Nokia and Orange announced the completion of a network trial using the Nokia PSE-Vs, its fifth generation super coherent optics. With this field trial, Orange has successfully validated a planned upgrade of its long-haul backbone networks to support new high-bandwidth 400 Gb/sec services, and the ability to scale fiber capacity up to 600Gb/sec. This represents an increase in spectral efficiency by 50% compared to prior technologies on its long distance optical network.
The trial was performed in real-world conditions using Nokia PSE-Vs super coherent optics in production-ready optical transport hardware, just 16 months after the lab prototype trial done on Orange’s live network. Orange and Nokia demonstrated error-free performance at a data rate of 600Gb/sec over a 914 km network between Paris and Biarritz, under challenging live network conditions. The fiber network consisted of 13 spans of Orange’s existing network, through multiple cascaded reconfigurable optical add/drop multiplexers (ROADM), using 100GHz WDM spectrum channels.
Jean-Luc Vuillemin, Vice President of International Networks and Services at Orange, said: “With the booming market bandwidth requirement and need for scalability and flexibility, it is important that Orange continues to support an ever-greater network scale and new high-bandwidth services across our terrestrial and subsea global footprint.
Validating super coherent optics with Nokia represents an important enabler for future-proof networks which will bring spectral efficiency and operational deployment flexibility to our customer solutions. Furthermore this technology will allow for power savings by nearly 50%, which is key to our objective of developing greener networks for our customers. ”
James Watt, Head of Optical Networks Division, Nokia, said: “We are delighted to work with Orange in continued support of their network upgrade plans. With the introduction of the PSE-Vs super coherent capabilities across our entire 1830 portfolio, Nokia enables spectrally-efficient transport at 600Gb/sec over real-world long haul networks, and 400Gbps services over ultra long haul networks spanning multiple 1000’s of kilometers.”
The Nokia PSE-V
The Nokia PSE-V is the industry’s most advanced family of digital coherent optics (DCO), powering the next generation of Nokia high-performance, high-capacity transponders, packet-optical switches, disaggregated compact modular and subsea terminal platforms. The PSE-V Super Coherent DSP (PSE-Vs) implements the industry’s only 2nd generation probabilistic constellation shaping (PCS) with continuous baud rate adjustment, and supports higher wavelength capacities over longer distances – including support for 400G over any distance – over spectrally efficient 100GHz WDM channels while further reducing network costs and power consumption per bit.
Earlier this week, Nokia and Bell Canada announced the first successful test of 25G PON fiber broadband technology in North America at Bell’s Advanced Technical Lab in Montréal, Québec.
The trial validates that current GPON and XGS-PON broadband technology and future 25G PON can work seamlessly together on the same fiber hardware, which is being deployed throughout the network today. 25G PON delivers huge symmetrical bandwidth capacity that will support new use cases such as premium enterprise service and 5G transport. Nokia’s 25G PON solution utilizes the world’s first implementation of 25G PON technology and includes Lightspan and ISAM access nodes, 25G/10G optical cards and fiber modems.
For the past decade, Bell has been rolling out fiber Internet service to homes and businesses across the country, a key component in the company’s focus on connecting Canadians in urban and rural areas alike with next-generation broadband networks. With this successful trial, Bell can be confident that its network will absorb the increased capacity of future technologies and connect Canadians for generations to come.
Stephen Howe, EVP & Chief Technology Officer, Bell, said:
“As part of Bell’s purpose to advance how Canadians connect with each other and the world, we embrace next-generation technologies such as 25G PON to ensure we remain at the forefront of broadband innovation. Our successful work with Nokia to deliver the first 25G PON trial in North America will help ensure we maximize the Bell fiber advantage for our customers in the years to come.”
Jeffrey Maddox, President of Nokia Canada, said: “Nokia innovations powered the fiber networks and the connectivity lifeline that carried Canadian homes and businesses through the pandemic. 25G PON innovations will drive the next generation of advances in our connected home experience.”
Bell and Nokia have closely collaborated over the years on many industry breakthroughs, such as the first Canadian trial of 5G mobile technology in 2016. Bell continues to work with Nokia to build and expand its 5G network across Canada.
Nokia today announced the launch of FP5, its fifth generation of high-performance IP routing silicon. As the new heart of Nokia’s IP service routing platforms, FP5 will enable service providers to address today’s unrelenting requirements to efficiently scale network capacity, enable new higher speed IP services, and provide unmatched protection against escalating network security threats. Building upon four generations of industry-leading network processors, Nokia is raising the bar by adding support for high density 800GE routing interfaces, a 75% reduction in power consumption and new embedded line rate, flow-based encryption capabilities. Nokia FP5-based platforms will be available starting in the first half of 2022.
