Dell’Oro: Worldwide Capex Forecast to Rise 2017 – 2020 Despite Flat Carrier Revenues with only 2% from IoT

According to a recently published report from Dell’Oro Group, worldwide newtork operator capex is forecast to rise from 2017 through 2020 despite flat carrier revenues. The most notable increases come from AT&T, Sprint, Megafon, Orange, Etisalat, and Deutsche Telekom.

“We have adjusted our overall three-year CapEx expectations upward to reflect a more optimistic investment view than we had originally envisioned in both the US and Chinese markets,” Stefan Pongratz, a senior analyst at Delloro, said in a blog post online.  The increase in global CapEx is being driven by increased spending in the US, as the country tries to position itself at the front of the queue for 5G deployment.

“After three consecutive years of declining capex, short-term and near-term market expectations have shifted up,” Pongratz said.

“Here in the US, we maintain the view that conditions are stabilizing and both capex and capital intensity will continue to trend upward. There are multiple factors that support our renewed optimism for capex in the US:

  • We are seeing our first signs of US Federal tax reductions translating into increases in capex with a clear boost in AT&T’s 2018 capex projections.
  • We see Sprint investing again
  • FirstNet investments are set to commence in 2018
  • Larger data plans are propelling capacity investments

And lastly, overall carrier revenue trends are stabilizing,” continued Pongratz.

However, total capex spending in China [Figure 1. below] is still expected to decline year-on-year in 2018 and stay flat in 2019 before returning to growth in 2020.

Currency adjusted operator revenues are projected to remain flat between 2017 and 2020, with operators expected to struggle to find new revenue streams to offset slower smartphone revenue growth.

While the IoT has long-term revenue generation possibilities, there is expected to be limited benefit over the next few years. Dell’Oro estimates that carrier IoT revenues will account for just 2% of total mobile revenues by 2020. Preliminary IoT connection pricing trends for 2017 are cause for concern, with downside risks to the IoT carrier revenue forecast, should price trends prevail.  Please see Figure 2. below for Dell ‘Oro forecast of IoT Carrier revenue growth through 2020.

About the Report
The Dell’Oro Group Carrier Economics Report provides in-depth coverage of more than 50 carriers’ revenue, capital expenditure, and capital intensity trends.  The report provides actual and forecast details by carrier, by region, by country (United States, Canada, China, India, Japan, and South Korea), and by technology (wireless/wireline).  The report also discusses further capex accelerating factors such as preparation for 5G and inhibiting factors such as the flat revenue trend. The report assumes operators will struggle to identify new revenue streams.

To purchase this report, please contact Matt Dear at +1.650.622.9400 x223 or email [email protected].

About Dell’Oro Group
Dell’Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications, networks, and data center IT markets.  Our firm provides in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions.  For more information, contact Dell’Oro Group at +1.650.622.9400 or visit www.delloro.com.

New FTTC technology to be deployed in Australia under NBN rollout

More than 1000 homes and businesses in North Melbourne and Sydney’s south will be the first to benefit from new technology under the NBN rollout that will deliver faster broadband speeds.  NBN Co is providing a limited release of its fiber-to-the-curb (FTTC) technology that will connect to a telecom pit near a driveway outside a home or business rather than a junction box down the street, with a larger release due in the second half of this year.  Fiber-optic cable is connected to the pit outside the home or business, with existing copper lines used to connect the Internet to the premise.  [That’s the same topology used by AT&T’s U-verse in the U.S.]

NBN Co‘s chief network engineering officer Peter Ryan labelled the Australian-made technology a “breakthrough:”

“It allows us to deliver a lot of the benefits of fiber-to-the-premise (FTTP) without the inconvenience of digging front lawns of Australians,” he told reporters.  “It allows us to deploy the NBN faster and at a lower cost and complete the network by 2020,” he added.

Testing has seen download speeds of over 100 Mbps and more than 40 Mbps uploads.  That could reach a gigabit per second with the addition of new “copper acceleration technology”, which is planned in selected areas by the end of the year.

