Ericsson
Orange Spain & Ericsson to build 5G Infrastructure for 3 High-Speed Rail Lines
In a statement, Orange highlighted it had won two of the three lots tendered by the transport infrastructure entity ADIF. It claimed its proposals for the lots received “the highest score” and its bids topped those from Vodafone.
In partnership with Ericsson, which is also supplying kit for Vodafone’s deployment, Orange will provide and maintain 5G infrastructure across the high speed rail corridors.
Announcing the award of its contracts, ADIF said it was part of attempts to “promote the digitisation and efficiency of the railway system” with the entity committing €117.3 million to deployment of 5G on the network and within its assets.
Alongside advantages for passengers, the organisation hailed 5G as a “critical catalyst in the digitisation of the economy in the coming years”.
Within the rail industry, it pointed to use cases including advanced logistics; real-time traffic management; automated vehicles; predictive maintenance; and improved surveillance in stations and on trains.
Orange says it is the first operator to launch 5G+, a network that consumes 90 percent less energy. Some of the notable sustainability initiatives undertaken by Orange include:
- 100% Green Energy Consumption: Since 2014, Orange has exclusively relied on green energy sources to power its operations, reinforcing their dedication to environmental responsibility.
- Device Recycling and Repair Program: Orange has implemented an ambitious program focused on recycling and repairing devices at their points of sale. By extending the lifespan of devices, they actively contribute to reducing electronic waste.
- Eco-Guidelines for Sustainable Practices: Orange has established eco-guidelines to encourage sustainable actions in their day-to-day operations. These guidelines serve as a roadmap, guiding employees in adopting environmentally friendly practices, even in the smallest gestures.
The ongoing efforts of Orange to promote sustainability demonstrate their commitment to mitigating their environmental impact. By integrating green energy, recycling and repair programs, and fostering sustainable practices, Orange is leading by example in its pursuit of a more sustainable future.
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Separately, Orange Belgium has completed its acquisition of a controlling stake in telco operator, VOO SA. The closing of this deal will give Orange Belgium a 75% stake minus 1 share in VOO SA, with the remaining 25% plus one share retained by Nethys.
This transaction values VOO at an enterprise value of €1.8 billion for 100% of the capital. Orange Belgium will finance this transaction through an intra-Group loan.
Xavier Pichon, CEO of Orange Belgium, comments: “For decades, we developed our telecom skills and pioneering spirit to challenge the market, but as from today, we have the industrial power, tech means and commercial scale to accelerate and Lead the Future of the Belgian telco market in the interest of all consumers, employees and society in general.”
References:
Orange Launches 5G+ Network With Reduced Energy Consumption in Spain
Ericsson and MediaTek set new 5G uplink speed record using Uplink Carrier Aggregation
Ericsson and MediaTek have set a new 5G uplink speed record of 440 Mbps in low-band and mid-band spectrum using Uplink Carrier Aggregation. That uplink speed was achieved in an Ericsson lab. The test was performed with Ericsson’s Radio Access Network (RAN) Compute Baseband 6648 and a mobile device using a MediaTek Dimensity 9200 flagship 5G smartphone chipset.
More precisely, the combination used was 50MHz FDD n1 and 100MHz TDD n77. By aggregating these two bands, communications service providers can considerably increase their uplink speeds, resulting in better network performance and user experience. The fast uplink speed brings better, smoother experiences for the likes of video conference users, streamers, and their audience with more frames per second and higher image resolution. The 440 Mbps 5G upload speed achieved in the lab compares to an average of 26.78 Mbps outdoors and 22.98 Mbps indoors, as per a Cellsmart survey.
Sibel Tombaz, Head of Product Line 5G RAN, Ericsson, said: ”Super-fast uplink speeds make a big difference in the user experience. From lag-free live streaming, video conferencing and AR/VR apps, to more immersive gaming and extended reality (XR) technologies. The 440 Mbps upload speed achieved by Ericsson and MediaTek will help make that difference. We are also continuously designing innovative solutions for optimizing 5G networks so our customers can make the best use of their spectrum assets.”
Service providers are seeking innovative ways of boosting capacity while using existing spectrum efficiently to meet growing demands for wireless data and applications. This is where carrier aggregation comes in, optimizing the service provider’s spectrum assets to bring to users better coverage, increased capacity, and higher data speeds.
HC Hwang, General Manager of Wireless Communication System and Partnership at MediaTek, said: “The successful result of combining Ericsson’s state-of-the-art 5G Baseband and MediaTek’s flagship smartphone chip has achieved another 5G industry milestone, and paves the way for superior mobile experiences to benefit users every day.” Uplink speed is becoming more crucial with the expected uptake of
gaming, XR, and video-based apps. For example, as AR devices gain popularity with larger augmentation objects, rendering becomes more demanding. This increases the demand on networks to deliver higher throughput and lower latency.
Uplink speed is becoming more crucial with the expected uptake of gaming, XR, and video-based apps. For example, as AR devices gain popularity with larger augmentation objects, rendering becomes more demanding. This increases the demand on networks to deliver higher throughput and lower latency.