When Nokia unveiled the FP4 platform four years ago it did so amid great fanfare, positioning its in-house silicon as a major advantage over its rivals. In the intervening time Nokia has made some major strategic miscalculations on its proprietary chips, especially for 5G, so this latest launch has been much more muted. However, the FP5’s decrease in power consumption is impressive.
According to an interview in Light Reading, the power consumption reduction is partly a product of more a advanced semiconductor manufacturing process and partly incorporating more stuff on a single piece of silicon, thus reducing the need for interconnects. BT has long been a fan of Nokia routing silicon and is in at the start of this latest effort.
- Nokia FP5 network processing silicon delivers a generational leap in IP network capacity and power efficiency while introducing new capabilities for protecting network traffic from security threats
- FP5 is the industry’s first high performance routing silicon delivering integrated line rate encryption for L2, L2.5 and L3 network services at speeds up to 1.6Tbps
- Nokia’s fully programmable network processor is the first to bring 800GE routing interfaces for service provider applications to market while retaining the agility to adapt to new applications
- FP5 sets a new benchmark for sustainability in IP routing with a 75% reduction in power consumption over previous generations
As cloud architectures, 5G and Industry 4.0 continue to drive network transformation, service providers require mission critical IP networks to be increasingly secure, agile and sustainable. IP networks must provide guaranteed high performance and integrity in the face of growing threats from network-level attacks and security breaches. They must also be able to adapt to address unforeseen changes and to support service evolution over the lifespan of the network. In addition, IP networking equipment must become increasingly power efficient to minimize impact on the environment.
With the introduction of Nokia’s fifth generation FP5 network processing silicon, Nokia says it brings a new suite of IP routing solutions to market to help service providers transform mission critical IP networks to address these new and evolving requirements.
Nokia has long been at the forefront of providing an embedded approach to IP network security. With FP4, the company transformed volumetric DDoS defense with router-based detection and mitigation. FP5 brings an additional layer of network protection with the introduction of ‘ANYsec’ – a new line rate, flow-based encryption capability integrated directly into the chipset. ANYsec supports the delivery of secure IP services including MPLS and segment routing, on-demand and at scale without impacting performance or power efficiency. Service providers can now ensure the integrity and confidentiality of all data flowing through their networks.
With FP5, Nokia brings a generational leap in router network capacity to market. Nokia service router platforms are the first to support high-density 800GE and 1.6 Tb/s clear channel routing interfaces for applications including mobile transport, IP core, peering, BNG and provider edge. New FP5-based line cards will support 14.4 Tb/s (19.2 Tb/s with Nokia’s intelligent aggregation capability.) A new series of fixed form factor 7750 Service Router-1 platforms enable the benefits of FP5 to also be realized in smaller network locations.
Nokia’s FP5 network processors drive down power consumption per bit by 75%. As FP5 is backwards compatible with FP4 and fully integrated into the latest versions of Nokia’s Service Router Operating System (SR OS), all existing features are supported from day one on the new hardware. Through this aligned hardware and software evolution strategy, Nokia delivers unmatched and sustainable investment protection to its customers.
As a fully programmable network processor, FP5 enables the agility required to evolve the network as standards and applications change. Its deterministic performance combined with rich telemetry insight ensure network operators can drive a maintainable and serviceable IP network both today and into the future.
Neil McRae, Managing Director and Chief Architect, BT, said: “BT has a long-standing relationship with Nokia, and we are pleased to see that with FP5, Nokia continues to innovate to ensure IP networks have the scale, flexibility and features to help us stay ahead of escalating demand from our residential, mobile and business customers. In particular, we are very happy to see the focus on power optimization as we grow our network, with both BT and Nokia committing to significant reduction in carbon footprint. In the past 18 months, our lives have been turned upside down, and our reliance on networks has been dramatically increased and reliability for customers is crucially important. With security being ever more important for our customers, seeing Nokia’s approach to building more security features into the platform is fantastic.”
Hiroyuki Oto, Senior Vice President and General Manager of Core Network Development Department, NTT DOCOMO, INC., said: “Our network needs to continue to evolve to meet the demands from our consumers, communities, and businesses. With Nokia’s latest generation of silicon innovation and their careful attention to ensuring investment protection with the flexibility to adapt to new requirements, we believe Nokia is delivering the right foundation to ensure IP networks can efficiently scale and transform to stay ahead of ever shifting market demands.”
Christian Gacon, Vice President, Broadband Networks, Orange France, said: “We have had a long relationship with Nokia from the very first silicon processor release. As our network continues to evolve to meet the demands of our customers, innovations such as Nokia’s FP5 silicon will enable us to balance capacity, maintainability and security to deliver the best customer experience. Introducing this exciting innovation into existing platforms will ensure that we can gracefully evolve our networks as we look to manage both planned and unexpected demands in a sustainable way.”
