Activity surrounding Open RAN is hitting a fever pitch.  We have been seeing accelerating operator and vendor announcements supporting Open RAN, and now the Open Networking Foundation has announced that it is launching SD-RAN to complement Open RAN.  The plan for SD RAN is to open up critical portions of the RAN architecture, allowing both open source and vendor based microservices, called xApps, software connect to the SD RAN architecture’s Radio Ixxx Controller (RIC).
 
To date, we’ve seen vendors like Parallel Wireless, Mavenir, Altiostar, Samsung and Nokia throw their weight behind Open RAN.  Japanese operator Rakuten has been very vocal about its successful commercial launch in April 2020 that uses Open RAN and a virtual computing system to support various RAN functions such as baseband.  ONF’s SD RAN project takes things another step, though, by allowing operators and vendors to to leverage open source in the RAN environment.
 
Getting there presents a challenge.  With its announcement, the ONF will support a nRT-RIC and xApps, this is the intelligence that needs to be opened up, according to Timon Sloane, VP for ecosystems and marketing for the ONF based in Menlo Park. He says that functionality from a powerful RIC and xApps can finally deliver the integration and benefits needed for an open approach to work.
 
Adding some muscle, the open RAN development community, and associated carriers globally, have shown their support for this latest project, a software defined RAN that will put a focus on open systems for 5G and the deeper integration.

 
The ONF’s SD-RAN project specifically is backed by a coterie of industry players: The O-RAN Alliance, Telecom Infrastructure Project (TIP), and Facebook. Also, global carriers and cloud providers like AT&T, Google, China Mobile, China Unicom, DT and NTT. Lastly, system/chip companies like Intel, Sercomm and Radisys.
 
The ONF’s proposed µONOS-RIC, is a microservices SDN controller based on ONF’s ONOS platform.  650 Group is bullish on this effort as previous attempts have not come to fruition and the ONF has already had lots of success with its CORD/cloud edge data centers and broadband access with the likes of AT&T DT and Comcast.

​We attended the CBRS Alliance event in Washington DC today, and by our rough estimate, about 350-400 people were in attendance representing groups such as regulators, legislators, lawyers, technology vendors, property owners, service providers, investors, media and analysts.  We were impressed with the widespread interest in the new shared spectrum technology and services running in the 3.5 GHz band that is now called “OnGo.”  We have researched CBRS for many years and found several acronyms and CBRS-specific terminology to be blossoming.  We found several themes at the CBRS Alliance event and a follow-on event at Federated Wireless, a SAS service provider, of special note: a) the OnGo experience will serve as a mold for regulators, operators and other interested parties not just in the US, but also the rest of the world, b) Tier 1 operators and WISPs appear focused on Fixed Wireless Access (FWA) deployments in CBRS spectrum, at least initially, c) many presenters focused on the “OnGo backhaul to gateways” use-case, at least as an initial opportunity, d) interested parties have a concern that PAL licenses may become very expensive when the auctions occur, and e) there were a very large number of devices supporting OnGo at this event.

Acronym soup.  The CBRS Alliance did its best to explain the various acronyms and how the various players work together.  It would take at least six pages to cover just the top-level details.  The idea here is that the 150 MHz of spectrum in the 3.5 GHz range was previously used exclusively by the US Department of Defense and is now going to be shared using a three-tier process, where the military (the incumbent) will have use of it when it needs, then private license holders will get next dibs (PAL), followed by general users (GAA).  Starting today, GAA users will begin use of the spectrum in the Initial Commercial Deployment (ICD) that was announced today, starting at 9 AM Eastern.  A group of service providers called Spectrum Access System (SAS) providers have been authorized to install radios on the US coastline that sense when the military is using the spectrum and send channel-use information to equipment that is operating in the CBRS spectrum.  These SAS providers will, therefore, coordinate the frequencies between incumbent, PAL, and GAA users.
​
Our view on why OnGo and “Shared spectrum” matters.  We expect that by sharing spectrum amongst various parties, more traffic can move across a smaller range of frequency than by using the more common method of auctioning off frequency bands to be used exclusively by one entity.  We estimate that shared frequency will carry ten-times more traffic than frequency bands licensed for the exclusive use of single entities.  Thus, it is for the greater good that this OnGo / CBRS experience go the distance and allow a public demonstration of whether multi-tiered shared spectrum can succeed or not.  Already, we have the experience of shared spectrum in the 2.4 GHz and 5 GHz bands used by WiFi – there is no doubt this has been successful; in fact, most public estimates show about 80% of smartphone traffic is carried by WiFi rather than cellular systems, all of which as of yesterday was carried on licensed spectrum.  At the CBRS Alliance event, guest speaker, US FCC Commissioner Michael P. O’Reilly said that based on the success of OnGo, he expects similar models could be applied to additional spectrum (and he implied this might the sequential order of launch): C-band (3.7-4.2 GHz), 3.45-3.55 GHz, 3.1-3.45 GHz and 7 GHz (which we understand is meant to be the same thing as what is being discussed at 6 GHz by the WiFi community).

FWA opportunity is front and center.  Charter and AT&T focused their comments on their plans to deploy fixed broadband systems.  AT&T shared some impressive statistics about the performance of recent trials using Massive MIMO cell sites using distributed RAN over CBRS spectrum, which is connected to indoor baseband over fiber optics to the radio sites and then connects wirelessly to customer premises equipment mounted at the roofline: it said it achieved 140x12 Mbps at slightly over one mile over line of sight using 20 Mhz channels. Charter discussed it had deployed its first commercial FWA in Davidson City, NC to rural locations.  It also discussed how it uses dual SIM systems to allow customer coverage to Verizon’s cellular network. Charter also discussed private LTE, neutral host, and Industrial IoT use cases.  The Wireless Internet Service Provider’s Association (WISPA) President spoke about its members’ enthusiasm for OnGo and explained that 100’s of WISPs used the 3.65 GHz spectrum and expects more will use the 3.5 GHz / CBRS spectrum.  Currently, WISPA says WISPS in the US have 6 million customers.

