Author: Alan Weissberger
TIP OpenRAN project: New 5G Private Networks and ROMA subgroups
The Telecom Infra Project (TIP), one of several industry consortiums creating specifications for open radio access networks (Open RAN), recently announced a new 5G Private Networks subgroup.
Editor’s Note:
We don’t know whether the TIP OpenRAN project or the O-RAN Alliance has (and will have) more industry influence and impact. In addition, there are many splinter partnerships forming; many of them led by Rakuten Mobile. What’s mind boggling is that none of the groups have liaison agreements with either ITU-R WP5D (responsible for all IMT standards, including 4G and 5G) or 3GPP (the prime spec writing organization for mobile networks).
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5G Private Networks contribute to improve the quality of experience for 5G connectivity, including better coverage and capacity through on-premise radio equipment, the ability to support low latency and high bandwidth service requirements through edge compute & routing of private traffic, and the potential to support the increasing demand for privacy and localized data analytics.
For network operators, 5G Private Networks also create the opportunity to implement new network management and operational models, enabling full automation of the operation of the enterprise network while improving end customer application experience.
However, to fully capture the benefits of 5G Private Networks, a different approach is required, because traditional network architectures, focused on large scale deployments and operations don’t have the right economics or the operational flexibility to efficiently deliver on the emerging needs of enterprise customers.
The 5G Private Networks Solution Group will develop a new approach to manage and operate 5G Private Networks, based on a cloud-native architecture, and making use of a new class of software management tools, based on the paradigms currently used for the cloud, but adapted to deliver the requirements of a telecom network environment. Telefónica will test the solution in their local TIP Community Lab in Madrid and then move to field trials in Málaga (Spain).
Juan Carlos Garcia, SVP Technology Innovation & Ecosystem, Telefónica, and TIP Board Director said: “This new solution group will enable operators to address the exciting opportunities that 5G is creating in the enterprise segment, both through valuable features for our customers and more efficient network operations. The TIP community is the perfect environment for this innovation, as it will allow us to leverage multiple current project groups (Open Core Networks, OpenRAN) to deliver an end-to-end Minimum Viable Product that we will then test in Telefonica’s TIP Community Lab.”
In particular, the new Solutions Group will leverage previous work contributed to TIP’s OpenRAN Project Group, on a first version of a CI/CD platform that applies traditional IT methodologies to automate integration, testing and deployment of OpenRAN software.
Ihab Tarazi, CTO and SVP, Networking and Solutions, Dell Technologies and TIP Board Director, said: “For open networks to deliver their benefits, the telecom industry needs an abstraction layer that helps integrate different components into end-to-end solutions. New software management tools based on the ones currently used for the cloud can address this need, and this Solution Group is a timely initiative for the industry to collaborate on making this happen.”
Caroline Chan, VP and GM Network Business Incubation Division, Intel and TIP Board Director, said: “Through the recently launched solution groups, TIP is expanding its scope to include the validation of interoperability between different elements across the whole network, and insights and recommendations about how to operate them. The new 5G Private Networks Solution Group is a strong example of this approach. With dedicated local private high-performance network connectivity as a key emerging deployment model for 5G and edge buildout, this group can help foster important ecosystem collaboration.”
As a result, this new solution group will help drive:
- Improved network economics, through the use of commoditized hardware and open source software, and more efficient and flexible network operations and automation, enabled by the adoption of cloud-native technologies.
- Dedicated local high-performance 5G connectivity and edge computing infrastructure, appealing to multiple B2B & B2B2C verticals.
- Better network security and performance.
Telefónica is one of the five European telcos that announced that they will work together on open RANs for mobile networks. The others are Deutsche Telekom, Orange, TIM and Vodafone. A memorandum of understanding (MOU) for that grouping commits the five to the O-RAN Alliance, which has 27 network operator members from AT&T to Vodafone, and to “other industry initiatives, such as the Telecom Infra Project, that contribute to the development of open RAN and that aim to create a healthy and competitive open RAN ecosystem and advance R&D efforts.”
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Separately, the charter of the new OpenRAN Orchestration and Management Automation (ROMA) subgroup was approved by the OpenRAN PG. ROMA focuses on aggregating and harmonizing mobile network operators requirements on Open RAN orchestration and lifecycle management automation, fostering ecosystem partners to develop products and solutions that meet ROMA requirements.
The goal of ROMA is to:
· Develop a common set of use cases for OpenRAN lifecycle management automation and orchestration that are agreed across multiple MNO and OpenRAN ecosystem members
· Develop Technical Requirements on products and solutions that support the identified use cases, including interfaces and data models
· Facilitate product and solution development through lab testing, field trials, participating TIP Plugfest and badging on TIP exchange etc.
· Support large scale OpenRAN deployment with lifecycle management automation, including Continuous Integration and Continuous Deployment (CI/CD) frameworks and tool sets.
It will bring better coverage and capacity through on-premise radio equipment, says TIP, and the ability to support low latency and high bandwidth service requirements through edge compute and routing of private traffic, and the potential to support the increasing demand for privacy and localized data analytics.