Ray Mota, CEO and Principal Analyst, ACG Research, said: “Nokia does it again and shows its understanding and commitment to service providers, which has been key in its #1 momentum gain in the overall $12 billion service provider market. With the introduction of its fifth generation FP5 routing silicon, we believe Nokia is well-positioned to continue as a vendor of choice for service providers seeking to evolve their IP networks to become more agile, efficient, and secure all the while providing investment protection.”
Federico Guillén, President of Network Infrastructure, Nokia, said: “Of all the things that are surprising about human beings, perhaps the most surprising is our ability to be surprised. Our customers require their networks to be robust, agile and adaptable enough to handle everything life throws at them – from disruptive security threats to a global pandemic. FP5 is a significant step forward in performance, security and efficiency and – in combination with our software excellence and investment in network automation and tools – it opens the next chapter in Nokia’s long-standing leadership in IP networking and IP silicon innovation.”
“This is the industry’s most advanced network-processing silicon for service provider IP networks,” Heidi Adams, VP of IP and optical network marketing at Nokia, said in a phone interview.
- Webpage: Nokia FP5
- Video: Master the unexpected with Nokia’s new FP5 silicon
- eBook: Master the unexpected with Nokia FP5
- App Note: Nokia FP5 silicon innovation
- Webpage: IP Network security
- Media Library: Nokia FP5 image
Nokia and Indosat Ooredoo have launched commercial 5G services in Surabaya city, Indonesia. Under the terms of the deal, Indosat Ooredoo’s customers can explore new enterprise and industrial use cases powered by the new 5G network.
Nokia and Indosat Ooredoo, as well as partners, Sepuluh Nopember Institute of Technology and the University of Oulu, will also open the Nokia 5G Experience Centre at ITS’ facilities in Surabaya. The site includes a Centre of Creativity designed for technology developers and ITS students to explore and develop new 5G use cases to drive innovation and socio-economic development in Indonesia. In addition, the facility includes a Center of Knowledge with 5G millimeter-wave capability to simulate a live 5G environment for testing a range of 5G uses cases. It also includes a Center of Excellence offering professional 5G certifications and other academic programs to support the development of local digital talent.
“I am deeply humbled and proud to launch Indosat Ooredoo’s 5G services in Surabaya aligned with our commitment to being the forefront of the 5G revolution in Indonesia,” said Ahmad Al-Neama (pictured), president director and CEO of Indosat Ooredoo. “This technology will help unleash many opportunities for the region’s education, people, and economy,” he added
Specifically, Nokia will supply equipment from its ReefShark based AirScale product range, which includes its AirScale Single RAN portfolio for both indoor and outdoor coverage. Once deployed, these solutions will deliver faster speeds and wider mobile coverage for Indosat Ooredoo’s customers, while at the same time cutting Ooredoo’s network operating costs.
In addition, Nokia will also deploy its dynamic spectrum sharing (DSS) solution, which will allow Indosat Ooredoo to use its 4G networks spectrum for 5G services, decreasing the time it takes to get 5G up and running.
“We are excited to launch commercial 5G services in Indonesia with Indosat Ooredoo as its trusted partner,” said Tommi Uitto, president of mobile networks at Nokia. “Our AirScale portfolio will deliver best-in-class services to its subscribers and I look forward to working hand in hand with them on this project moving forward. The opening of the Nokia 5G Experience Center will also provide a platform to drive innovation in the country,” he added.
Further to this collaboration, Nokia and Indosat Ooredoo, as well as partners, Sepuluh Nopember Institute of Technology and the University of Oulu, will also open the Nokia 5G Experience Centre at ITS’ facilities in Surabaya.
The site includes a Centre of Creativity designed for technology developers and ITS students to explore and develop new 5G use cases to drive innovation and socioeconomic development in Indonesia.
The facility will also feature a Center of Knowledge with 5G millimeter-wave capability to simulate a live 5G environment for testing a range of 5G uses cases. It will include a Center of Excellence offering professional 5G certifications and other digital academic programs.
“We are thrilled to be partnering with Nokia and Indosat Ooredoo to bring 5G innovation to Indonesia and specifically into Surabaya,” said Prof. Dr. Ir. Mochamad Ashari, Rector of Sepuluh Nopember Institute of Technology.
“Through such industry partnerships, we aim to provide a platform for young minds to collaborate directly with industry and business leaders and develop 5G solutions that will benefit the University and the wider community.”
Nokia claims a new speed record with Vodafone Turkey with a regional demonstration of a 1 Tbps per channel coherent transmission over a live optical network. The companies proved a capacity increase of 150 percent over a single channel coherent transmission, and the ability to scale network capacity up to 70 Tbps per fiber. This capacity milestone is part of an ongoing modernization effort with Nokia to future-proof Vodafone Turkey’s optical network architecture.