About one million premises are expected to be connected by 2020, Communications Minister Mitch Fifield said, although that could change.  “This is really good news and a further development in the evolution of the NBN,” he told reporters alongside Treasurer Scott Morrison at the launch in Miranda, in Sydney’s south, on Sunday.

nbn™ Fibre to the Curb (FTTC) equipment

For more information, please visit: https://www.nbnco.com.au/learn-about-the-nbn/network-technology/fibre-to-the-curb-explained-fttc.html

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NBN Co will decide what other locations will get the FTTC broadband access, based on what technology “makes sense” in any given area, Mr. Fifield said.  FTTC can deliver the same 100Mbps speeds as fiber-to-the-premise, but at a lower cost, in much less time and with far less disruption to people’s property, he added.  Mr Fifield guaranteed all premises would get at least 25 Mbps, with 90 per cent above 50 and 72 per cent at 100 Mbps.   “The Turnbull government is keeping broadband bills down and taxes lower by rollout the NBN sooner and more affordably,” he said.

NBN Co’s chief customer officer for residential, Brad Whitcomb, said new “copper acceleration technology” known as G.fast could deliver even faster speeds in selected areas by the end of the year.

Mr Whitcomb said NBN has been working closely with service providers to test the new FTTC over the past few months.

“As with the introduction of any new technology, we will continue to gain insights as we navigate the complexity of the build as well as potential issues which can arise when people connect to the network,” he said in a statement.

Mr. Fifield is confident the network will meet the speed needs of Australians once completed in 2020, but noted NBN Co would pursue upgrade options if needed.  “I think the experience people are having today is, overwhelmingly, a good one,” he said.

https://thenewdaily.com.au/news/state/nsw/2018/04/08/nbn-fttc-sydney-melbourne/

 

CCS Insight: Europe will fall behind China & U.S. in 5G

Researchers at CCS Insight have released a report predicting that Europe will fall behind in the rollout of “5G.”  The market research firm predicts the U.S. and China will lead the way in deploying the next generation of mobile technology known as “5G.” Initial commercial deployments in the U.S. are expected this year, but China is set to overtake in connection volume by 2020.

CCS Insight’s forecast of an initial U.S. lead corroborates with a report from the GSMA at the end of March 2018 — but the firms appear to disagree in the rest of their rankings in the period leading to 2025.

In the GSMA’s report, China falls to fourth place — behind Europe — by 2025 with 25 percent of mobile connections being 5G. Europe fares slightly better with 31 percent, Japan with 45 percent, and the United States leading with 49 percent.

This author believes China will be #1 in “5G” deployment, even if the network operators there use a pre-standard RAN/RIT for mobile access.

Kester Mann, Principal Analyst covering operators at CCS Insight, said in the firm’s report:

“The industry might be struggling to establish the business models for investment in 5G, but this isn’t stopping leading operators battling for bragging rights to launch the first networks. Competitive forces and the need for capacity are the leading drivers of early deployment, although we caution this could set unrealistic expectations for initial network capability.”

The chart below provides a summary of CCS Insight’s 5G forecast up to 2025:

As per the above chart, CCS predicts adoption of 5G will not really start ramping up until 2021, which is what we’ve been saying for MANY YEARS!

“The industry might be struggling to establish the business models for investment in 5G, but this isn’t stopping leading operators battling for bragging rights to launch the first networks,” said Kester Mann of CCS Insight. “Competitive forces and the need for capacity are the leading drivers of early deployment, although we caution this could set unrealistic expectations for initial network capability.”

CCS forecasts that while the early launches might be in the US, Korea and Japan, China should storm to the front of the 5G pack. Estimates predict 5G in the country would hit 100 million connections in 2021 before passing 1 billion in 2025. Despite most other markets having launched commercial services by 2025, China will still account for nearly four in every 10 global 5G connections.

“We see the first 5G smartphones emerging in 2019, but these will be relatively few in number,” comments Marina Koytcheva, VP of Forecasting at CCS Insights. “The real ramp-up will come in 2021 when over 350 million 5G handsets will be sold worldwide.”

The bulk of adoption is not expected to be driven by innovative new technologies such as autonomous vehicles and remote healthcare, but rather by the need for higher speeds and bandwidth to support mobile video consumption. Even in 2025, mobile broadband is still predicted to represent 98 percent of all 5G connections.