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About the Telecom Infra Project:
The Telecom Infra Project (TIP) is a global community of companies and organizations that are driving infrastructure solutions to advance global connectivity. Half of the world’s population is still not connected to the internet, and for those who are, connectivity is often insufficient. This limits access to the multitude of consumer and commercial benefits provided by the internet, thereby impacting GDP growth globally. However, a lack of flexibility in the current solutions – exacerbated by a limited choice in technology providers – makes it challenging for operators to efficiently build and upgrade networks.
Founded in 2016, TIP is a community of diverse participants that includes hundreds of companies – from service providers and technology partners, to systems integrators and other connectivity stakeholders. We are working together to develop, test and deploy open, disaggregated, and standards-based solutions that deliver the high-quality connectivity that the world needs – now and in the decades to come.
Find out more: www.telecominfraproject.com
References:
Learn more and join the new 5G Private Networks Solution Group here.
https://telecominfraproject.com/tip-launches-5g-private-networks-solution-group/
Huawei and China Mobile test 5G indoor Massive MIMO
The pilot was conducted using LampSite, Huawei’s 5G digital indoor network product, based on the 2.6 GHz inter-frequency networking (80 MHz + 80 MHz). Distributed Massive MIMO was enabled in multiple 5G indoor cells to provide the large capacity needed to support 5GtoB (5G to Business) services and meet their high requirements for uplink experience. The peak uplink experience was quadrupled compared with traditional 4T4R cells.
Indoor distributed Massive MIMO introduces Massive MIMO for macro base stations to indoor networks. It is an innovative approach by Huawei to continuously increase the capacity of indoor 5G networks. The technology supports up to 64T64R channels and pools beamforming, MU-MIMO, and other technologies to ensure high capacity in the uplink and consistent user-perceived data speeds. Such a high level of performance makes it perfectly for smart production in which service terminals are frequently relocated for flexible production. Adding another competitive edge to empower 5G to transform industries.
The pilot is of great significance to indoor 5G, providing carriers with a new option to ensure premium uplink experience for emerging industrial services, such as video transfer and AGV operations, and expand 5G to factories, ports, power grids, airports, transportation, security, and many other industrial markets.
Huawei will continue to work with China Mobile Guangdong in innovating 5G to improve 5G performance, build competitive 5G networks, and lead the development of 5G to Business customers.
India 4G Spectrum Auction Raises 778 billion Rupees
After much delay, India’s 4G spectrum auction has ended in just two days, raising Indian Rupee (INR) 778 billion (US $10.6 billion) for the government. The auction was held on March 1st and 2nd by India’s Department of Telecommunications. The airwaves acquired will help India’s telecom network operators add 4G capacity and get ready for 5G.
India auctioned spectrum in the 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz frequency bands. However, the 700MHz spectrum remained unsold because of the high reserve price.
India telecom network operators Reliance Jio, Bharti Airtel, and Vodafone Idea won spectrum in the government’s latest auction.
India’s largest telco, Reliance Jio announced it has acquired the right to use spectrum in all 22 circles across India in the auction. The upstart network operator secured spectrum in the 800 MHz, 1800 MHz and 2300 MHz frequency bands, which increases Jio’s spectrum footprint by 55 percent to 1,717 MHz.
Jio will pay INR 571.23 billion for the right to use this spectrum for a period of 20 years. Payments can be made over a period of 18 years (2-year moratorium plus 16-year repayment period), with interest at 7.3 percent per year.
Reliance Jio now claims to have the highest amount of sub-GHz spectrum with 2×10 MHz contiguous spectrum in most circles. It also has at least 2×10 MHz in the 1800 MHz band and 40 MHz in the 2300 MHz band in each of the 22 circles. The operator also reports it has achieved complete spectrum derisking, with average life of owned spectrum of 15.5 years. Reliance Jio will acquire the spectrum with an effective cost of INR 608 million per MHz. Jio also says the acquired spectrum can be used for provision of 5G services.
“The acquired spectrum can be utilized for transition to 5G services at the appropriate time, where Jio has developed its own 5G stack,” says the Jio press release.
India’s second-largest network service provider, Bharti Airtel acquired 355.45 MHz of spectrum across sub-GHz, mid-band and 2300 MHz bands for a total price of INR 186.99 billion. Airtel will use this spectrum to upgrade its deep indoor and in-building coverage in urban towns. In addition, this spectrum will also help improve its coverage in villages by offering the superior Airtel experience to an additional 90 million customers in India. Airtel also plans to use this spectrum to deliver 5G services in future.
An Airtel statement mentioned that the “the reserve pricing of these bands [700MHz and 3.5GHz] must be addressed on priority in future. This will help the nation to benefit from the digital dividend that will inevitably arise out of this.”
“Airtel has now secured pan-India footprint of sub GHz spectrum that will help improve its deep indoor and in building coverage in every urban town,” as per the company’s statement.
Vodafone Idea entered this spectrum auction “holding the largest quantum of spectrum with a very small fraction, which was administratively allocated and used for GSM services, coming up for renewal”.