This optical transmission test builds upon an earlier trial conducted by Nokia and Vodafone Turkey that validated a 1Tbps clear channel IP router interface, further preparing the operator’s network for the future.
The optical network speed test showcased 1 Tbps capacity over 130 GHz bandwidth without any errors on Vodafone Turkey’s live optical network between its data centers. The trial was conducted over the operator’s in-service optical network, based on Nokia’s wavelength routing technology, which includes its non-blocking CDC-F ROADM optical switch architecture. Supporting operation over C+L bands, Nokia’s optical line system also enables a doubling of the total fibre capacity of Vodafone Turkey’s network.
Nokia’s photonic service engine (PSE) technology, providing maximum performance and spectral efficiency. The Nokia PSE coherent optics are deployed in Vodafone Turkey’s network using the 1830 PSI-M (Photonic Service Interconnect-Modular) compact modular optical networking platform, optimized for data center interconnect applications over metro, regional and long-haul distances.
Thibaud Rerolle, CTO at Vodafone Turkey, said: “At Vodafone Turkey, we are committed to using next generation technology to provide the most convenient services to our customers – uninterrupted and reliably. Our fiber optic backbone is an important step on the way to 5G and, with Nokia, we continue to equip our optical network with the latest technologies and innovations for our services today and in the future.”
James Watt, Head of Optical Networks Division, Nokia, said: “Our field-proven optical technologies and solutions are enabling service providers like Vodafone Turkey to meet growing capacity demand and provide the best end-user experience. We are pleased to complement our deployment of advanced optical transport solutions with the successful and timely completion of this crucial trial to modernize Vodafone Turkey’s optical network. Together, we are accelerating their digital transformation with solutions that can be easily scaled to meet 5G demands.”
Separately, Nokia today announced that it has been selected to roll out UScellular’s standalone 5G core network with deployment expected to be completed by the end of 2022.
- UScellular will deploy Nokia’s portfolio of hardware, software and services to enable its 5G standalone (SA) core network
- UScellular’s 5G SA network will provide its 5 million customers with superior service, capacity, and reliability
By implementing Nokia’s 5G SA core, UScellular will be able to unlock the full potential of 5G for its customers, delivering the high speeds and low latencies that will power new applications such as virtual and augmented reality. UScellular will also be able to leverage Nokia’s cloud-native, open modular structure to rapidly introduce and scale future network functions for new revenue opportunities.
UScellular’s deployment of Nokia’s 5G core adds to its existing support for the Radio Access Network (RAN) where Nokia is supplying its AirScale radios for both low-band and mmWave 5G.
Mike Irizarry, Executive Vice President and Chief Technology Officer, UScellular:
“As we continue to expand and enhance our 5G network, we value the innovation and support that Nokia provides to help us deliver a superior wireless experience to our residential and business customers. As we deploy 5G SA core, Nokia brings expertise, technology excellence and the right mix of hardware, software and services to meet our requirements for high performance and low latency.”
Ed Cholerton, President of Nokia North America:
“We are thrilled to be selected by UScellular to deliver a full 5G experience to its customers. Our 5G SA core and 5G radios provide not only new capabilities, scale, operational efficiencies, and revenue opportunities, but drive a far better user experience that customers expect. Working with UScellular to provide the core network function software and cloud infrastructure continues our momentum in the North American standalone 5G core market.”
Nokia’s 5G SA core is a cloud-native architecture with network functions deployed as microservices that can be moved to the network edge to meet low latency requirements for software-driven services, like network slicing. Globally, Nokia has already deployed over 250+ cloud core networks and 70+ 5G standalone core networks.
Nokia said its 5G SA core is currently deployed in more than 70 networks globally, but very few of those are commercially available.
Nokia also sold its 5G SA core to T-Mobile US, the first operator to deploy a 5G SA core. It remains the only U.S. operator with a commercially available standalone 5G network.
5G SA cores remain incredibly scarce. Most of the 141 live 5G networks at the end of April 2021 were still operating in non-standalone mode (5G NSA), Stéphane Téral, chief analyst at LightCounting, noted during a panel discussion at MWC Barcelona 2021. As of the end of July, there were only nine standalone networks globally, he said. The latest was KT Corp.’s 5G SA core deployment using Samsung’s technology.
A 5G SA core introduces many unique 5G features, including higher data throughput and performance, lower latency, network slicing. It separates the data and control planes which is required for mobile edge computing and many industrial applications.
Nokia and TPG Telecom today announced that they have switched on a live 5G standalone (SA) network in Australia on the 700MHz spectrum band – the first time this has happened in the world. Low band 5G coverage at 700MHz, which is the lowest 5G frequency band deployed in Australia with the largest range, will enable TPG Telecom to provide wide outdoor 5G services, as well as deep indoor 5G coverage in urban and suburban areas to its customers.