Earlier this year, AT&T boasted that it had completed what was believed to be the first 5G standalone (SA) uplink 2-carrier aggregation data connection in the U.S.
The connection was made at its Redmond, Washington, lab, where they achieved upload speeds of over 120 Mbps with a combination of 850 MHz and 3.7 GHz spectrum.
In May, T-Mobile reported reaching uplink speeds over 200 Mbps in a 5G data call using uplink CA; in that case, they used T-Mobile’s live commercial 5G SA network as opposed to a lab environment. T-Mobile used 2.5 GHz and 1.9 GHz bands.
References:
https://www.fiercewireless.com/tech/ericsson-mediatek-claim-upload-speed-record-440-mbps
CELLSMART: 5G upload speeds are insufficient for industrial/enterprise applications
Cellsmart: 5G download performance improves but upload performance lags
Swisscom, Ericsson and AWS collaborate on 5G SA Core for hybrid clouds
Swiss network operator Swisscom have announced a proof-of-concept (PoC) collaboration with Ericsson 5G SA Core running on AWS. The objective is to explore hybrid cloud use cases with AWS, beginning with 5G core applications. The plan is for more applications to then gradually be added as the trial continues. With each cloud strategy (private, public, hybrid, multi) bringing its own drivers and challenges the idea here seems to be enabling the operator to take advantage of the specific characteristics of both hybrid and public cloud.
The PoC reconfirms Swisscom and Ericsson’s view of the potential hybrid cloud has as a complement to existing private cloud infrastructure. Both Swisscom and Ericsson are on a common journey with AWS to explore how use cases can benefit telecom operators.
The PoC will examine use cases that take advantage of the particular characteristics of hybrid and public cloud. In particular, the flexibility and elasticity it can offer to customers which can mean deployment efficiencies for use cases where capacity is not constantly needed. An example of this could be when maintenance activities are undertaken in Swisscom’s private cloud, or when there are traffic peaks, AWS can be used to offload and complement the private cloud.
Swisscom had already been collaborating with AWS on migrating its 5G infrastructure towards standalone 5G. In addition, it has also used the hyperscaler’s public cloud platform for its IT environments. Telco concerns linger [1.] around the use of public cloud in telecoms infrastructure (especially the core networks) for some operators, hybrid cloud is seemingly gaining momentum as a transitional approach.
Note 1. Telco concerns over public cloud:
- In a recent survey by Telecoms.com more than four in five industry respondents feared security concerns over running telco applications in the public cloud, including 37% who find it hard to make the business case for public cloud as private cloud remains vital in addressing security issues. This also means that any efficiency gains are offset by the IT environment and the network running over two cloud types.
- Many in the industry also fear vendor lock-in and lack of orchestration from public cloud providers. Around a third of industry experts from the same survey find it a compelling reason not to embrace and move workloads to the public cloud unless applications can run on all versions of public cloud and are portable among cloud vendors.
- There’s also a lack of interoperability and interconnectedness with public clouds. The services of different public cloud vendors are indeed not interconnected nor interoperable for the same types of workloads. This concern is one of the drivers to avoid public cloud, according to some network operators.
–>PLEASE SEE THE COMMENT ON THIS TOPIC IN THE BOX BELOW THE ARTICLE.
Quotes:
Mark Düsener, Executive Vice President Mobile Network & Services at Swisscom, says: “By bringing the Ericsson 5G Core onto AWS we will substantially change the way our networks will be built and operated. The elasticity of the cloud in combination with a new magnitude in automatization will support us in delivering even better quality more efficiently over time. In order to shape this new concept, we as Swisscom believe strategic and deep partnerships like the ones we have with Ericsson and AWS are the key for success.”
Monica Zethzon, Head of Solution Area Core Networks, Ericsson says: “5G innovation requires deep collaboration to create the foundations necessary for new and evolving use cases. This Proof-of-Concept project with Swisscom and AWS is about opening up the routes to innovation by using hybrid cloud’s flexible combination of private and public cloud resources. It demonstrates that through partnership, we can deliver a hybrid cloud solution which meets strict telecoms industry requirements and security while making best use of HCP agility and cloud economy of scale.”
Fabio Cerone, General Manager AWS Telco EMEA at AWS, says: “With this move, Swisscom is opening the door to cloud native networks, delivering full automation and elasticity at scale, with the ability to innovate faster and make 5G impactful to their customers. We are committed to working closely with partners, such as Ericsson, to explore new use cases and strategies that best support the needs of customers like Swisscom.”
