On April 21, 2021, DISH, the fourth wireless operator in the US market, and hyperscaler Amazon Web Services (AWS) announced plans to work together, whereby DISH will leverage AWS infrastructure and services to build a cloud-based 5G Open Radio Access Network.   The DISH/AWS announcement is important because this is the first 5G Radio/hyperscaler deal – or second if you count Rakuten as a hyperscaler.  We are encouraged by the DISH/AWS deal and think this represents a big step in the industry.  What’s so important is that two of the three major Radio Access Network (RAN) functions will be running on AWS; these are the Centralized Unit (CU) and the Distributed Unit (DU).  We see the DU running on the AWS service called Outposts as being the most critical part of this announcement, because historically this hardware has been delivered as a proprietary hardware system using proprietary semiconductors from the likes of vendors like Ericsson, Nokia and Huawei.  Thus, AWS’ involvement in the DISH network serves as a reminder of the opportunity for RAN vendors to deploy cloud native RAN in future cellular network deployments.

DISH is employing a terminology it called a “Capital Light” model, whereby it reduced the amount of capital spending it requires to build out its planned national network.  Key to achieving this light capital model is leveraging the capital spending done by AWS and instead leveraging what some might call an OPEX oriented model.  DISH plans to launch live cellular services in Las Vegas, NV first, and then its 5G network will cover 20% of the US population by June 2022 and then 70% by June 2023 and 75% of by June 2025, and thereafter it will continue its build to “match competitors beyond 2025.”  The company also plans to begin building enterprise focused 5G networks beginning in 2021.

In our follow-up inquiries to the AWS and DISH teams, we have learned that DISH is exercising an option to run O-RAN using AWS Graviton hardware plus Enterprise Kubernetes Services.  Additionally, DISH has the option to use Intel based COTS based hardware in parts of its network.  Thus, DISH has flexibility to deploy baseband systems on AWS or in its network, and can use Graviton or Intel systems.   We have seen AWS engage in contracts with other parties where there are minimum usage rates or dollar commitments.  We are not sure this is the case for the DISH deal, but AWS explains that it expects to deliver “thousands of site specific hardware,” while at the same time DISH expects that by mid 2023, it will have built out “15,000 cellular sites.”

We wanted to share some insights on how this relationship appears to be structured.  It appears that many scenarios have been envisioned as to how the relationship may evolve in the future, and we think that both parties have worked in contract terms that allow some flexibility in achieving each company’s goals.  We did not review the contract between the two companies, but in a webinar presentation held April 30, 2021, executives from DISH hedged their bets somewhat on the relationship with AWS in ways we found interesting:

• DISH is building an architecture on top of AWS that will address potential down-time that may occur at AWS.  AWS said it has designed its system to route around failures such as fiber cuts; it appears that DISH is not going to rely completely on the AWS redundancy features alone. 
• DISH is maintaining its current working relationship with Intel, which began a year ago.  DISH explains that it its first wave of network buildouts, it has been using Intel FlexRAN components in building its 4T4R network.  DISH explains that its 4T4R network requires only “moderate compute” capabilities and that FlexRAN from Intel is sufficient for that.  But for its planned Massive MIMO Open RAN systems, it will need a new generation of acceleration.  DISH claims that it is maintaining a dialogue with Intel about these future requirements.  However, AWS executives explained that the RAN DU function will be running on AWS Outposts services, and in particular the 1U version that uses the AWS in-house developed ARM-based Graviton2 processors.  Additionally, AWS explained that “obviously we’re working with accelerator cards.  It also explained that “Intel remains a very good partner and we expect to work with Intel.”  We hone in on this topic because up till now, every Open RAN system we are aware of has used x86 and for all but the lowest throughput systems uses some type of acceleration like FPGA cards.  It seems that AWS would prefer DISH to use Graviton2 Outposts, but DISH is keeping its options open in case its Massive MIMO systems don’t work well with Graviton2.
• Enterprise 5G deployments might not use AWS hardware and services exclusively.  DISH executive Marc Rouanne explained that “some customers may demand we put our software to other hardware.”
• DISH will maintain its use of VMWare at least in part.  Although DISH has selected vendors that offer software systems that are cloud-native, which in the context of the presentation meant container and Kubernetes based, there are some network functions that are not cloud-native.  For those functions that are not cloud-native, DISH explained that it will use VMWare to manage these systems (we interpret this as meaning Virtual Network Functions).   Additionally, VMWare capabilities are being used “across the board” as a minimum to help onboard and test Containerized Network Functions (CNF).  And, VMWare will be used to support enterprise customers who require VMWare functionality.  Also, DISH said it was a very important requirement that AWS and VMWare works together, because DISH will “used VMWare on top of AWS services,” which could mean a lot of things, but in context, we think it means that VNFs will run on VMWare in the AWS computing environment.

Cisco's customer event, Cisco Live (virtual), is underway, and the company made many announcements.  We are emphasizing what we think are the most relevant, which include Observability capabilities, Network as a Service (NaaS), and SASE.  Here is a rundown of what we learned about today.
 
Core portfolio (includes Campus Ethernet Switches, Wireless LAN).