Under the partnership, Nokia is supplying equipment from its latest ReefShark based AirScale product range including its unique triple band remote radio unit that supports 700, 850 and 900 MHz bands. The unit also supports 3G, 4G and 5G simultaneously across all TPG Telecom’s low-band frequencies. TPG Telecom’s 5G SA service is now successfully activated in parts of Sydney and this means that the operator’s customers will benefit from having 5G available in more places.
Low band 5G goes further outdoor and deeper into buildings than existing 5G deployments and will allow operators like TPG Telecom to bring 5G to even more customers. TPG Telecom may be targeting the Internet of Things (IoT) with its 700MHz service, because that frequency provides a broader coverage area. Australian homes will contain over 47 million smart devices by 2022, estimates the country’s National Science and Technology Council.
Other network operators are pursuing 700MHz 5G service.
- Japan’s KDDI said in March that it is using Samsung equipment operating in the 700MHz spectrum as part of its goal of covering 90% of Japan’s population by early 2022.
- CBN/China Mobile have put out tender requests bids for 480,397 5G macro base stations in the 700 MHz band. China granted a 5G license for use of the 700 MHz frequency to CBN, the country’s fourth telecoms operator, in June 2019.
- AT&T’s 5G “low band” network mostly uses 850MHz, but its 700 MHz FirstNet public safety network uses hardware “that can be upgraded to 5G with a simple software release.” AT&T has not publicly announce when that might be done.
The 700MHz spectrum provides “deep indoor penetration, a reliable uplink and large coverage,” notes a Nokia white paper. 700Mhz spectrum was referred to as “beachfront property” in 2007-2008.
Barry Kezik, Executive General Manager Mobile and Fixed Networks at TPG Telecom, said: “We’re excited to be the first network in the world to realize the true potential of low band 5G SA at 700MHz. TPG Telecom’s low band 5G will expand our 5G coverage, supporting our goal of reaching 85% of the population in Australia’s top six cities by the end of the year and changing the way people and things connect to the TPG Telecom 5G network.”
Dr Robert Joyce, Chief Technology Officer at Nokia Oceania, said: “Nokia is proud to support another 5G world first. We have a long-standing partnership with TPG Telecom, and we have jointly developed our unique triple band radio solution specifically for them. Today we get to see the result of that joint effort and collaboration which will deliver premium wide area 5G SA coverage for TPG Telecom and its customers.”
Other 5G networks in Australia: Telstra’s 5G covers 200 towns and cities, and Optus recently announcing it has connected 1 million 5G devices to its network
Nokia today said it expects operating margins at its mobile networks business will be flat in 2021 in an update on strategy to streamline the Finland headquartered company into four business groups.
The immediate focus of the mobile networks business will be on executing its turnaround, Nokia said. It expects the business to deliver a comparable operating margin of about 0% in 2021 and significant improvement over the longer term, Nokia added.
Nokia announced a new strategy in October under which the company will have four business groups and CEO Pekka Lundmark said Nokia would “do whatever it takes” to take the lead in 5G.
Pekka Lundmark Photographer: Roni Rekomaa/Bloomberg
“We are putting in a significant technology investment in this new strategy switch… we are willing to sacrifice short-term profitability, to make sure that we really get into technology leadership,” Lundmark said in a video interview.
“We are now putting so much money in R&D that we are sacrificing a little bit of the short-term profitability to get to where we want to be in the long term. Still, we are only taking contracts that make commercial sense.”
“We have to remember that 5G is going to be a 10-year cycle and we are still in the very early stages of that cycle.”
The company had earlier cut its 2020 operating margin forecast to 9% from 9.5% and for 2021 forecast operating margin of 7-10% for the entire company. Operating margins at its Network Infrastructure business, which includes optical and fixed networks, would be in the high single digit range in 2021.
Lundmark, who took over as CEO in August, is driving a reorganization at the telecommunications gear maker as the roll out of 5G networks gathers speed. The company said its overall outlook for next year is unchanged and it expects a margin, excluding some items such as restructuring costs, for the entire business of 7% to 10% in 2021.
The break-even margin implies that the “Mobile Networks’ present status seems worse than feared,” analyst Daniel Djurberg at Svenska Handelsbanken AB wrote, even as Nokia seeks “a significant improvement over the longer term” for the unit. Djurberg said he had expected a low single-digit margin.
Lundmark took over the top job in Nokia in August after product missteps by the company saw it lag Swedish rival Ericsson and Chinese group Huawei in the race to win deals to sell 5G network equipment.
Several senior executives have also left company as it is moving to a new operating model to be implemented on January 1st.
Lundmark said Nokia will now have 11 members in the new leadership team from 17 earlier and there were still two unannounced names who will leave the company.