“How to deploy software in different cloud environments – at a high level, it is hard making that work in practice,” said Per Narvinger, the head of Ericsson’s cloud software and services unit. “You have hyperscalers with their offering and groups trying to standardize and people trying to do it their own way. There needs to be harmonization of what is wanted.”
https://telecoms.com/520337/swisscom-ericson-and-aws-collaborate-on-hybrid-cloud-poc-on-5g-core/
https://telecoms.com/520055/telcos-and-the-public-cloud-drivers-and-challenges/
AWS Telco Network Builder: managed network automation service to deploy, run, and scale telco networks on AWS
Omdia and Ericsson on telco transitioning to cloud native network functions (CNFs) and 5G SA core networks
Ericsson to lay off 8,500 employees as part of cost cutting plan
After warning in January that profit margins at its RAN business would worsen, telecom equipment maker Ericsson will lay off 8,500 employees globally as part of its plan to cut costs, according to a memo sent to employees and seen by Reuters.
“The way headcount reductions will be managed will differ depending on local country practice,” Chief Executive Borje Ekholm wrote in the memo. “In several countries the headcount reductions have already been communicated this week,” he said. “It is our obligation to take this cost out to remain competitive,” Ekholm said in the memo. “Our biggest enemy right now may be complacency.”
While technology companies such as Microsoft, Meta and Alphabet have laid off thousands of employees citing economic conditions, Ericsson’s move would be the largest layoff to hit the telecoms industry.
On Monday, the company, which employs more than 105,000 worldwide, announced plans to cut about 1,400 jobs in Sweden. While Ericsson did not disclose which geography would be most affected, analysts had predicted that North America would likely be most affected and growing markets such as India the least.
The company said in December it would cut costs by 9 billion crowns ($880 million) by the end of 2023 as demand slows.
“Our aim is to manage the process in every country with fairness, respect, professionalism and in line with local labor legislation,” Ericsson said in a statement.
“We are also working on our service delivery, supply, real estate and IT. We have already started to implement and accelerate various initiatives to help us reach” the cost-cutting goal, Ericsson said.
Many telecom companies had beefed up their inventories during the height of the pandemic which is now leading to slowing orders for telecom equipment makers like Ericsson and Nokia.
References:
https://www.reuters.com/business/media-telecom/ericsson-lay-off-8500-employees-memo-2023-02-24/
https://apnews.com/article/technology-stockholm-covid-business-07bda439ac93836817a00d0d54892d0a
Ericsson Mobility Report: 5G monetization depends on network performance
High Tech Layoffs Explained: The End of the Free Money Party
Ericsson Mobility Report: 5G monetization depends on network performance
A special Ericsson Mobility Report – called the Business Review edition – addresses monetization opportunities as they relate to 5G. Flattening revenues have been a challenge for service providers in all parts of the world, often impacting network investment decisions as part of their business growth strategies, known as ‘monetization’ in the industry.
The report highlights a positive revenue growth trend since the beginning of 2020 in the top 20* 5G markets – accounting for about 85 percent of all 5G subscriptions globally – that correlates with increasing 5G subscription penetration in these markets.
The report finds:
- Tiered pricing models are key for service providers, both for effectively addressing the individual needs of each customer and for continuing to drive long-term revenue growth.
- The top 20 5G markets have seen a significant network performance boost following the introduction of 5G services.
- After a period of slow or no growth, wireless service revenue curves are again pointing upwards in these leading markets. This correlate with 5G subscription penetration growth.
- In the top 20 5G markets, the average downlink throughput has increased by 4.3 times over the past 5 years. This is 32 percent more than other markets on a global level, showing the positive impact 5G has had on network performance and user experience. The most significant network performance improvement in the top 20 5G markets was in 2020, following the introduction of 5G NSA network services.
- In the top 20 5G markets, the median downlink throughput of 5G is 5.8 times higher than the throughput of 4G (187 Mbps vs. 32 Mbps) in Q3 2022. This performance boost is what service providers could offer to consumers as an immediate benefit of upgrading to 5G.
Fredrik Jejdling, Executive Vice President and Head of Networks, Ericsson, says: “Meeting our customers’ challenges is at the heart of our R&D efforts and every resulting product we develop. The link between 5G uptake and revenue growth in the top 20 5G markets underlines that not only is 5G a game changer, but that early adopters benefit. What is particularly encouraging about this is that while 5G is still at a relatively early phase, it is growing fast with proven early use cases and a clear path to medium and long-term use cases.”
As expected, Enhanced Mobile Broadband (eMBB) is the main early use case for 5G, driven by increasing geographical coverage and differentiated offerings. More than one billion 5G subscriptions are currently active across some 230 live commercial networks globally. 5G eMBB offers the fastest revenue opportunities for 5G, as it is an extension of service providers’ existing business, relying on the same business models and processes. Even in the top 20 5G markets, about 80 percent of consumers have yet to move to 5G subscriptions – one pointer to the potential for revenue growth.
As highlighted in the November 2022 Ericsson Mobility Report, Fixed Wireless Access (FWA) is the second biggest early 5G use case, particularly in regions with unserved or underserved broadband markets. FWA offers attractive revenue growth potential for CSPs as it largely utilizes mobile broadband assets. FWA connections are forecast to top 300 million within six years.
Beyond consumer subscribers, there are growing opportunities in enterprise and public sector applications across the world. Ericsson sas that 5G enables significant value for enterprises, with private 5G networks and wireless wide area networks being deployed for enterprise and industrial use.