As a result, Vodafone Idea acquired spectrum in only five circles for INR 19.93 billion. The operator said it has used this opportunity to optimize spectrum holdings post-merger to create further efficiencies in a few circles. Vodafone Idea expects the spectrum it has acquired in five circles to help it enhance its 4G coverage and capacity.
India’s just completed spectrum auction does not contain any airwaves for 5G
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Reliance Jio’s decision to be the biggest spenders at the auction comes shortly after its holding company, Jio Platforms, reported ₹22,858 crore in revenue during the quarter to December, which was a 30% improvement from the year prior.
Last year, Jio Platforms sold a third of itself to others for ₹152,056 crore. Buyers included Google, Facebook, Silver Lake, Vista Equity Partners, General Atlantic, KKR, Mubadala, ADIA, TPG, L Catterton, PIF, Intel Capital, and Qualcomm Ventures.
References:
https://www.telecompaper.com/news/india-completes-spectrum-auction-raises-inr-778-billion–1374417
Internet 2’s Next Generation Infrastructure team deploys 800Gbps optical link
On February 26, 2021, Internet2 deployed its first 800 Gbps single-carrier optical circuit between Phoenix and Tucson, AZ as part of its Next Generation Infrastructure (NGI) program.
This milestone marks the first 800G native link to be deployed by a U.S. research and education network. The optical circuit leverages a 102 Ghz carrier generated by a single Ciena Waveserver 5 transponder at each endpoint.
On February 25, 2021, the Internet2 project team completed the upgrade of all Reconfigurable Optical Add-Drop Multiplexers (ROADMs) to flex spectrum on all east-west long-haul routes nationwide. Additionally, the majority of the optical fiber was upgraded from LEAF to SMF28 to better match the coherent transmission technologies being used to convey the new 800 Gbps optical link.
Internet2 plans to rapidly expand its 400G and 800G transmission capabilities along these newly flex-grid enabled routes; more link capacity will come online as our phase 2 hardware deployment team (GDT) continues to move across the country. The Internet2 team is deploying the Cisco 8200 and Ciena Waveserver 5 platform. Completion is targeted for the end of this month (March 2021).
The successful deployment of this initial 800 Gbps optical link is the culmination of thousands of hours of effort from both the Internet2 community and teams in many organizations, including Internet2, GlobalNOC at Indiana University, Ciena, Lumen, and GDT.
Just two weeks ago, Telefonica said it had trialed an 800 Gbps optical link, using Huawei and Nokia network equipment. However, there are no 800 Gps links in any commercial production network, as far as we can determine.
References:
North Carolina School District deploys WiFi 6 from Cambium Networks; WiFi 6 vs 6E Explained
Cambium Networks a leading global provider of wireless networking solutions, today announced its multi-year agreement with the school district of Burke County, N.C., with the addition of Wi-Fi 6 access points to provide multi-gigabit speeds in classrooms.
Using E-Rate funding for education, Burke County will upgrade its network to the latest Wi-Fi 6 technology to improve learning for students. The project, which began in late 2020, is delivering 1,500 multi-gigabit high-density access points to the district’s 27 schools and 12,000 students. This will allow students to simultaneously use Zoom and view streaming videos in the classroom using the latest XV3-8 access points, as well as XMS cloud management that seamlessly integrates with Google G-Suite and other embedded education systems.
“When the technology works, the students win, and so does our community. That is especially important as we navigate the pandemic and students return in March,” said Dr. Melanie Honeycutt, CIO of the Burke County School District. “Cambium is our solution for great performance at an affordable price for high density classrooms, and just in time as COVID accelerated our 1:1 laptop program and the increased use of streaming video.”
Cambium’s Wi-Fi 6 and XMS end-to-end cloud-management solutions provide multi-gigabit Wi-Fi access at a proven low total cost of ownership. With easy integration to existing systems, planning, provisioning, installation and centralized cloud management, Cambium’s solutions can be rapidly deployed to deliver end-to-end multi-gigabit wireless speeds.
“We love to work with visionary and discerning customers,” said Atul Bhatnagar, president and CEO, Cambium Networks. “Dr. Honeycutt and Burke County understand that this is the time to address the digital divide. They have done so in a way that gives students what they require for excellence in education.”
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What is WiFi 6 and 6E?
The IEEE 802.11ax standard was dubbed Wi-Fi 6 by the WiFi Alliance. At the time of publication, it was limited by U.S. law to a wireless spectrum that only covered the 2.4GHz and 5GHz bands.
In a 2.4GHz band, there are three non-overlapping channels—and that bandwidth is shared by all users. If too many end point WiFi devices compete for bandwidth on the same wireless channel, then some of those signals will be dropped.
In April of 2020, the Federal Communications Commission (FCC) voted unanimously to open up the 6GHz band for unlicensed use. With that policy change, significantly more airwaves are open that WiFi routers can use. The WiFi Alliance named versions of IEEE 802.11ax that operate at or above 6GHZ as WiFi 6E.
Images Courtesy of WiFi Alliance
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The opening of the 6GHz band is essentially quadruples the amount of airwaves (14 additional 80MHz channels, and seven additional 160MHz channels) available for WiFi routers and smart WiFi devices. That means less signal interference.
Wi-Fi Alliance® is introducing new terminology to distinguish forthcoming Wi-Fi 6 devices that are capable of 6 GHz operation, an important portion of unlicensed spectrum that may soon be made available by regulators around the world. Wi-Fi 6E brings a common industry name for Wi-Fi® users to identify devices that will offer the features and capabilities of Wi-Fi 6 – including higher performance, lower latency, and faster data rates – extended into the 6 GHz band. Wi-Fi 6E devices are expected to become available quickly following 6 GHz regulatory approvals, utilizing this additional spectrum capacity to deliver continuous Wi-Fi innovation and valuable contributions to consumers, businesses and economies.
So, what’s the difference?
Early-adopter devices using Wi-Fi 6 (such as the first batch of Wi-Fi 6 routers) are limited to the 2.4GHz and 5GHz spectrum, while Wi-Fi 6E-compliant devices will have access to all those much richer 6GHz airwaves.
References:
https://www.wi-fi.org/news-events/newsroom/wi-fi-certified-6-delivers-new-wi-fi-era
https://www.wi-fi.org/news-events/newsroom/wi-fi-alliance-brings-wi-fi-6-into-6-ghz
IBM’s Cloud Satellite service in Generally Available Orbit
IBM’s Cloud Satellite service is now in generally available (GA) orbit. The service extends the IBM Cloud control plane to run virtually anywhere, whether that be on commodity hardware, some edge device, or inside another public cloud.
IBM manages Cloud Satellite deployments, which is different than from most other software-defined hybrid cloud platforms. It provides an administrative control plane and as-a-service operation of IBM cloud services using a Kubernetes (K8s) cluster.
IBM explained that the GA push now makes the platform available to all customers. It allows users to run their IBM Cloud service on-premises or in edge locations managed through a single pane of glass in the public cloud.
The first two services for IBM Cloud Satellite will be Cloud Pak for Data and OpenShift as a Service.
IBM’s not alone in looking to data as one of the first services to be offered on hybrid. Amazon Outposts offers RDS for MySQL and PostgreSQL; Azure Arc data services include SQL Managed Instance and PostgreSQL Hyperscale; while Google recently added BigQuery Omni to its Anthos software-defined hybrid cloud as part of a multi-cloud and edge play.
The rationale as to why data services are so elemental to hybrid cloud is that, for many organizations or use cases, data needs to stay local for reasons ranging from latency issues to data residency requirements. OpenShift as a service will provide a route for customers seeking to build their own private cloud K8s environments. IBM is announcing that this will also be early on the list.
As part of this collaboration, customers will be able to:
- Deploy applications across more than 180,000 connected enterprise locations on the Lumen network to provide a low latency experience
- Create cloud-enabled solutions at the edge that leverage application management and orchestration via IBM Cloud Satellite
- Build open, interoperable platforms that give customers greater deployment flexibility and more seamless access to cloud native services like AI, IoT and edge computing
IBM said it has more than 65 “ecosystem partners” building services to run in the Cloud Satellite environment. Partner include Cisco, Dell Technologies, and Intel. They intend to develop cloud services which can run across the multi-cloud and premises platform services include storage, networking, and server options.
“IBM is working with clients to leverage advanced technologies like edge computing and [artificial intelligence], enabling them to digitally transform with hybrid cloud while keeping data security at the forefront,” said Howard Boville, Head of IBM Hybrid Cloud Platform, in a statement. He added that “clients can securely gain the benefits of cloud services anywhere, from the core of the data center to the farthest reaches of the network.”
IBM highlighted three partners, among them Lumen Technologies and Portworx, that are both heavily leveraging 5G to deliver PaaS services for edge computing, and F5, which is developing vertical solutions for banking institutions.
IBM noted that Lumen Technologies (formerly CenturyLink) was using the hybrid cloud platform to deliver its Edge Compute service. That capability relies on Red Hat’s OpenShift that runs within Cloud Satellite to host the applications running close to Lumen’s edge locations. Lumen touts that it has approximately 450,000 route fiber miles in its network spread across more than 60 countries.
Lumen struck a similar deal earlier this year with VMware that will see both vendors “fast-track the design, development, and delivery of edge computing and more secure, work-from-anywhere solutions.”
Does anyone remember IBM’s Satellite Business Systems (SBS) of the late 1970s? It was a pioneer in delivering data services to businesses as a precursor of the Internet.
References:
https://www.ibm.com/cloud/satellite
https://developer.ibm.com/blogs/distributed-cloud-development-ibm-cloud-satellite/
https://www.zdnet.com/article/ibm-cloud-satellite-goes-ga/
https://www.sdxcentral.com/articles/news/ibm-cloud-satellite-boosted-to-ga-orbit/2021/03/
IBM Cloud Satellite: Build faster. Securely. Anywhere. Now generally available. To get started, visit: https://www.ibm.com/cloud/satellite.
For more information on how IBM is working with its ecosystem of partners, visit: www.ibm.com/cloud/blog/ibm-partner-ecosystem-and-cloud-satellite
For more information on IBM Cloud Pak for Data as a Service, visit:
https://www.ibm.com/blogs/journey-to-ai/ibm-cloud-pak-for-data-with-ibm-cloud-satellite
For more information on how IBM is helping developers build on IBM Cloud Satellite, visit:
https://developer.ibm.com/blogs/distributed-cloud-development-ibm-cloud-satellite
For more information on how IBM Cloud Satellite is supported by IBM Storage, visit: www.ibm.com/blogs/systems/improve-it-infrastructure-with-ibm-hybrid-cloud-storage-for-ibm-cloud-satellite
For more information on IBM Global Technology Services capabilities for IBM Cloud Satellite, visit: ibm.biz/PC_IaaS
To learn more about how Lumen has integrated Cloud Satellite across 180K global edge locations, visit: https://blog.lumen.com/speeding-innovation-at-the-edge-with-lumen-technologies-and-ibm-cloud-satellite
About IBM:
For further information visit: www.ibm.com/cloud/
Deutsche Telekom & Ericsson CEOs: Europe’s Dysfunctional Telecom Industry Must Consolidate
Europe’s telecommunications industry needs to consolidate, Deutsche Telekom Chief Executive Tim Hoettges said on Friday, as the region’s 100 operators invest more in 5G networks at a time when revenue and profits are under pressure.
“The industry is in a dilemma that it can only escape through cost synergies,” Hoettges told a news conference, repeating earlier calls for consolidation. “I believe deeply that European consolidation is necessary.” Yet the Germany-based telecom provider, that owns a majority stake in T-Mobile US, is not in active merger talks.
Earlier this month, Borje Ekholm, chief executive of Sweden based equipment maker Ericsson told the Financial Times that Europe has a “non-functioning” telecoms market. Ekholm suggested it was rational for Europe’s telecoms operators not to invest in 5G networks, because many of them failed to earn their cost of capital. “The problem is that the guys that are supposed to build out that infrastructure (wireless telcos) don’t make any money. There is a very big cost to waiting,” he added.
Ericsson is worried that Europe is falling far behind China and the U.S. in the rollout of 5G, which it argues will be crucial for the digitalization of businesses. The company has forecast that 5G could boost the continent’s gross domestic product by 2 percentage points a year.
“Without [5G], general industry will be less efficient and less competitive. Without the infrastructure, it’s hard to develop the digital industry, and that impacts huge value potential and potentially millions of future jobs,” said Ekholm.
The European 5G network equipment makers — Ericsson and Finland’s Nokia — also have a big strategic and security role, as Europe grapples with how much market access to give to their Chinese rival Huawei.
Europe has dozens of telecom operators, but attempts to consolidate in some countries have been blocked by the European Commission because of competition worries. That led some operators to complain their profitability lags far behind bigger U.S. rivals.
Several countries, including Germany and the UK, are pushing for the creation of additional telecom equipment makers, as well as the opening up of networks to other companies. Ekholm expressed surprise that Europe would do anything to undermine Ericsson and Nokia, as telecoms was one of the few technology sectors where the continent had “strategic autonomy,” he said.
“It is interesting to see that now there is a discussion about giving EU subsidies to develop competing companies, mostly they are based in the US and Asia.”
He added that it was vital for Ericsson “to be in markets at the forefront of tech development: China and the U.S.”
“For us to have a presence in both China and the U.S. allows us to be a global tech leader. It is high risk to be only in one ecosystem and not the other. It could ultimately lead to the Chinese ecosystem developing faster thanks to its scale.”
Ericsson’s CEO previously spoke out about Sweden’s ban of Chinese telecoms vendors, e.g. Huawei and ZTE. Ekholm insists that there are currently too many disincentives to invest in European telecom infrastructure. He’s probably right.
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References:
https://www.ft.com/content/32b38192-8c77-412a-ab20-36f75d6f4995
https://services.eiu.com/wave-of-consolidation-in-the-eu-telecoms-market/
Analysis: AT&T spins off Pay TV business; C-Band $23.4B spend weakens balance sheet
AT&T has agreed to create a new company for its U.S. video business unit together with private equity firm TPG Capital. The company will be called New DirecTV and include: today’s Direct TV, U-verse TV and AT&T TV (AT&T’s OTT video service) which AT&T said was “the future of TV” only 11 months ago. That was, indeed, a very short lived future!
The new company will have an estimated enterprise value of $16.25 billion. It will be headed by DirecTV CEO Bill Morrow and have its headquarters in El Segundo (California) and Denver (Colorado).
AT&T will own 70 percent of the new company, while TPG will hold 30 percent and will pay AT&T $1.8 billion in cash.
AT&T CEO John Stankey said the agreement is in line with the operator’s strategy to focus on core assets such as 5G, fiber optic network build-outs and HBO Max. The New DirecTV will provide “dedicated management focus” for the pay-TV operations while reducing AT&T’s huge debt burden.