References:

https://www.ccsinsight.com/press/company-news/3240-ccs-insight-predicts-1-billion-users-of-5g-by-2023-with-more-than-half-in-china

https://www.telecomstechnews.com/news/2018/apr/06/ccs-insight-europe-behind-5g/

https://www.digitaltveurope.com/2018/04/06/ccs-insight-5g-connections-to-reach-60m-in-2020/

http://telecoms.com/488905/research-paints-gloomy-5g-picture-for-europe/

https://www.ccsinsight.com/our-services/5g-networks/3300-quarterly-market-analysis-5g-networks

 

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Vertical Systems Group: U.S. Business Fiber Availability Reaches 54.8%

The availability of optical fiber connectivity to large and medium size commercial buildings in the U.S. jumped to 54.8% in 2017, based on latest research from Vertical Systems Group.  AT&T, Verizon and CenturyLink’s aggressive build-outs of fiber into commercial buildings have continued to increase the availability of fiber connectivity.

As a result, the U.S. Fiber Gap has dropped to less than fifty percent (45.2%) for the first time. This annual benchmark quantifies the scope of fiber lit buildings in the U.S. with twenty or more employees. Encompassing more than two million individual business establishments, this base of commercial buildings maps directly to the addressable market for higher speed Carrier Ethernet, Cloud, Data Center, Hybrid VPN and emerging SDN-enabled services.

“More commercial U.S. buildings were newly lit with fiber during 2017 than in any other year since we initiated this research in 2004…..

AT&T told investors that it reached 400,000 business buildings with its own lit fiber facilities. Due to AT&T’s aggressive build-out, the service provider now covers over 1.8 million U.S. business customer locations. The telco said it is “adding thousands more buildings each month.”

CenturyLink and Verizon took the M&A path to enhance their on-net fiber holdings.

In a huge M&A deal, CenturyLink’s purchase of Level 3 increased its on-net building reach by nearly 75% to approximately 100,000 buildings, including 10,000 buildings in EMEA and Latin America, which gives the #3 U.S. telco a larger footprint to deliver carrier Ethernet and software-defined network services.

Verizon’s purchase of XO Communications gave the telco additional metro fiber networks in 40 major U.S. markets with over 4,000 on-net buildings and 1.2 million fiber miles.

Consolidated Communications also enhanced its on-net fiber holdings via its acquisition of FairPoint. By acquiring FairPoint, Consolidated immediately established itself as the ninth largest fiber player with a presence in 24 states and 8,000 on-net buildings.

This greater density will enable Consolidated to pursue more dark fiber and lit Ethernet service opportunities with a larger mix of business and wholesale customers.

What was also notable about this year’s M&A on-net building rush was the presence of nontraditional players like Uniti Fiber, which acquired two regional fiber providers, Southern Light and Hunt Telecom. These two deals give the REIT more fiber to pursue a mix of wireless, E-Rate, military, enterprise and wholesale opportunities, including fiber-to-the-tower backhaul, small cell networks and dark fiber. The acquisition of Southern Light in particular gives Uniti access to an additional 4,500 on-net locations.

Fueling Ethernet, 5G deployments

Having more available on-net fiber is another factor that plays into service providers’ U.S. Ethernet service reach and 5G plans by creating pipes through which wireless operators can build small cell and distributed antenna systems (DAS) to improve wireless coverage in business buildings.

Encompassing more than 2 million individual business establishments, this base of commercial buildings maps directly to the addressable market for higher speed carrier Ethernet, cloud, data center, hybrid VPN and emerging SDN-enabled business services.

Several of the service providers that have high on-net fiber building counts represent some of the largest Ethernet providers in the U.S.

On the Ethernet end, AT&T, CenturyLink and Verizon continue to demand high spots in the Ethernet space. However, the effect of M&A clearly has altered the Ethernet landscape.

CenturyLink knocked AT&T from its nearly 13-year reign as the top domestic Ethernet provider in the U.S. by completing its acquisition of Level 3 Communications. The service provider’s move up the ranks of VSG’s year-end 2017 U.S. Ethernet Leaderboard was also a function of continued growth in Ethernet ports for both companies. Earlier, Level 3 ranked second to AT&T and CenturyLink ranked fifth on the Mid-2017 U.S. Ethernet Leaderboard.

But Ethernet is only one factor driving ongoing on-net fiber builds. Cochran noted in an e-mail to FierceTelecom that “larger providers larger providers are accelerating deployments” to position themselves for 5G.

Verizon, for example, acquired WideOpenWest’s fiber assets in Chicago, securing fiber to more than 500 macro-cell wireless sites and more than 500 small-cell wireless sites in the area.

