microsoft used this term in the 1990s. Based on presentations made by Ericsson, Nokia, and Samsung, we expect that the incumbents, Ericsson and Nokia,will embrace ORAN but will establish a path to continue serving customers with the same vertically integrated business models of today. We are eager to see the results of mobile network operator bidding to observe how many startups win projects for wide scale deployment.
CBRS. Today, CBRS is available in the US market and has been so for about a month. We had an interesting opportunity to moderate three panels on the stage at MWCa and found some very interesting indoor/campus uses for CBRS, including WiFi backhaul, secure/critical communications, surveillance, IoT/sensor monitoring. Since CBRS indoor spectrum generally allows for more output power than for WiFi, the range is better. We see this as a key advantage for CBRS users, though enterprises who take advantage of the so-called OnGo service must pay various monthly fees such as those for the SAS and potentially other ongoing services. We expect that CBRS will be successful in certain verticals.
Unlicensed. We believe the existence of CBRS could uncork the value of unlicensed spectrum at 900 MHz, 5 GHz, 2.4 GHz, and 6 GHz. We are conducting significant research into each of these and other spectrums.
We attended the operator and vendor consortium of 5G Americas. The themes of the show were: 5G, spectrum, cell siting, Asia-Pacific operator progress. For the second time in the past couple weeks, we saw FCC Commissioner Michael O'Reilly present, and his key messages were similar both times, focusing on CBRS, C-Band and 6 GHz. In attendance from the North American service provider side were AT&T, T-Mobile US, Shaw, and Sprint (we focused on NA operators mainly in this write-up). Notable vendors included Cisco, Commscope, Ericsson, Intel, Kathrein, Mavenir, Nokia, Qualcomm, and Samsung. We would say the most important theme from the show is the surge in interest in unlicensed spectrum, both for the use of mobile operators, as well as competing carriers, as well as by enterprises both for indoor and outdoor applications. For this write-up, we are focusing primarily on comments made by some of the leading operators who attended the conference.
AT&T discussed mmWave, future 3GPP releases, 5G phones, Mobile Edge Computing and indoor cellular, mid-band spectrum strategies, 5 GHz spectrum usage, Mobile Edge Computing (MEC), StandAlone (SA), among other topics. AT&T views mmWave as just a tool in the toolkit, so to speak, and not the only spectrum that is useful in 5G. It considers mmWave to be most helpful in urban and potentially indoor settings. Representatives said that future 5G-oriented Releases 16 & 17 are expected to be software upgrades to existing hardware and won't require new equipment to incorporate these new capabilities which will include network slicing. AT&T is making a big deal about its Mobile Edge Computing (MEC) initiative. At the conference, it emphasized MEC as having two main parts: a) expansion to about 100 edge sites (mostly Central Offices) from about 20 central locations in the LTE era and initially supporting packet core, and b) Microsoft Azure services managed end-to-end by AT&t. The company also emphasized that it plans to pursue some indoor cellular opportunities, some that currently leverage 5 GHz using LAA technology, some that will leverage CBRS and some that will leverage mmWave. We get the impression from AT&T that it is open in how it pursues future mid-band spectrum strategies. Its strategy could change based on: a) the timing of the CBRS PAL licenses (currently slated for June 25, 2020), b) the potential for C-Band private auctions (potentially in the mid 2020 timeframe), c) the potential for some or all of the 6 GHz spectrum availability (where Wi-Fi 6 would co-occupy), as well as other factors. We learned that, at least in certain regions, the company is making very ample use of 5 GHz spectrum using LAA techniques. AT&T seeing its picocells (small cells) get around 100 Mbps from LAA out of a total 130 Mbps inclusive of around three other licensed spectrums. We were surprised the company makes such ample use of unlicensed spectrum where Wi-Fi currently exists. The 5 GHz experience of AT&T leads us to think that 6 GHz, which promises to offer far more spectrum that the 5 GHz swath presently available, could be very beneficial to mobile operators and their consumers, as well as the Wi-Fi industry, and its consumers. AT&T expects that by this time next year, it will be "pushing" 5G to all its customers, part as a result of handsets adopting 5G capabilities, part the result of its network seeing nationwide coverage. Of the services that AT&T operates, it is installing mainly Packet Core in its MEC systems. AT&T is also planning to run Microsoft Azure services in its MEC locations. It expects that both Packet Core and Azure will see a 10-20 ms latency reduction by being located in MEC locations. AT&T says that StandAlone (SA) is "just new software," and downplayed the significance of the upgrade from EPC/NonStandAlone (NSA) to SA.