Upgrading existing 4G sites to 5G has the potential to realize increases of 10 times in capacity and reduce energy consumption by more than 30 percent, offering the possibility of growing revenue and lowering costs, while addressing sustainability.
Jejdling adds: “Revenue growth and sustainability are recurring themes in my discussions with customers. In this special Ericsson Mobility Report edition, we have explored how service providers are tapping 5G opportunities. We see initial signs of revenue growth in advanced 5G markets with extensive coverage build-out and differentiated service offerings. An equally crucial aspect of 5G is that it brings cost advantages and helps service providers handle the data growth needed to drive future revenue. This can make 5G the growth catalyst that the market has been waiting for.”
Read the full Ericsson Mobility Report Business Review Edition report here.
*Note: The markets categorized as the Top 20 5G markets in the report are: Australia, Bahrain, China, Denmark, Finland, Hong Kong, Ireland, Japan, Kuwait, Monaco, Norway, Qatar, Saudi Arabia, Singapore, South Korea, Switzerland, Taiwan, the UAE, the UK and the US.
They were selected on the basis of 5G subscription penetration. These markets represent 85 percent of all 5G subscriptions globally – with each market having 5G penetration above 15 percent.
Related links:
Ericsson Mobility Report site
Ericsson 5G
Ericsson 4G and 5G Fixed Wireless Access
Breaking the energy curve
5G the next wave – what does consumers want
Ericsson & Mobily enhance network performance through Artificial Intelligence (AI)
Ericsson has developed an AI system for automated network management which has now been included in Saudi Arabia operator Mobily’s wireless network. The companies have successfully deployed the ‘Ericsson AI-based network solution’ into Mobily’s network in Saudi Arabia in order to enable some ‘enhanced and smart end-user experiences.’
This AI system will provide 5G network diagnostics, root cause analysis and recommendations for ‘superior user experiences.’ The network diagnostics capabilities within the cognitive software suite provides ‘proactive network optimization’, allowing the operator to identify and resolve network anomalies and providing reliable connectivity, we are told.
Ericsson’s AI-based network solution delivers comprehensive Machine Learning (ML) based 5G network diagnostics, root cause analysis and recommendations for superior user experiences. The smart, automated network diagnostics capabilities of Ericsson’s cognitive software suite results in proactive network optimization, supporting Mobily, the leading digital partner of the international technical conference LEAP 23, in identifying and resolving network anomalies and constantly providing reliable connectivity.
Ericsson is so excited by the product in fact that it says it ‘redefines the very nature of network operations,’ alongside the presence of Big Data and ‘ever-expanding and more accessible computing power.’
“From people in remote locations to large gatherings, individuals often expect uninterrupted and quality connectivity,” said Alaa Malki, Chief Technology Officer from Mobily. “Ericsson’s Artificial Intelligence (AI)-based solution enables our customers to enjoy superior and uninterrupted 5G connectivity to stay connected with loved ones or to document key moments anytime, anywhere. Our partnership with Ericsson has once more reinforced our commitment to Unlock Possibilities during times that matter most, and we look forward to carrying our mission forward. I want to thank Ericsson for its support which allowed us to use this data-driven concept to make all kinds of changes and optimizations within short timeframes.”
Ekow Nelson, Vice President at Ericsson Middle East and Africa said: “For numerous years, our partnership with Mobily has provided customers with assured and superior connectivity to stream live experiences and benefit from a multitude of services even in the most challenging environments. Our success relied on Ericsson’s Artificial Intelligence-based network solution built with Machine Learning models that learn from the live network using the multiple sources of data to deliver near real-time improvements, thus avoiding interruptions during critical and peak times.”
How AI interacts and disrupts different industries looks likely to be an increasingly prominent issue in the years to come, for all sorts of reasons. In an interview with Telecoms.com recently, Beerud Sheth – CEO of conversational AI firm Gupshup said, “Like almost any industry, telcos will also have to figure out how they see this disruption… it creates opportunities and threats. And I think you have to lean into the opportunities, and maybe mitigate the threats a little bit. It changes a lot of things, it changes consumer expectations, it changes what people expect and what they want to do and can do, and they have to keep pace with all of it. So, there’s a lot of work for telco executives.”
References:
Ericsson, Mobily successfully enhance network performance through Artificial Intelligence
Ericsson warns profit margins at RAN business set to worsen
Ericsson, Intel and Microsoft demo 5G network slicing on a Windows laptop in Sweden
Ericsson, Intel and Microsoft successfully demonstrating end-to-end 5G standalone (SA) network slicing capabilities on a Windows laptop at Ericsson’s Lab in Sweden. This pioneering trial demonstrates the applicability of the technology on devices beyond smartphones, paving the way for new business/enterprise opportunities and for consumer use cases such as mobile gaming and collaboration applications for 5G cellular-connected laptops.