Crown Castle advanced its fiber standing by acquiring Lightower—a deal that gave it greater fiber density to address businesses and its traditional wireless business customers deploying small cells in buildings. This acquisition gave Crown Castle rights to approximately 60,000 route miles of fiber, with a presence in all the top 10 and 23 of the top 25 metro markets.

As the expectations for higher speed Ethernet, cloud and in-building wireless coverages continues to ramp, service providers will continue to further narrow the fiber gap inside buildings. But unlike the speculative builds of the 1990s, these are focused on bandwidth hungry applications that are showing no signs of slowing.

Editor’s Note:

For this Vertical Systems Group analysis, a fiber lit building is defined as a commercial site or data center that has on-net optical fiber connectivity to a network provider’s infrastructure, plus active service termination equipment onsite. Excluded from this analysis are standalone cell towers, small cells not located in fiber lit buildings, near net buildings, buildings classified as coiled at curb or coiled in building, HFC-connected buildings, carrier central offices, residential buildings, and private or dark fiber installations.

 

References:

STATFlash: U.S. Business Fiber Availability Reaches 54.8%

https://www.fiercetelecom.com/telecom/at-t-verizon-centurylink-others-advance-net-business-fiber-availability-to-54-8-says-vsg

Telstra Launches 5G Enabled WiFi Hotspots without 5G Devices; 5G Connected Car Up Next

Australia’s Telstra has launched what it says are the first “5G-enabled” Wi-Fi hotspots in the world.   The new hotspots on the Gold Coast in Queensland, Australia will provide locals and visitors with access to free broadband services during the evaluation period.  While there are no 5G-enabled consumer devices available at this time, the Australian telco will connect 5G backhaul and infrastructure from an exchange to a Wi-Fi access point, so it can be used on existing 4G devices.

The open hotspots will provide up to 10GB of downloads per device per day. They will be managed by Telstra’s recently-launched 5G innovation center on the Gold Coast.  Telstra has connected 5G backhaul and related infrastructure in the Southport Exchange in the city to allow connections to the 5G network over Wi-Fi on existing devices.

“Wi-Fi has limited throughput so a single hotspot alone cannot come close to reaching the limits of 5G at our Innovation Center,” Telstra group managing director for networks Mike Wright said. “By using multiple hotspots with potentially hundreds of smartphone users served through a single 5G device we are able to get closer to demonstrating 5G in a real world environment. Our 5G backhaul is capable of delivering download speeds of more than 3 Gbps,” he added.

Telstra is also using mmWave spectrum and its 5G innovation centre to put a connected car on the road using Intel’s 5G automotive trial platform.

“Working with global technology companies Ericsson and Intel, we have put Australia’s first 5G connected car on the road. We are in the very early stages of development and are achieving download speeds approaching 1 Gbps inside the car and the vehicle is also equipped with a Wi-Fi access point,” Wright said.

The executive also highlighted the evolution of the telco’s 5G prototype during the first months of the year. “At the start of the year our 5G prototype device was the size of a bar fridge and weighed more than 200 kilograms.  Now, in collaboration with Intel and Ericsson, we have one that has been shrunk down to the size of a personal computer and can be installed in a car.”

The 5G center is central to a $58 million investment Telstra has made to upgrade infrastructure on the Gold Coast to support growing demand and major events in the area. Telstra will run extensive 5G trials on the Gold Coast during the Commonwealth Games in April this year.

Telstra previously said that said that it would work with Ericsson on key 5G technologies including massive multiple-input, multiple-output (Massive MIMO), adaptive beamforming and beam tracking, and OFDM-based waveforms in its Gold Coast center.

Reference:

https://www.telstra.com.au/aboutus/media/media-releases/Telstra-offers-Australias-first-taste-of-5G

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Telstra will have competition. Australian telecom operator Optus said it plans to roll out a fixed-wireless 5G service in key metro areas by early 2019. The announcement comes after the launch of an outdoor trial of 5G New Radio (NR), which showed 2Gbps download speeds for a fixed wireless service in homes and businesses, the Singtel subsidiary said.

The trial, conducted at its headquarters in Macquarie Park in Sydney in January, used dual-band 5G NR equipment and commercial grade CPEs for both C-band and millimeter wave band frequencies. C-band is within the same spectrum range of Optus’ 3.5GHz, which has been earmarked for 5G deployment, the operator said. The mmWave band 5G network has the capability to reach peak data speeds of 15Gbps to a single user, which is 15x what 4.5G is capable of today.