Nokia has been losing out on contracts for carriers’ 5G build outs, including a big contract to provide 5G technology to Verizon earlier this year which was won by Samsung Electronics Co.
In a just released 5G Readiness report commissioned by Nokia, market research firm Sapio surveyed 1,628 technology purchasing decision-makers in eight markets and across six industry sectors to get a broad sense of how professionals believe 5G is going to affect their business.
- The markets (and participants) surveyed were as follows: Australia (203), Finland (200), Germany (203), Japan (203), Saudi Arabia (202), South Korea (200), UK (207), US (210).
- The sectors were: energy and utilities (208 responses), mining (119), manufacturing (455), public sector (271), healthcare (445), transportation (130). Respondents from companies of less than 250 employees were only permitted for energy and utilities and mining companies.
The grand summary of this extensive survey and extrapolating exercise is that Nokia now forecasts 5G will add $8 trillion to global GDP by 2030. A key message is that a lot of technological progress over the next decade will depend on 5G. That remains to be seen, especially in light of the lack of standards for the non radio aspects of 5G and the ultimate number of 5G Radio Interface Technologies to be included in the 2nd version of IMT 2020.SPECS, sometime in 2021.
On average, whilst the importance of 5G adoption is well understood, a significant investment gap remains. 86% of decision makers said they have some kind of strategy for 5G, and over a third fear being outpaced by the competition should they not invest in 5G in the next 3 years. However, only 15% are currently investing in its implementation, and over a quarter (29%) of businesses are not planning any 5G investment in the next 5 years.
Image Credit: Nokia
The report breaks down the findings by country and also looks at specific events like the COVID-19 pandemic. How literally to take all these extrapolations from a company with a vested interest in driving the market is down to the individual, but at the very least it provides a good snapshot of industry expectations. Here are a few survey results:
- 43% of global technology decision makers have increased their overall investment in their strategic technology planning. This represents a 27% net increase in the number of budgets that have increased.
- In the U.S., additional costs (44%), disrupted timelines (42%) and the emergence of new technology gaps (38%) have been the most prevalent impacts of COVID-19 on technology road maps.
- 41% have C-Level sponsor for 5G implementation in their organization. 25% don’t have any 5G championing from management (23%).
- Businesses are more likely to feel that their industry is middling in terms of 5G adoption, with 20% setting a high benchmark.
- 43% of technology decision makers have a long term 5G strategy. Just over 1 in 10 have no strategy whatsoever (11%)
- Over a third fear being outpaced by the competition should they not invest in 5G, while 27% feel whatever their 5G investment they will still be successful.
5G Investment Plans (SOURCE: Nokia):
Barriers to 5G adoption:
The gap between enterprise awareness of 5G’s benefits and current levels of adoption suggests there are notable barriers to implementation. The research identified five principal barriers to 5G adoption for:
- Ecosystem availability: Limited availability of key infrastructure outside urban centers was cited by 28% of decision-makers.
- Education and understanding: 17% said a key barrier is that decision-makers within their business do not understand 5G, while 14% said they don’t know enough about it themselves.
- Awareness: Over a fifth of technology buyers (22%) said that 5G implementation is not a current priority for their business.
- Cost and complexity: 15% said they were not confident their company would be able to implement the necessary technologies.
- Security: Over a third (34%) said that they are concerned about the security of 5G.
“As organizations across the world move faster towards deployment of 5G enabled technologies, those who wish to be the first to leverage its potential cannot afford to lose more time,” said Gabriela Styf Sjöman, Chief Strategy Officer at Nokia. “To capture the tremendous opportunities of 5G, organizations must start or intensify their planning now and accelerate business model innovation to remain competitive in a rapidly digitalizing global economy. Beyond investment in the technology itself, this will require digitalizing operations, processes and ways of working to capture the full potential of 5G.
“5G adoption is categorically shown to fuel business success. Organizations that have integrated 5G stand to benefit from advantages that go way beyond faster, more efficient and reliable network services. As 5G enables businesses to transform, it will also accelerate wider technological and economic trends, with unimaginable possibilities for global economies and societies.
“The cities, hospitals and factories of the future depend on 5G and the unparalleled ability it offers to move, process and store vast volumes of data. Moreover, the biggest challenges we face as a society – from climate change to the pandemic – can be better tackled through at-scale use of the data and technologies that 5G will unleash.”
The report identifies three key catalysts for change in order to bring about improved understanding, confidence and ultimately adoption of 5G. These are: improved regulation, collaboration and willingness to innovate.
- A third of technology buyers said that government investment in infrastructure or subsidies to drive down costs would encourage them to invest more in 5G. Enterprises will not adopt 5G unless the supply from network operators is presented and priced appropriately, which in turn relies on governments and regulators making 5G spectrum in low, mid and high bands available and affordable.
- The lack of understanding that exists within some businesses around 5G must be directly addressed. Companies and consumers alike need more information about the technology and how it can both improve operations and solve real world problems, ranging from enterprise use cases to telehealth to green technology.
- As companies better understand 5G, they must boldly move to overhaul their operations to accommodate it, for example, exploring how they could use 5G to streamline and more effectively monitor their mobile workforce, fleet or supply chain.
We’ve strongly warned for some time that making money in 5G will be extremely difficult until the core IMT 2020 standards (radio and non radio aspects) are complete and widely implemented. Today we heard proof of that from Nokia:
“Some of the risks that we flagged previously related to the initial phase of 5G are now materializing,” Nokia CEO Rajeev Suri said, noting that its third-quarter gross margin was impacted by the “high cost level associated with our first generation 5G products.”
“Competitive intensity has increased in some accounts as some competitors seek to take share in the early stage of 5G,” Nokia said in a statement. Yet the company said it has 48 commercial 5G deals and has launched 15 live (pre-standard) 5G networks. It’s telco customers include Sprint, Verizon, AT&T, and T-Mobile in the U.S.
China has been a disappointment for Nokia, too. Greater China made up 8% of Nokia’s net sales in the third quarter, the company said Thursday. But revenue from the region fell by 21% from the year-earlier period.
Nokia shares had one of their worst days ever on Thursday after the Finnish telecom equipment maker reduced its profit outlook to reflect the costs of developing 5G products. The stock fell by -24% to $3.87 — the largest drop since 1991 — as Nokia also disclosed in its third-quarter earnings release that it would not be paying a dividend for that quarter and the fourth quarter in part to “guarantee Nokia’s ability to increase 5G investments.”
The elimination of Nokia’s dividend contradicted what the company said about dividends on its website to attract investors:
The dividend is the principal method of distributing earnings to shareholders. Over the long term, Nokia targets to deliver an earnings-based growing dividend by distributing approximately 40% to 70% of non-IFRS diluted EPS, taking into account Nokia’s cash position and expected cash flow generation.
Instead of paying a dividend, the company wants to use its cash to increase its 5G investments, strengthen its cash position, and invest in strategic areas such as software. The company expects to start paying dividends again after it reaches a cash balance of 2 billion euros.
Nokia reduced its earnings forecast this year from an operating margin of 9-12 per cent to one of 8.5 per cent, plus or minus one percentage point. For next year, it slashed its estimate of a 12-16 per cent operating margin to 9.5 per cent, plus or minus one percentage point.
It will take much longer than most pundits believe to realize to monetize the potential and make a decent profit from 5G!
AJW Comment: We are at the start of the 5G transition and Nokia appears to be having the usual problems of refining and finding cost efficiencies in its technology in its first iterations. Gross margins were hit by “a high cost level associated with our first generation 5G products” combined with “pricing pressure in early 5G deals” as it has been limited in what it can charge for the next-generation equipment by competition for those key first customer wins. There are also “profitability challenges in China,” where there has been patriotic domestic buying and support of Huawei 5G equipment by the three state owned telcos. Also, the proposed (but not consummated) merger of Sprint and T-Mobile in the U.S. is causing uncertainty on future demand in one of Nokia’s main early markets for 5G where the company largely competes only with Ericsson (as Huawei has been shout out of the U.S. telecom equipment market, except for earlier sales to rural wireless carriers).
Nokia is the world’s second-largest telecom gear maker by market share, but way behind #1 Huawei. Ericsson is #3 (see Positive Note below).
The overall decrease in Nokia gross profit in the first nine months of 2019 was primarily due to lower gross margin in Networks. We experienced relatively high 5G product costs in Networks, as well as elevated levels of deployment services, consistent with being in the initial phase of 5G. This was partially offset by lower costs related to network equipment swaps, net sales growth in both Networks and Nokia Software, as well as higher gross margin in Nokia Software. In the first nine months of 2019, Nokia gross profit benefited from lower incentive accruals.