OnGo as a backhaul.  We detected a theme that seems durable: CBRS spectrum can be used by enterprises with far-flung operations to save costs by reducing the installation of wired / optical cables and associated infrastructure.  There was an impressive list of vendors who had equipment at the show, a number of which were gateway devices that made connections between CBRS and other well-known protocols such as Ethernet and WiFi, to name a couple.  While OnGo/CBRS support is not as widespread on devices today, IoT devices supporting other wired and wireless systems certainly are, the list of which includes WiFi, Zigbee, Bluetooth, Ethernet and more.  We were taken by how compelling some presenters made a case for using CBRS simply assuming a reduction in new cabling to enable new systems such as kiosks, surveillance, digital signage, farming, and so on.  Many of these examples would increase the deployment of existing protocols like WiFi, Zigbee, Bluetooth, and Ethernet, instead of reducing their demand.  The idea that OnGo/CBRS competes with existing systems may be incorrect.

PAL auctions.  Commissioner O’Reilly said PAL auctions are scheduled for June 25, 2020.  In our formal and informal interviews, we understand there is a growing concern that CBRS spectrum auctions could be aggressively pursued not only by existing Tier 1 mobile operators but also by other players, not least of which could include MSOs and maybe even “Big Tech” companies.  Since the 3.5 GHz spectrum is where many countries besides the US have begun deploying 5G services, making equipment in these frequency bands commonplace, there is ample reason to want to use this spectrum in the US.  Bidders may raise the price high enough that enterprises will choose not to compete, and won’t view the CBRS spectrum as attractive as they had hoped.  In this case, PAL would look quite a bit more like a typical licensed spectrum, similar to other auctions.

OnGo devices abound.  At the show, the following vendors had devices on show (see pictures):  Sercomm, MultiTech, Sierra WIreless, Zyxel, Encore, Cradlepoint, AMIT Wireless, Commscope / Ruckus, Accelleran, Bai Cells, Cambium, Samsung, Google, LG Electronics, Sequans, Telit, JMA Wireless, Motorola Solutions, Cisco, BEC Technologies, Ericsson, ip access, BLINQ, Comba Telecom, and Westell.

According to news reports and press and social media announcements by high-ranking members of US government, the US government has put Huawei on its so-called "Entity List" of the Bureau of Industry and Security (BIS).  Our read on this is it similar to what happened with ZTE during C2Q18 last year, a move that severely curtailed ZTE's shipments and revenue until ZTE made concessions and was removed from the list.  Many, but not all, Huawei products use technology only available from US suppliers. US-made semiconductors are the most significant Entity List target that Huawei needs to ship its products.  Significant US semiconductor suppliers to Huawei include Intel, Xilinx, and Broadcom.  

Huawei is such a significant vendor in many of our coverage areas, including Mobile Radio Access Networks (RAN), Ethernet Switching, and Servers, for instance, that we feel it is a good time to point out that 2019 market-level estimates may be at risk.  Additionally, since Chinese cloud services players, like Baidu, Alibaba and Tencent cannot delay their capital infrastructure build-outs, alternate suppliers may benefit.

We think it comes as no surprise to Huawei that the US is putting it under pressure.  Just over a year ago, we attended the Huawei analyst summit (April 16, 2018) and its then-chairman said in response to the question "Will Huawei find alternate suppliers for data center products, "Today, Intel is the dominant player.  Our point of view, we look forward to a more diversified landscape; but we work with Intel mainly now."  Additionally, at Huawei's most recent analyst summit (mid-April 2019), the three main keynote speakers, all high-ranking executives of the company spoke about how much progress Huawei has made in developing in-house semiconductors and what its plans are to continue developing more.  We do, however, think that despite Huawei's diversification efforts that it still has significant reliance upon key US chip companies.

​At Mavenir’s analyst meeting in Dallas today, the company stated that it expects to grow its revenues about 10% Y/Y in 2018.  In arriving at this revenue, it is pursuing a price-aggressor strategy to some extent and has a surprisingly broad portfolio of telecom-focused products.  Its product line is software-oriented, though the company does still have hardware development on an ongoing basis.  Using 5G as its ‘insertion point,’ the company is working on a strategy to get 10-15 large, Tier 1 mobile network operators at the tens-of-millions per year level.  The company’s portfolio encompasses voice core, messaging core, mobile packet core and radio access networks.  What is really interesting is that Mavenir expects to expand past its traditional revenue stream (telecom core and messaging) into the radio market, with revenues coming in 2019.

In its traditional telecom core market, the company suggested that some of its customer wins are with Tier 1 mobile network operators across its product portfolio, including IMS/VoLTE, EPC/5GCore, Security and advertising messaging.  To illustrate its success in selling a differentiated Telecom Core portfolio, it shared subscriber statistics that its operator customers who use Mavenir core system such as IMS TAS, CSCF and RCS application servers (mostly supporting VoLTE, and secondarily RCS):

• North America >70M active subscribers, 62% VoLTE share
• EMEA >25M active subscribers, 50% VoLTE share UK/Fr/Germany
• APAC >45M subs; 67% RCS share Central/S.Asia

​In its new market, RAN, this is exciting – Mavenir is a new entrant to the RAN market, and it is US-based.  The company expects that it will have Radio Access Network (RAN) revenue in 2019 after successful completion of trials now underway.  For reference, the company’s RAN systems generally follow open standards such as xRAN and can be considered “cloud RAN.”