“Everyone has heard of concepts like self-driving cars, smart homes, AI and virtual reality however their full potential will require a fast and reliable network to deliver,” said Optus managing director of networks Dennis Wong.

“Seeing 5G data speeds through our trial that are up to 15x faster than current technologies allows us to show the potential of this transformative technology to support a new ecosystem of connected devices in the home, the office, the paddock and in the wider community.”

Optus will also be hosting a 5G technology showcase during the 2018 Commonwealth Games, which will be held on the Gold Coast in Queensland from April 4 to 15 (this week and next).

Reference:

https://www.telecomasia.net/content/optus-launch-fixed-wireless-5g-service-2019

 

FCC Acts to Speed Deployment of Next-Gen Wireless Infrastructure; Interview with FCC Chair Ajit Pai

Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment, Second Report and Order

The Federal Communications Commission (FCC) recently adopted new rules streamlining the wireless infrastructure siting review process to facilitate the
deployment of next-generation wireless facilities.  The FCC Order focuses on ensuring the Commission’s rules properly address the differences
between large and small wireless facilities, and clarifies the treatment of small cell deployments.

Specifically, the Order:
 Excludes small wireless facilities deployed on non-Tribal lands from National Historic Preservation Act (NHPA) and National Environmental Policy Act (NEPA) review, concluding that these facilities are not “undertakings” or “major federal actions.”

 Small wireless facilities deployments continue to be subject to currently applicable state and local government approval requirements.

 Clarifies and makes improvements to the process for Tribal participation in Section 106 historic preservation reviews for large wireless facilities where NHPA/NEPA review is still required.

 Removes the requirement that applicants file Environmental Assessments solely due to the location of a proposed facility in a floodplain, as long as certain conditions are met.

 Establishes timeframes for the Commission to act on Environmental Assessments.

The FCC said that those actions will reduce regulatory impediments to deploying small cells needed for 5G and help to expand the reach of 5G for faster, more reliable wireless service and other advanced wireless technologies to more Americans.

Statement by FCC Chairman Ajit Pai:

Re: Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment, WT Docket No. 17-79

If the United States is going to lead the world in 5G, we need to modernize our wireless infrastructure regulations. Our efforts to unleash spectrum for consumer use are necessary, but they aren’t sufficient to secure our 5G future. In fact, they’ll be pointless if carriers can’t deploy the physical infrastructure needed to bring next-generation services to the American people.

And unfortunately, our current wireless infrastructure rules are a poor fit for the 5G networks of the future. They were designed with 200-foot towers in mind, not the highly-densified networks of small cells that will be common in the 5G world.

That’s why today’s Order is so important. We take a giant leap forward in updating our wireless infrastructure rules. By cutting unnecessary red tape, we’ll make it substantially easier for carriers to build next-generation wireless networks throughout the United States. That means faster and more reliable wireless services for American consumers and businesses. That means more wireless innovation, such as novel applications based on the Internet of Things. And ultimately, that means American leadership in 5G.

Specifically, we clarify today that small cells are inherently different from large towers. So they shouldn’t face identical regulatory review under the National Historic Preservation Act and National Environmental Policy Act. We also streamline the process for Tribal review notifications through our Tower Construction Notification System……………………..

* * *

Lately, there’s been a lot of talk about American leadership in 5G. But talk is cheap; action is what actually matters. And now is the time for action. A vote for this Order is a vote for concrete action that will help toohe United States lead the world in 5G. It’s a vote for better, faster, and cheaper mobile broadband for the American people. It’s a vote for making the United States the best home for wireless innovation and investment. And it’s a vote to extend digital opportunity to more of our citizens. That future is a bright one, and it’s one I’m determined to deliver by supporting this Order.

Read more at: https://transition.fcc.gov/Daily_Releases/Daily_Business/2018/db0330/FCC-18-30A2.pdf

Related:  Ken Pyle’s interview with FCC Chair Pai on Digital Opportunities through Grassroots Efforts

and this article:  Will the FCC Amend Rules for Small Cells….

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Addendum:

According to Lightreading, AT&T has applied to the FCC for an experimental radio license to hold “5G” related tests in Burbank, CA using 28GHz base stations and terminals, connecting within 100 meters of the base station.