The trial used User Equipment Route Selection Policy (URSP), which enables devices to automatically select between different slices according to which application they are using. It also used Ericsson’s Dynamic Network Slicing Selection, Ericsson’s dual-mode 5G Core, and Ericsson’s RAN Slicing capabilities to ‘secure end-user service differentiation.’
Network slicing has long been seen as vital to capturing the value that a 5G network can provide for communications service providers (CSPs) and enterprises. The market for network slicing alone in the enterprise segment is projected at USD 300 billion by 2025, according to the GSMA. By demonstrating a single Windows 11 device can make use of multiple slices, which are used according to the on-device usage profiles and network policies defined at the CSP level, the partners show the flexibility and range of potential use cases available using this technology.
This trial illustrates the opportunities for 5G monetization beyond smartphone devices and opens the door to a wider 5G device ecosystem, allowing CSPs and other members of the telecoms and IT world to expand their horizons when considering opportunities to generate profitable use cases for 5G. Laptop type devices, in particular, are vital to enterprise productivity. The inclusion of Windows 11 laptops in the ranks of devices that can be used for commercializing 5G network slicing is a sign of the ecosystem maturing. Network slicing capabilities will benefit consumer and enterprise segments by defining specific Service Level Agreement per slice for existing and emerging Windows applications and use cases, such as real-time enterprise applications like Microsoft Teams and Office365, game/media streaming, and emerging AI and augmented reality/extended reality (AR/XR) applications.
Sibel Tombaz, Head of Product Line 5G RAN at Ericsson, said: “Expanding the range of devices for network slicing to include laptops will allow new business segments to create a variety of use cases for consumer and enterprises. We have shown, together with Intel and Microsoft, how ecosystem collaboration can open new possibilities. We will continue to strengthen Ericsson’s network slicing capabilities and work with industry partners to enable more applications on several devices, spreading the benefits of 5G in the consumer and enterprise segments.”
Ian LeGrow, Microsoft Corporate Vice-President of Core OS Innovation said: “We are thrilled to showcase our cutting-edge technology and its ability to deliver fast, dependable and secure 5G connectivity on Windows 11. Partnering with Intel and Ericsson only further solidifies our commitment to innovation and openness in our platform.”
This ground-breaking network slicing demo will be showcased jointly with Intel and Microsoft in the Ericsson Hall during MWC Barcelona 2023 from February 27 to March 2.
Andrew Wooden of telecoms.com wrote:
“There are so many tests and trials going on, and while technically seem to signal a bit of incremental progress each time, it can be easy to lose the context of what is supposed to be offered while digging around in the weeds of experimental telecoms architecture. That said if trials like this can keep the emphasis on how they provide some extra money-making opportunities for those in the business of flogging 5G, and some genuine benefits for the rest of us, perhaps it will gain some traction when they show it off in Barcelona.”
Source: Viavi Solutions
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References:
https://www.ericsson.com/en/news/2023/2/ericsson-intel-and-microsoft-show-network-slicing-capabilities-on-a-laptop-for-consumer-and-enterprise-applications
https://www.ericsson.com/en/network-slicing#dynamicnetworksliceselection
https://www.ericsson.com/en/core-network/5g-core
https://telecoms.com/519733/ericsson-intel-and-microsoft-slice-up-a-network-and-feed-it-to-a-laptop/
Ericsson and Nokia demonstrate 5G Network Slicing on Google Pixel 6 Pro phones running Android 13 mobile OS
Samsung and KDDI complete SLA network slicing field trial on 5G SA network in Japan
5G Network Slicing Tutorial + Ericsson releases 5G RAN slicing software
https://www.viavisolutions.com/en-us/5g-network-slicing
Network Slicing and 5G: Why it’s important, ITU-T SG 13 work, related IEEE ComSoc paper abstracts/overviews
Ericsson warns profit margins at RAN business set to worsen
Ericsson on Friday reported lower than expected 4th-quarter core earnings as sales of 5G equipment slowed in high-margin markets such as the United States, sending the Swedish company’s shares to their lowest since 2018.
Ericsson is the latest tech company to show the impact of customers tightening belts amid concerns about a global economic slowdown. Others have been cutting staff, including Microsoft (10,000) and Google parent Alphabet (12,000) which have announced thousands of job cuts this week while Amazon had announce 10,000 layoffs several weeks ago.
Ericsson has already announced plans to cut costs by 9 billion crowns ($880 million) by the end of 2023.
Chief Financial Officer Carl Mellander told Reuters that would involve reducing consultants, real estate and also employee headcount. “It’s different from geography to geography, some are starting now, and we’ll take it unit by unit, considering the labour laws of different countries,” Mellander said, referring to the cuts.
Mellander declined to say if the job cuts would be similar to 2017 when Ericsson laid off thousands of employees and focused on research to return the company to profitability.
Last week, the company said it would book a 2.3 billion Swedish crown ($220 million) provision for an expected fine from U.S. authorities for breach of a settlement reached in 2019.
Ericsson’s net sales rose in the fourth quarter, but margins, net income and core earnings fell. Its gross margin for the fourth quarter of 2022 fell to 41.4% from 43.2%.