• Observability.  DNA Advantage and Premier customers will now be able to run the ThousandEyes agent natively on their Catalyst 9300/9400 switches and will receive access to ThousandEyes Internet and cloud intelligence at no additional cost.  ThousandEyes Internet and cloud intelligence data is being incorporated into AppDynamics Dash Studio, AppDynamics’ next-gen dashboarding experience..   Cisco executive, Todd Nightingale, elaborated that the Thousand Eyes acquisition has been integrated into the Cisco portfolio very rapidly, and in fact, more rapidly than the Meraki acquisition.   We think that the merging of Observability into Cisco's core products could drive partnerships between Cisco's competitors in networking, security, and Observability.
• Cisco Plus.  Cisco Plus offering includes Hybrid Cloud and SASE offerings initially.
  • SASE.  Cisco's first Network as a Service (NaaS) focuses on its SASE offering.  Nightingale emphasized that its SASE focus does not mean it is de-emphasizing SD-WAN, but includes SD-WAN, cloud security gateway, and other security functions.  We see that the cloud security gateway (a cloud-based subscription offering) is a significant services capability for Cisco in that it is not a hardware function that Cisco is offering to customers to then resell to others, instead, it is a cloud-based service that Cisco is offering directly to customers.  Cisco views SASE as the combination of networking, security and analytics.  Executives from two different business units introduced SASE: Todd Nightingale (Core Networks) and Jeetu Patel (Security).  Similar to our comments about Observability, we expect that Cisco's SASE offering will drive Cisco's competitors in networking and security into partnerships or other corporate combinations.
  • Hybrid Cloud. The company will also offer private cloud capabilities such as its UCS server, SAN, DC networking (Nexus) and Intersight (orchestrator) as private cloud capabilities; the company has not yet announced names of 3rd partners.   The company's entry to the private cloud as a service market has some similarities to HPE's Greenlake offering. 
• Intersight.  The company emphasized its digital networking building capabilities by incorporating technology from Hashicorp with its in-house Intersight capability.  We published our views on this Hashicorp / Cisco deal just a few days ago.

Security (includes Firewall, Content Security, Identity). 

• Password-less.  The company announced its Duo portfolio now includes the unveiling of its Duo password-less authentication; the company says this capability will be available in July 2021 as a "public preview."  The company indicated that it will also bring Duo and Umbrella capabilities "down market" and will also continue to be available to Cisco's traditional large enterprise.  The company announced that it sees 900 million Duo-based authentications per month across its installed base.

Mass Scale portfolio (includes Data Center Switches, Optical Transport, Routing).

• Silicon One.  The company reiterated that it has 10 Silicon One chips since its initial announcements ranging from 3.2 Tbps to 25.6 Tbps speeds.  The company claims that it has a dozen companies focusing on Routed Optical networks based on the architecture that leverages advancements relating to Silicon One and its just-closed Acacia optical technology.   Executive Jonathan Davidson highlighted the Acacia ZR and ZR+ transponder module capabilities.  Routed Optical networking offers capex, opex, and energy savings.  The company suggests that existing customers who use Routers and optical transport today can take a first step that means plugging transponder modules directly into routers, meaning the need for optical shelves can be eliminated over time.  Cisco featured spokespersons from Microsoft Azure and Lumen (Century Link) to discuss general thoughts on the Routed Optical concept. 
• Open RAN.  The company has made investments, both disclosed and undisclosed.  The company has engaged third parties' services to integrate and test its orchestration and transport technology with other 5G systems in the marketplace.
• Subscriber Management.  The company introduced Cisco Cloud Native Broadband Network Gateway, which supports the integration of wireless packet core and wireline subscriber management.

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.  

In conjunction with its recent Rakuten earnings call this week, Rakuten Mobile disclosed some more of its plans.  This mobile operator is becoming a telecom vendor.  Specifically, it said that “by expanding the Rakuten Communications Platform (RCP) globally, Rakuten aims to evolve from a Japan-headquartered tech company to a global leader in telecom.”  We see this as an explicit statement that the company plans to sell its telecom software and related services to operators worldwide.  For instance, Rakuten Mobile just announced a partnership with Saudi-based operator, stc.  This move pits Rakuten against Microsoft (who just acquired telecom companies and runs a cloud), Oracle (who runs a cloud and made telecom company acquisitions), and the rest of the telecom industry (traditionally Nokia, Ericsson, Huawei, ZTE, Amdocs, Netcracker and others). 

In offering RCP to other operators around the world, its unique value, as we see it, is that Rakuten has successfully built an LTE and now a 5G network based on Open RAN.  What we find interesting is that the company has developed a significant amount of intellectual property in-house or through technology sharing.  In an interview today with Tareq Amin, Rakuten Mobile executive, we asked what technology has been developed in-house by Rakuten.  Here’s what we learned.

• OSS (it acquired OSS vendor, Innoeye May 2020, which has sold to 20 other operators)
• BSS (developing in-house; expected completion by April 2021)
• Orchestration
• Radio software (it owns a substantial share of Altiostar)
• Cloud IP.  It cooperates with robin.io and has added significant services mesh, CPU-related optimizations, for instance
• Systems integration to make its “pods”
• Core.  It works with NEC on 5G Core and has access to its source code

Some other components are not developed by Rakuten (the radios come to mind), but this is an exciting development.  RCP would be delivered as a “private cloud” on the premises of carrier customers (partners).  The terminology Rakuten is using for this “private cloud,” is it’s a “pod.”  RCP’s plans are a very interesting development in the industry.

There is one more thing.  Rakuten said it is working with a technology supplier that will sell Rakuten a server card that would allow a combined router and RAN processing function to co-exist on a server.  Today, the servers it uses to support its Open RAN radios use an FPGA NIC.  These servers can support up to 16 base stations.  We see the addition of routing to this card as an extension of the capability – but it means there may be a diminished need for cell site routers. 

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.