AT&T bought DirecTV in 2015 for $48.5 billion but the actual value was closer to $66 billion including debt. AT&T recently struck $15.5 billion off the value of the DirecTV, reflecting the service’s dimmer prospects. AT&T said it would get about $7.8 billion in cash from the transaction to help pay down debts. Those proceeds include $5.8 billion that the new company will borrow from banks and pay back to AT&T.
“The disruption in pay TV did exceed our original expectations,” AT&T finance chief John Stephens said in an interview, adding that the satellite-TV business had helped generate cash for the company even as its customer base declined. Mr. Stephens said the new ownership structure is “a very attractive transaction, getting TPG’s expertise and that upfront cash payment.”
The new company will not include the WarnerMedia HBO Max streaming platform, AT&T’s Latin American video operations Vrio, AT&T’s regional sports networks, U-verse network assets and AT&T’s Sky Mexico investment.
At completion, all existing AT&T video subscribers will become New DirecTV customers and all existing content deals, including NFL Sunday Ticket on DirecTV, will become of the new company. New DirecTV will have a commercial agreement with AT&T and continue to provide bundled pay-TV services for mobile and internet customers.
New DirecTV video subscribers will also continue to receive HBO Max (which currently costs $15 per month) plus any associated discounts. AT&T and New DirecTV will also continue to serve customers through multiple distribution channels, including retail, online, call centers and indirect sellers; and share revenues for ad inventory management and ad sales.
The new company’s board will have two representatives from both AT&T and TPG, with Morrow holding the fifth seat. Most AT&T video services employees will move to New DirecTV. The new company plans to recognize its unionized labor force and will assume and honor all existing collective bargaining agreements.
The deal is expected to close in second half of this year. Under the terms of the agreement, AT&T will receive $7.8 billion from New DirecTV, including $7.6 billion in cash and the assumption from AT&T of $200 million worth of existing DirecTV debt. AT&T will use the proceeds to reduce its debt. TPG will contribute $1.8 billion in cash to New DirecTV in exchange for preferred units and its 30 percent stake in the new company.
“This agreement aligns with our investment and operational focus on connectivity and content, and the strategic businesses that are key to growing our customer relationships across 5G wireless, fiber and HBO Max. And it supports our deliberate capital allocation commitment to invest in growth areas, sustain the dividend at current levels, focus on debt reduction and restructure or monetize non-core assets,” said AT&T CEO John Stankey.
“As the pay-TV industry continues to evolve, forming a new entity with TPG to operate the U.S. video business separately provides the flexibility and dedicated management focus needed to continue meeting the needs of a high-quality customer base and managing the business for profitability. TPG is the right partner for this transaction and creating a new entity is the right way to structure and manage the video business for optimum value creation.”
“We look forward to working with AT&T, Bill and the entire talented team at the new DIRECTV to create a seamless customer experience through the separation of the company,” John Flynn, Principal at TPG said. “We are particularly excited by the opportunity to grow new DIRECTV’s streaming video service, leveraging the company’s leading pay-TV platform, talented labor force and large subscriber base to transition it into a leading next-generation video provider with best-in-class content and customer experience.”
AT&T lost 7 million domestic pay-TV subscribers over the last two years. Comcast lost about 2 million such customers over the same period. Dish Network Corp. , DirecTV’s satellite-TV rival, shed roughly 1 million subscribers.
Financing the Deal:
New DirecTV has secured $6.2 billion in committed financing from its bank group, $5.8 billion of which will be used to pay AT&T and assume the $200 million of agreed debt.
AT&T also agreed to cover up to $2.5 billion in losses tied to DirecTV’s NFL Sunday Ticket package.
AT&T financial impact:
AT&T’s net debt load, which was listed above $180 billion after the Time Warner transaction, recently stood around $148 billion.
In 2021, AT&T expects to apply the cash proceeds from the transaction toward debt reduction and does not expect a material impact to its 2021 financial guidance for:
• Consolidated revenue growth in the 1% range
• Adjusted EPS to be stable with 2020
• Gross capital investment in the $21 billion range with capital expenditures in the $18 billion range
Following close of the transaction, AT&T expects to deconsolidate the U.S. video operations from its consolidated results. The company will continue to look at ways of “monetizing non-core assets.”
Opinion – AT&T’s C-Band Spend Adds to Debt and Weakens its Balance Sheet:
The company added that it has proactively managed its debt portfolio, reducing near-term debt maturities by about $33 billion in 2020 and lowering the overall portfolio average rate to 4.1 percent at the end of 2020, down 20 basis points from first-quarter 2020 levels.
However, AT&T has not said how it would pay for the $23.4B they spent to acquire spectrum at the recently completed C-Band auction, other than the $14.7B it raised raised in a loan-credit agreement with Bank of America earlier this year.
Moody’s Investors Service on Wednesday told clients that AT&T’s C-Band spectrum splurge could pressure AT&T’s credit rating, which sits two notches above junk territory. In a brief note Thursday, Moody’s called the DirecTV deal “moderately credit positive” because it would produce cash to help cover the spectrum costs.
Oppenheimer analysts believe that spectrum build-out in new 5G deployments will take at least a year and the resulting revenue won’t show up for a few years. We believe that AT&T will be very hard pressed to fund the spectrum buildout within the next two or three years due to delays in installing hundreds of thousands of small cells and fiber to them for backhaul.
Analyst Craig Moffett had this to say: “At $23.4B, AT&T spent more than would have been expected a month ago, but expectations for their spend had been rising (notwithstanding the fact that they have onlyfinanced half of what they bought, and even that with only short-term debt), so the surprise may not be large there, either. But again, it’s a shock to see the number.”
“AT&T emerges from the auction with leverage of 4.1x EBITDA (assuming all debt financing)……AT&T, in particular, will face enormous pressure to withdraw its hyper-aggressive promotional stance in order to produce enough free cash flow to sustain their dividend – but that is cold comfort for an industry whose ROI will inarguably be even worse than it has been in the past.”
Craig noted that C-Band spectrum will require many more small cells which require permits, time and effort to install. That will delay AT&T’s 5G network expansion using the newly acquired spectrum:
“3.5 GHz spectrum (again, as a rough proxy for C-Band) requires sixteen times as many cell sites as would 2.0 GHz spectrum for the same free space coverage. And because C-Band will have very limited ability to penetrate obstructions (trees, walls and windows, intervening buildings, etc.), real world propagation limitations will likely be even greater than what a free space model would suggest.”
References:
https://www.wsj.com/articles/at-t-to-spin-off-directv-unit-in-deal-with-tpg-11614288845 (paywall)
https://otp.tools.investis.com/clients/us/atnt2/sec/sec-show.aspx?FilingId=14659869&Cik=0000732717&Type=PDF&hasPdf=1 (SEC 8K report on $14.7B loan with BoA)
Equinix and Vodafone to Build Digital Subsea Cable Hub in Genoa, Italy
Equinix and Vodafone have announced plans to build a new subsea cable hub in the northern Italian port of Genoa, to be called GN1.
Under the deal, Vodafone will land the 2Africa cable system at Genoa and use Equinix’s GN1 facility as a strategic interconnection point for the subsea cable system, with a connection on to Milan and the rest of Europe.
The partners said the EUR 1 billion 2Africa cable will be ready for service in 2023, a 37,000 km system circumnavigating the continent of Africa and directly connecting 16 countries in Africa to Europe and the Middle East, with a design capacity of up to 180 Tbps on key segments. To facilitate interconnection, GN1 will have a direct fiber connection to ML5, the soon-to-be opened Equinix flagship data center in Milan.
The newly-announced GN1 hub will be Genoa’s first carrier-neutral data center, offering customers secure colocation and interconnection services, as well as the ability to directly tap into Equinix’s digital ecosystems and colocation facilities in Milan. It will provide a capacity of 150 cabinet equivalents, and colocation space of around 560 square meters.
The combination of 2Africa’s landing in the new Genoa site and the direct connection to Milan means GN1 will offer a new, complementary and diverse alternative option for the Mediterranean region. As Genoa’s first carrier-neutral data center, GN1 will offer customers secure, resilient colocation and interconnection services, as well as the ability to directly leverage Equinix’s digital ecosystems and colocation facilities in Milan. It will provide a capacity of 150 cabinet equivalents, and colocation space of approximately 6,000 square feet (560 square meters).
2Africa is expected to deliver more than the total combined capacity of all subsea cables serving Africa today, with a design capacity of up to 180 Tbps on key segments of the system. This will be vital to help build a digital society ready for services that require a large amount of data transfer, such as cloud computing or video.
The need for robust digital infrastructures can be seen across the world, and Africa is no exception. The continent is experiencing a critical period of digital transformation and development of its digital economy. In the next few years, digital technologies are expected to be a factor in improving African people’s quality of life and driving economic development in the region.
The GSMA predicts that the number of mobile internet users in Africa will continue to grow rapidly, primarily due to the popularization of smartphones and lack of fixed-line infrastructure, which has led to a boom of new services such as mobile payment, instant messaging, online streaming media and short video.
Highlights/Key Facts:
- The 2Africa project includes partners from China Mobile International, Facebook, MTN GlobalConnect, Orange, stc, Telecom Egypt, Vodafone and WIOCC. The cable system will underpin digitization across the African continent by bringing greater capacity, quality and availability of internet connectivity between Africa and the rest of the world.
- Responsibility for landing the 2Africa cable is split between the 2Africa parties depending on location. Vodafone is leading all European landings, along with selected other sites.
- As the home of the interconnected cloud®, Equinix is a natural destination for subsea cable systems and a gateway to new opportunities for system operators and their customers. Equinix hosts over 2,950 cloud and IT service providers on its global platform and can support subsea cable systems in 40 subsea-enabled metros around the world. When subsea cable systems are linked to cloud and content ecosystems on Platform Equinix®, users can access a variety of scalable cloud services almost anywhere they need to be. And because Equinix is carrier-neutral, subsea system operators can offer excess network capacity to customers who otherwise couldn’t as quickly or efficiently reach the markets being served by new subsea architectures.
- GN1 is being built in line with global environmental standards and will contribute to a portfolio of some of the most energy-efficient data centers in the world. Indeed, GN1 is expected to utilize 100% renewable energy. As the world’s digital infrastructure company, Equinix is working to protect, connect and power a more sustainable digital world by proactively addressing its ESG impacts. Equinix recently scored the highest rating on its first response to the DPP’s Committed to Sustainability survey, and joined European cloud infrastructure and data center providers and European trade associations to form the Climate Neutral Data Centre Operator Pact and Self-Regulatory Initiative.
- ML5 will be a new flagship International Business Exchange™ (IBX®) data center in Milan that offers state-of-the-art colocation, as well as a host of advanced interconnection services—including Equinix Fabric™ and Equinix Internet Exchange®—enabling virtual interconnections to some of the largest cloud providers in the world, such as Amazon Web Services, Microsoft Azure, Oracle Cloud Infrastructure and Google Cloud. When opened, ML5 will provide capacity of 500 cabinet equivalents and colocation space of approximately 15,000 square feet (1,400 square meters).
- The Global Interconnection Index (GXI) Volume 4, a market study recently published by Equinix, forecasts that overall interconnection bandwidth—the measure of private connectivity for the transfer of data between organizations—will achieve a 45% compound annual growth rate (CAGR) from 2019 to 2023, globally. The expected growth is driven by digital transformation, and specifically by greater demands from enterprises extending their digital infrastructure from centralized locations to distributed edge locations.
Quotes:
- Nick Gliddon, Director, Vodafone Carrier Services:
“The 2Africa project is vitally important to improving connectivity between Europe, Africa and the Middle East, and will also improve intra-European connectivity. By linking Spain and Portugal directly to Genoa and Milan, the system will avoid fiber bottlenecks that naturally occur between France and Spain, further strengthening Vodafone’s Gigabit networks.” - Emmanuel Becker, Managing Director, Italy, Equinix:
“Italy is an important growth market for Equinix in EMEA, as it’s a strategic interconnection point for the region and beyond. We are working to give our customers improved access to the expanding global subsea cable network, so they have increased opportunities to expand internationally. Thanks also to the opening of our new data center in Milan, ML5, we are creating an interconnected metro area where customers can connect with strategic business partners in Italy and across the world.” - Eugene Bergen Henegouwen, President, EMEA, Equinix:
“I am thrilled we are adding a new metro to our EMEA portfolio. Equinix’s Genoa site provides a great landing hub for subsea cable operators, whilst at the same time boosting the digital ecosystems at our recently announced Milan flagship, ML5. Equinix continues to focus on expanding its position as a global connectivity service provider. Our commitment is always to support the increasing demands we’re seeing from companies globally to accelerate their digital transformation. We’re helping businesses connect to everything they need to succeed, and will continue to do so.” - Marco Bucci, Mayor of Genoa City:
“We are very excited to be the host city for the new subsea hub GN1, that will serve as a landing point for the 2Africa cable in the north of Italy. Genoa is known for the central role it has played in maritime trade for many centuries. Thanks to GN1, the city will become one of the main digital harbors of Europe, and play a key role in global data transfer.”
References:
https://www.telecompaper.com/news/equinix-and-vodafone-announce-genoa-hub-for-subsea-cables–1373724
https://blog.equinix.com/blog/2021/01/15/equinix-submarine-cable-momentum-is-accelerating/
Vodafone-Espana trial: 5G connected drone (UAS) enables Guardia Civil to improve surveillance in rural areas
Vodafone Spain has completed a trial with the Guardia Civil military police force to evaluate the viability of using 5G networks to improve surveillance using remote-controlled drones.
The pilot test consisted of using the 5G network to improve communication of the UAS (unmanned aerial vehicle systems) drone for surveillance tasks in rural areas or areas with difficult access. The drone was remotely-controlled by the Guardia Civil.
The Tarsis fixed-wing unmanned aerial vehicle system of local provider Aertec Solutions coupled with a 5G smartphone for both high-definition and 4k camera communications, as well as flight command management.
Vodafone said its 5G network provided the maximum bandwidth and minimum latency required for the transmission of high-quality images and control signals in real time, allowing specialist pilots to operate the drone remotely from a control center.
In order to carry out teleoperation safely, it was necessary to broadcast high quality images from cameras installed in the UAS and to send remote control actions or reference coordinates by the pilot.
The pilot trial was the latest test in the Andalucia 5G initiative which has been promoted by Spain’s ICT development agency Red.es, which is being developed by Vodafone and Huawei.
This is one of the two projects that Spain’s Government has promoted through the first public call for aid to 5G pilots, resolved in the spring of 2019.
Presented in November 2019 in Seville, it includes 35 use cases that will apply the benefits of 5G technology in the sectors of energy, industry, smart cities, tourism, agriculture, health and dependency, security, emergencies and defense, society and digital economy.
Vodafone said the project’s budget is EUR 25.4 million, including EUR 6.3 million from Red.es. It will cover the provinces of Seville, Jaen, Malaga, Cadiz and Huelva.
References:
https://www.saladeprensa.vodafone.es/c/notas-prensa/np_piloto_5G_dron_Guardia_Civil/
https://www.bbc.com/news/technology-54797917