Ericsson said it expected a fall in margin in its Networks business to persist through the first half of 2023, but the effect of cost savings to emerge in the second quarter.
JPMorgan analysts said given the fall in margins and higher investments, they would expect 2023 earnings to decline by a double digit percentage.
Inge Heydorn, partner and fund manager at investment firm GP Bullhound, said: “The fourth quarter shows once again that the U.S. has a big impact on Ericsson’s margins.”
With U.S. customers such as Verizon tightening their purse strings, Ericsson is hoping newer markets such as India can provide some growth. Its South East Asia, Oceania and India market was the only one to grow in the quarter, rising 21%, accounting for 13% of the company’s business.
The company’s fourth-quarter adjusted operating earnings, excluding restructuring charges, fell to 9.3 billion Swedish crowns from 12.8 billion a year earlier. That was short of the 11.22 billion expected by analysts, Refinitiv Eikon data showed. Net sales rose 21% to 86 billion crowns, beating estimates of 84.2 billion.
A settlement of a patent deal with Apple (AAPL.O) last month resulted in revenue of 6 billion crowns, but Ericsson also took 4 billion crowns in charges, including a provision for a potential fine from U.S. regulators and divestments.
However, there was some good news.
- Ericsson said it expects significant patent revenue growth over the coming 18-24 months.
- Ericsson, outside China, remains the company to beat in 5G. Its share of the market for radio access networks (RANs) appears to have increased several years in a row – from 33% in 2017 to 39% now.
- Ericsson is healthily profitable, which could not be said when CEO Ekholm took charge in 2017.
- Boosted by recent takeover activity and a major licensing deal with Apple, its headline sales for the final quarter of 2022 were up 21%, to 86 billion Swedish kronor (US$8.4 billion), compared with the same period a year before.
However, Ericsson has experienced one of its biggest profit slumps since the first half of Ekholm’s tenure. Hurt by higher costs and SEK4 billion ($390 million) worth of one-off charges – relating to US fines, write-downs and divestiture – its net income dropped by 39%, to SEK6.2 billion ($600 billion). Worse, all the various profit margins thinned, with Ericsson’s closely monitored EBIT (earnings before interest and tax) margin shrinking to just 9.1%, from 16.1% a year earlier. And the outlook is frosty.
The mini-boom in 5G spending appears to be over – temporarily, at least. Last year, the market for RAN products, where Ericsson now generates about 70% of its revenues, grew by around 5%, according to data from Dell’Oro, a market research firm that Ericsson uses. This year, RAN market sales are expected to fall by 1%. And in North America, responsible for nearly 30% of Ericsson’s overall revenues, Dell’Oro predicts they will drop by a worrying 7%.
After investing heavily in network rollouts during the last couple of years, many operators are cutting their expenditure amid signs of an economic downturn, and reducing the equipment stockpiles they built up when supplies were tight. “We expect operators to adjust inventory levels as the supply situation eases and we plan for these trends to continue during the first half of 2023,” said Ekholm on Ericsson’s earnings call today.
“The first half is really where we’ll see the sizeable inventory adjustments,” said Ekholm, answering questions asked by analysts. “Operators can sweat assets for a couple of quarters but it cannot be done much more [than that] because of the traffic growth underneath. That is the way to model it.” Ericsson’s expectation is that total mobile data traffic worldwide will grow by a factor of five between 2022 and 2028.
Given the market slowdown, turbulence of the last year and seemingly endless difficulties at smaller units, it is easy to forget that Ericsson remains a solid and successful business. But it has become more reliant on RAN sales under Ekholm – generating more than 70% of its revenues in that market last year, compared with just 47% in 2016. Ekholm clearly restored Ericsson’s reputation as a RAN provider. Amid the slowdown in that sector (zero growth forecast by Dell’Oro through 2027), his big challenge now is to prove it can thrive elsewhere.
Andrew Gardiner, analyst at Citi, said the announcements demonstrated the “significant challenges” the company faced this year. “We view Ericsson’s outlook as one of fundamentals deteriorating in the next quarter or two, as it aims to improve in the second half and beyond,” he added.
References:
https://www.reuters.com/technology/ericsson-quarterly-earnings-miss-expectations-2023-01-20/
https://www.ft.com/content/dd5cb329-f5bd-4b78-bde1-ca7510daaa7a
Ericsson expects RAN market to be flat with 5G build-out still in its early days; U.S. cellular industry growth to slow in 2023
Ericsson is planning for a flat RAN market and is structuring its cost base and operations accordingly. Underlying the flat market is a technology shift to 5G from earlier generation. 5G build-out is still in its early days with only about 20% of all base station sites outside China installed with 5G mid-band. Because 5G is still in its early days, vendors like Ericsson and Nokia are seeing lower margins. Therefore, they are relying more heavily on patent royalties to boost profits. Because 5G is still in its early days, vendors like Ericsson and Nokia are seeing lower margins. Therefore, they are relying more heavily on patent royalties to boost profits.
Given the rapid increase in network traffic levels, operators’ investment in performance and capacity is expected to remain robust. The 5G RAN market is expected to grow by over 11% per annum over the next three years, with potential further upside from areas such as Fixed Wireless Access, Enterprise connectivity, XR and Mission Critical Services (which require URLLC which meets performance requirements in ITU M.2410).
In Networks, Ericsson expects to expand its global footprint and enhance gross income through continued investments in technology for performance and cost leadership and, in addition, improve productivity and capital efficiency across the supply chain. In particular the Segment will continue investing in enhanced portfolio energy performance, enabled by Ericsson Silicon and innovating next-generation open architecture, such as Cloud RAN – key areas of strategic importance for its operator customers. Cloud RAN also offers potential in the enterprise segment.
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Separately, Morgan Stanley analysts forecast that the U.S. wireless industry growth will slow in 2023.
“Carriers could move to cut pricing in order to maintain their subscriber bases,” the Morgan Stanley analysts wrote in a report to investors issued Thursday. That could reduce the operators’ ability to make money, they noted. “A continued adoption of premium plans could also support wireless service revenue growth,” they added.
Morgan Stanley analysts expect the U.S. wireless industry – including Verizon, AT&T, T-Mobile, Dish Network and cable companies like Comcast and Charter Communications – to collectively add 8.7 million new postpaid phone customers during 2023. That’s down only slightly from 8.9 million during 2022 and just below the record 10 million that providers collectively added over the course of 2021.
“We see the biggest slowdown in 2023 adds at AT&T, while Verizon could grow adds modestly yoy [year over year] off a low base, and T-Mobile can do slightly better given this year saw the impact of the Sprint network shutdown,” the Morgan Stanley analysts wrote. “We will be watching the growing deployment of eSIM technology to see if it opens the door to higher switching activity, while it should also help carriers lower costs through an easier activation process.”
References:
https://www.prnewswire.com/news-releases/ericsson-capital-markets-day-2022-301704231.html
https://telecoms.com/519003/ericsson-expects-ran-market-growth-to-be-flat-for-years/
Omdia and Ericsson on telco transitioning to cloud native network functions (CNFs) and 5G SA core networks
Introduction:
Telco cloud has evolved from the much hyped (but commercially failed) NFV/Virtual Network Functions or VNFs and classical SDN architectures, to today’s more robust platforms for managing virtualized and cloud-native network functions that are tailored to the needs of telecom network workloads. This shift is bringing many new participants to the rapidly evolving telco cloud [1.] landscape.
Note 1. In this instance, “telco cloud” means running telco network functions, including 5G SA Core network on a public, private, or hybrid cloud platform. It does NOT imply that telcos are going to be cloud service providers (CSPs) and compete with Amazon AWS, Microsoft Azure, Google Cloud, Oracle Cloud, IBM, Alibaba and other established CSPs. Telcos gave up on that years ago and sold most of their own data centers which they intended to make cloud resident.
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In its recent Telco Cloud Evolution Survey 2022, Omdia (owned by Informa) found that both public and private cloud technology specialists are shaping this evolution. In July 2022, Omdia surveyed 49 senior operations and IT decision makers among telecom operator. Their report reveals their top-of-mind priorities, optimism, and strategies for migrating network workloads to private and public cloud.
Transitioning from VNFs to CNFs:
The existing implementations of telco cloud mostly take the virtualization technologies used in datacenter environments and apply them to telco networks. Because telcos always demand “telco-grade” network infrastructure, this virtualization of network functions is supported through a standard reference architecture for management and network orchestration (MANO) defined by ETSI. The traditional framework was defined for virtual machines (VMs) and network functions which were to be packaged as software equivalents (called network appliances) to run as instances of VMs. Therefore, a network function can be visualized as a vertically integrated stack consisting of proprietary virtualization infrastructure management (often based on OpenStack) and software packages for network functions delivered as monolithic applications on top. No one likes to admit, but the reality is that NFV has been a colossal commercial failure.
The VNFs were “lift & shift” so were hard to configure, update, test, and scale. Despite AT&T’s much publicized work, VNFs did not help telcos to completely decouple applications from specific hardware requirements. The presence of highly specific infrastructure components makes resource pooling quite difficult. In essence, the efficiencies telcos expected from virtualization have not yet been delivered.
The move to cloud native network functions (CNFs) aims to solve this problem. The softwardized network functions are delivered as modern software applications that adhere to cloud native principles. What this means is applications are designed independent of the underlying hardware and platforms. Secondly, each functionality within an application is delivered as a separate microservice that can be patched independently. Kubernetes manages the deployment, scaling, and operations of these microservices that are hosted in containers.
5G Core leads telcos’ network workload containerization efforts:
The benefits of cloud-native are driving telcos to implement network functions as containerized workloads. This has been realized in cloud native 5G SA core networks (5G Core), the architecture of which is specified in 3GPP Release 16. A key finding from the Telco Cloud Evolution Survey 2022, was that over 60% of the survey respondents picked 5G core to be run as containerized workloads. The vendor ecosystem is maturing fast to support the expectations of telecom operators. Most leading network equipment providers (NEPs) have built 5G core as cloud-native applications.
Which network functions do/will you require to be packaged in containers? (Select all that apply):
This overwhelming response from the Omnia survey respondents is indicative of their growing interest in hosting network functions in cloud environments. However, there remain several important issues and questions telcos need to think about which we now examine:
The most challenging and frequent question is whether telcos should run 5G core functions and workloads in public cloud (Dish Network and AT&T) or in their own private cloud infrastructure (T-Mobile)? The choice is influenced by multiple factors including understanding the total cost of running network functions in public vs private cloud, complying with data regulatory requirements, resilience and scalability of infrastructure, maturity of cloud platforms and tools, as well as ease of management and orchestration of resources across distributed environments.
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Ericsson says the adoption of cloud-native technology and the new 5G SA Core network architecture will impact six strategic domains of a telco network, each of which must be addressed and resolved during the telco’s cloud native transformation journey: Cloud infrastructure, 5G Core, 5G voice, automation and orchestration, operations and life cycle management, and security.
In the latest version of Ericsson’s cloud-native 5G Core network guide (published December 6, 2022), the vendor has identified five key insights for service providers transitioning to a cloud native 5G SA core network:
- Cloud-native transformation is a catalyst for business transformation. Leading service providers make it clear they view the transformation to cloud-native as a driver for the modernization of the rest of their business. The company’s ability to bring new products and solutions to market faster should be regarded as being of equal importance to the network investment.
- Clear strategy and planning for cloud-native transformation is paramount. Each individual service provider’s cloud-native transformation journey is different and should be planned accordingly. The common theme is that the complexity of transforming at this scale needs to be recognized, and must not be underestimated. For maximum short-and-long-term impact tailored, effective migration strategies need to be in place in advance. This ensures that investment and execution in this area forms a valuable element of an overall transformation strategy and plan.
- Frontrunners will establish first-mover advantage. Time should be a key factor in driving the plans and strategies for change. Those who start this journey early will be leading the field when they’re able to deploy new functionalities and services. A common frontrunner approach is to start with a greenfield 5G Core deployment to try out ideas and concepts without disrupting the existing network. Additionally, evolving the network will be a dynamic process, and it is crucial to bring application developers and solution vendors into the ecosystem as early as possible to start seeing faster, smoother innovation.
- Major potential for architecture simplifications. The standardization of 5G Core has been based on architecture and learnings from IT. The telecom stack should be simplified by incorporating cloud native principles into it – for example separating the lifecycle management of the network functions from that of the underlying Kubernetes infrastructure. While any transformation needs to balance both new and legacy technologies, there are clear opportunities to simplify the network and operations further by smart investment decisions in three major areas. These are: simplified core application architecture (through dual-mode 5G Core architecture); simplified cloud-native infrastructure stack (through Kubernetes over bare-metal cloud infrastructure architecture); and Automation stack.
- Readiness to automate, operate and lifecycle manage the new platform must be accelerated. Processes requiring manual intervention will not be sufficient for the levels of service expected of cloud-native 5G Core. Network automation and continuous integration and deployment (CI/CD) of software will be crucial to launch services with agility or to add new networks capabilities in line with advancing business needs. Ericsson’s customer project experience repeatedly shows us another important aspect of this area of change, telling us that the evolution to cloud-native is more than a knowledge jump or a technological upgrade – it is also a mindset change. The best platform components will not deliver their full potential if teams are not ready to use them.
Monica Zethzon, Head of Solution Area Core Networks, Ericsson said: “The time is now. Service providers need to get ready for the cloud-native transformation that will enable them to reach the full potential of 5G and drive innovation, shaping the future of industries and society. We are proud to be at the forefront of this transformation together with our leading 5G service providers partners. With this guide series we want to share our knowledge and experiences with every service provider in the world to help them preparing for their successful journeys into 5G.”
Ericsson concludes, “The real winners of the 5G era will be the service providers who can transform their core networks to take full advantage of what 5G Standalone (SA) and cloud-native technologies can offer.”
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Omdia says another big challenge telcos need to manage is the fragmentation in cloud-native tools and approaches adopted by various technology providers. Again, this is nothing new as telcos have faced and lived through similar situations while evolving to the NFV era. However, the scale and complexity are much bigger as network functions will be distributed, multi-vendor, and deployed across multiple clouds. The need for addressing these gaps by adopting clearly defined specifications (there are no standards for cloud native 5G core) and open-source projects is of utmost importance.
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References:
Overcoming the challenges telcos face on their journey to containerized network functions
https://omdia.tech.informa.com/OM023495/Telco-Cloud-Evolution-Survey–2022
https://www.ericsson.com/en/news/2022/10/ericsson-publishes-the-cloud-native
https://www.t-mobile.com/news/network/t-mobile-lights-up-standalone-ultra-capacity-5g-nationwide