Key drivers of Nokia’s outlook-
Net sales and operating margin for Networks and Nokia Software are expected to be influenced by factors including:
• Our expectation that we will perform approximately in-line with our primary addressable market in full year 2019 and full year 2020, as we further prioritize profitability and cash, while continuing to drive growth in our Nokia Software and Nokia Enterprise businesses. (This is an update to earlier commentary to outperform our primary addressable market in full year 2019 and over the longer-term.) On a constant currency basis, we expect our primary addressable market to grow slightly in full year 2019, and for growth to continue in full year 2020;
• Competitive intensity has increased in some accounts as some competitors seek to take share in the early stage of 5G, which is particularly impacting Mobile Access. (This is an update to earlier commentary that competitive intensity could increase);
• Additional 5G investments focused on accelerating our product road maps and cost competitiveness. Investment areas include System on Chip based 5G hardware, including diversifying and strengthening the related supplier base (new commentary);
• Additional digitalization investments focused on driving automation and productivity, including further simplification of IT tools and operational processes (new commentary);
• Temporary capital expenditure constraints in North America related to customer merger activity, as well as other potential mergers or acquisitions by our customers (This is an update to earlier commentary for potential mergers or acquisitions by our customers);
• The timing of completions and acceptances of certain projects, particularly related to 5G. Based on the evolving readiness of the 5G ecosystem and the staggered nature of 5G rollouts in lead countries, we expect full year 2019 will have seasonality characterized by a particularly weak first quarter, a strong second quarter, a solid third quarter and an expected strong fourth quarter (This is an update to earlier commentary for an expected soft third quarter and an expected particularly strong fourth quarter);
• Some customers are reassessing their vendors in light of security concerns, creating near-term pressure to invest in order to secure long-term benefits;
• Our expectation that we will improve our R&D productivity and reduce support function costs through the successful execution of our cost savings program;
• Our product and regional mix, including the impact of the high cost level associated with our first generation 5G products (This is an update to our earlier commentary, providing additional details); and
• Macroeconomic, industry and competitive dynamics.
On a positive note: “As I look to the future, it is clear to me that Nokia has some unique advantages,” Suri said, citing “a powerful, end-to-end portfolio that allows us to benefit from 5G investments across all network domains.”
Nokia’s dismal earnings report contrasts with that of rival Ericsson which last week beat quarterly earnings expectations and lifted its market forecast for this year and its sales target for 2020. The Swedish firm said demand for (pre-standard) 5G networks was robust: “5G is taking off faster than earlier anticipated,” CEO Börje Ekholm said in an earnings statement. The Swedish telecom equipment company said it had signed 27 commercial 5G contracts.
Some analysts had thought that Nokia would benefit from the pressure on Huawei. But the disappointing results published Thursday were driven primarily by weakness in the division responsible for rolling out 5G.
“The report was a major disappointment … outlook was cut across the board reflecting the company’s continuing stumbles as the new cycle of network market is starting to take off,” Inderes analyst Mikael Rautanen said in a note to clients.
“This is all very disappointing,” said Lee Simpson, an analyst at Jefferies. “There is something almost embarrassingly irrelevant about the Nokia story now.”
“He has been in the position now for over five years and is still struggling to put in place a sustainable, comprehensive set of results and targets,” sad Neil Campling of Mirabaud Securities.
Thailand’s AIS Fibre has become the first network operator globally to commercially launch services based on Nokia’s in-home meshed Wi-Fi solution. The fixed line broadband operator will offer customers Nokia CPE designed to provide a seamless Wi-Fi broadband experience across every corner of the home. IEEE Techblog covered whole-home Wi-Fi service in this blog post.
AIS Fibre customers in Thailand will be eligible to receive the Nokia WiFi Beacon 3 duo-pack for a special price which, once installed, should establish a whole-home meshed Wi-Fi network that significantly enhances ultra-broadband coverage and performance.
Many homes suffer from poor Wi-Fi performance. Speeds and reliability can be impacted by the number of connected devices and by interference from appliances like microwaves or Wi-Fi networks from neighbours. In addition, coverage is often inadequate due to dead zones from indoor walls. Solving these issues can be difficult, often requiring several access points to be installed.
Nokia’s meshed Wi-Fi solution is designed to address common issues impacting Wi-Fi performance in the home, such as interference from household appliances or neighboring Wi-Fi networks, as well as dead zones from indoor walls. It automatically connects to the strongest channel to provide the best possible performance. The beacons also include embedded software and analytic functions to automatically self-heal and optimize Wi-Fi networks.
“In speaking with service providers from all over the world it’s clear that Wi-Fi is a major challenge because, most don’t provide or manage the Wi-Fi network in the home that customers rely on for broadband access,” Diffraction Analysts chief research officer Benoit Felten said. “To deliver a great end-to-end service, operators need to ensure a consistent broadband experience can be achieved in the home and Nokia is helping make that happen,” Felton added.
AIS Fibre customers with a true meshed Wi-Fi experience that is easy to install and delivers the whole-home coverage and performance needed to support ultra-broadband services.
Under the agreement, AIS will offer the beacons to customers at a special price. The solution is designed to be set up in minutes and generate a heat map to help users identify and manage dead zones.
Nokia says their product “enhances in-home Wi-Fi solution for service providers to provide a faster, better, smarter network experience:”
- Expanded portfolio of Nokia residential devices and gateways now support intelligent mesh Wi-Fi capabilities
- New software and analytics provide self-healing, self-learning, self-care functions that optimize Wi-Fi networks and maximize performance
- Nokia enables service providers and users to quickly identify and resolve Wi-Fi network issues with new online portal and mobile application