Sprint "is all-in on 2.5 GHz mid-band deployments for 5G services." Given the company's potential merger with T-Mobile USA, we view its network-build-out choices as being somewhat limited. It has limited options because it increases its near-term value to its acquirer, T-Mobile, if it deploys 5G in 2.5 GHz. Likewise, it is doesn't implement in mmWave, this reduces overlap with T-Mobile, who is deploying there. The company reiterated that it had launched 5G in 9 markets. It is seeing its peak speeds on 5G (aided by the fact that it has simultaneously upgraded hardware to Massive MIMO) be about 3-5 times that of its 8T8R LTE systems. It currently covers 11M POPs and 2,100 square miles with 5G. Sprint also shared that it sees RFPs from customers to replace Wi-Fi with 5G, though it didn't share more about this topic. The company's experience is that in upgrading its macro base stations to Massive MIMO 64T64R capabilities, it is getting 3-4x faster throughput than its 8T8R systems, though in the field these measurements vary widely. Additionally, Sprint said that its Massive MIMO systems relative to earlier systems show "generally the same coverage," with 1-2 dB better sometimes. Sprint is exploring ORAN and vRAN but "not adopting near term."
Shaw (Canada) presented its mobile LTE and 5G efforts and plans. Shaws plans are interesting because the company has significant cable services deployed in Canada. The company said nearly all the mobile technology it has installed in the past three years are "5G-ready." It will use 5G first in 600 MHz, then in mid-band (probably in 3.5 GHz) and the last in mmWave. Shaw expects that low-band 5G handsets will be available in 2020, and, similar to what AT&T said, it expects that is when 5G mobile will start in earnest in Canada. Shaw admitted that it is behind where the US operators are in deploying 5G, but offered no apologies, as it felt it is where it needs to be from a competitive standpoint in Canada. Almost laughing, Shaw explained that it would never consider deploying mmWave along highways, and that only high-density locations would get mmWave coverage. Shaw's view that mmWave is for high-density locations was shared universally by other operators in attendance, including AT&T, Sprint and T-Mobile US.
T-Mobile US spokespersons explained that mmWave has seen some challenges, relative to initial expectations and that while it does get mmWave to operate beyond near-line-of-sight, the view of T-Mobile is that mmWave is "just part of 5G." T-Mobile expects 3GPP Release 16 to be completed in 2020, but that it will be 2021 before it deploys Release 16, which won't require "a massive hardware refresh" and which will incorporate industrial and connected vehicles features. T-Mobile views 5G as being appropriate for indoor installations because while mmWave has challenges penetrating glass and concrete, but when 5G operates in low and mid-band spectrums, the "issue goes away." By 2020, T-Mobile expects StandAlone packet core to be ready, but since its current EPC/NonStandAlone (NSA) systems are already virtualized, the upgrade to SA is "not a forklift" upgrade. T-Mobile says virtual RAN (vRAN) "will take time," and that it will "need accelerators," which we take to mean FPGA-based Network Interface Cards (NICs) or the like to allow servers to operate faster than just x86 processors will allow.
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.
Today, Amazon announced that it will acquire eero, a consumer mesh WiFi equipment company that as of 3Q18 had 13% revenue share. In 3Q18, the consumer mesh WiFi market measured just over $150M, which was up just over 34% Y/Y. The number one player by revenue was NETGEAR in 3Q18, followed very closely by Google, who had retained the number one spot for the 5 quarters before 3Q18. Now, with Amazon's acquisition of eero, just three players will have well over 3/4th of the consumer mesh WiFi market. What's interesting here is that two Internet titans, Google and Amazon, are attempting to disrupt the consumer networking market that up till 2015 was dominated by hardware players such as NETGEAR, Linksys, TP-Link, D-Link (consumer WiFi vendors) and adjacent players such as Technicolor, Arris, Huawei, ZTE and Nokia (Broadband Customer Premises Equipment vendors).
So, what does it mean that now both Amazon and Google are battling for primacy in the home networking market?
It is complementary to their interactive speaker business. Both Amazon and Google have introduced various hardware products for the home, but most successful have been both of their interactive speaker products, which for Amazon has been the Echo and Dot and for Google Home. These speakers are generally in an "always-on" mode, which allow them to listen to all sounds nearby, and which also means they are generally always connected to the WiFi devices in the home. By always being connected, these speakers consume much of the available WiFi bandwidth in the home, deteriorating the available spectrum for other devices. One obvious solution, which is being made available by wireless chip giant, Qualcomm, is to integrate WiFi chips with speaker chips. That's the direction that both Amazon and Google may pursue - to integrate Home with Google WiFi and Echo with eero. This will mean that multiple WiFi mesh devices will also represent multiple interactive speakers in the home, all while combating the over-use of WiFi spectrum in the home.
These Internet giants can, and probably will, attempt to overwhelm the market with low prices, subsidized by primary businesses. We already see that Google's price for a 3-pack is 37% lower than eero's comparable system. Our working theory is that Google has been selling close to no margin and that eero has been experiencing a 30's percent margin. This is probably not good news for the following companies who either do have gross margins above 30% or we assume do, like NETGEAR, TP-Link, D-Link, and others mentioned above.
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: