On March 30th we wrote that Huawei Technologies was back, with its net profit more than doubled from the same period last year (2023). Today, a Wall Street Journal (WSJ) news story reaffirmed that with reasons which were really no surprise!  Huawei’s profit more than doubled last year, the largest jump in at least two decades. Roughly two-thirds of its revenue comes from domestic (China) clients.

Five years ago, the U.S. sanctioned Huawei, cutting off the Chinese company’s access to advanced U.S. technologies like semiconductors and the Android OS for its smartphones.  Initially, the company struggled. In 2021, its revenue dropped almost 30% from the year before. Its core telecom equipment business was suffering. Apple’s iPhone was taking over Huawei market share in smartphones.

Yet in the last year, Huawei has come roaring back, boosted by billions of dollars in China government support.  Huawei has expanded into new businesses, boosted its profitability and found fresh ways to curb its dependence on U.S. suppliers. It has held on to its leading position in the global telecom-equipment market, despite American efforts to squeeze Huawei out of its allies’ networks.   Also, it’s making a big comeback in high-end smartphones, using sophisticated new chips developed in-house, such that it has captured 15% market share in China (knocking Apple out of the top five smartphone brands).

“The U.S. government’s campaign against Huawei is inadvertently bolstering the company’s resilience, echoing the age-old adage that what doesn’t kill you makes you stronger,” said Sameh Boujelbene, an analyst at research firm Dell’Oro Group.

China state support has paid off big time! After the U.S. imposed restrictions, Huawei and China’s government grew closer. Soon, Huawei leaders declared that every product they made going forward should be able to rely entirely on components developed by Chinese companies. China government contracts and company registration records, as well as WSJ interviews with former and current employees, reveal that billions of dollars flowed from the Chinese government to Huawei through preferential buying contracts and subsidies. State-owned enterprises, government agencies and Communist Party bodies sought Huawei chips, smartphones, cloud services and software, with some procurement contracts calling for Huawei gear by name.

Local governments have bought Huawei businesses, providing cash injections. Once reliant on Google’s Android for its consumer devices, Huawei built its own operating system. It has even made a foray into electric vehicles, a task that Apple gave up on, and developed its own version of Bluetooth. Huawei still faces challenges. Its most advanced semiconductors remain a step behind industry leaders such as Nvidia, whose chips are made by TSMC in Taiwan, which Huawei no longer has access to due to U.S. sanctions.  U.S. export restrictions, which effectively barred Huawei from using American technology anywhere along the chipmaking process, meant the Chinese company could no longer source its chips from TSMC.  Some analysts believe it will be hard for Huawei to keep innovating without access to more advanced Western technologies, especially chip making equipment and software.

One current U.S. official said Washington is closely tracking Huawei’s efforts to make its own semiconductors, in case more actions are needed to block China from manufacturing artificial-intelligence-focused chips that can give Beijing a military edge.

On May 16, 2019, China’s local government in Shenzhen, where Huawei is based, registered an investment company Shenzhen Major Industry Investment Group (SMII), focused on semiconductors, investing in foundries, manufacturing equipment and materials that would help ensure Huawei was supplied with enough domestically made chips and other technologies.  Two companies established by SMII, including a chip foundry, employed former Huawei executives, according to people familiar with the matter. One received around a dozen patented technologies transferred from Huawei. Huawei human-resources managers had asked company researchers if they would work at that entity, promising them they could keep their benefits if they moved, according to people familiar with the matter.  Shenzhen’s imports of semiconductor manufacturing equipment surged after SMII’s inception, official data shows.  Through various state-backed funds, the Chinese government has invested in more than two dozen chip-related startups, over the past five years, according to corporate database Tianyancha.

That’s in addition to government investments in Huawei’s HiSilicon chip unit (more below), which made the silicon used in the company’s popular Mate 60 Pro smartphone.  HiSilicon became an independent, wholly owned Huawei subsidiary in 2004.  It was founded in 1991 as Huawei’s ASIC Design Center.

A  majority-owned Shenzhen company also bought Huawei’s Honor smartphone business, which was struggling because of the U.S. sanctions. The deal was worth several billions of dollars, a person familiar with the transaction said. The cash allowed Huawei to focus on other businesses, including its higher-end Mate series of phones.

“We’ve been through a lot over the past few years. But through one challenge after another, we’ve managed to grow,” Huawei said in a written statement, adding that the company owed its survival and development to the trust and support of global customers, partners and “all sectors of society.” Sustaining R&D investment will be crucial going forward, the company said.

“We’ve been through a lot over the past few years, but through one challenge after another, we’ve managed to grow,” Huawei said in a written statement, adding that the company owed its survival and development to the trust and support of global customers, partners and “all sectors of society.” Sustaining R&D investment will be crucial going forward, the company said.

Huawei focused on building out more of its own supply chain and expanding into new areas that could generate revenue to help keep the company going, including cloud computing and other services, according to Chris Peirera, a former Huawei senior director in public affairs. “In the past, we chased the ideal of globalization, determined to serve mankind. What are our goals now? It’s to survive. We will make money wherever we can,” Huawei founder Ren Zhengfei later told the company’s staff in an internal letter.

Huawei received over $1 billion in China government grants in 2023, more than quadruple the amount it received in 2019, according to Huawei’s financial reports. In all, Huawei received nearly $3 billion in the past five years, accounting for 3% of its total R&D expenses.

Source: Huawei via WSJ

China’s government directed state agencies to buy more of Huawei’s software, chips and mobile devices, a policy that boosted Huawei while reducing China’s reliance on American companies, including Apple, whose iPhones are no longer allowed in the workplace for many government employees.  A Chinese government research unit named Huawei as one of four tech giants spearheading the nation’s push to wean itself off foreign technology, while another government body singled out Huawei as a preferred state supplier of AI chips, servers and other enterprise software.

Though Huawei is still seeking to sell its products abroad in places such as Southeast Asia and Africa, it is more reliant on China’s market than ever, with 67% of revenue last year coming from domestic clients. The company often portrays itself as a national champion that gives priority to serving China.

Source: Huawei via WSJ

A WSJ investigation found more than 300 government procurement contracts worth around $5 billion specifically calling for the purchase of servers and other tech infrastructure powered by Huawei’s Kunpeng central processing units, or CPUs, in 2023. Other contracts listed Huawei CPUs among a handful of preferred local vendors.  All of this was a sharp contrast to five years ago, when government agencies specifically requested products from U.S. chip makers Intel or AMD.

China’s buy-local policy is even more pronounced in the telecom-equipment space, Huawei’s largest revenue source. State-owned Chinese wireless carriers have largely stopped buying equipment from Huawei’s foreign rivals, Sweden’s Ericsson and Finland’s Nokia, even when one of them priced their contracts more cheaply than Chinese companies. The shift came while Sweden and other European countries indicated that they would cut Huawei and another Chinese equipment maker, ZTE, from their networks.  Ericsson and Nokia held about 15% of China’s cellular network equipment market before 5G began rolling out in 2019.  In China’s current 5G cellular-equipment market, Huawei holds about 4% to 5%, according to market research firm Dell’Oro.

They peg Huawei’s 2023 global telecom market share (#1) at 30% – double that of #2 Nokia as per this pie chart:

With so much government support, Huawei was able to avoid massive job and spending cuts that would have gutted its R&D or led to a talent exodus. Huawei boosted R&D spending to almost 165 billion yuan, or $23 billion, last year, up from 102 billion yuan in 2018. More than half of Huawei’s 207,000 employees are in R&D.

Huawei is now at the vanguard of China’s push to develop cutting-edge chips to wean reliance on Nvidia and Intel, as the Biden administration seeks to curb China’s ability to develop advanced chips and technology that could aid its warfare and surveillance. U.S. chip juggernaut Nvidia singled out Huawei as a top competitor in February.

Huawei is leading a government-funded project to develop memory units for advanced AI chips, people familiar with the matter said, with at least 11 national AI data centers now using Huawei chips.  WSJ reports that last summer, a group of Huawei researchers gathered at a barbecue restaurant on the outskirts of Beijing to congratulate engineers who worked on the Mate 60 Pro chip set at Huawei owned HiSilicon.

“You HiSilicon people kick ass,” one of the Huawei researchers said, according to a person who attended. “Managers tell us daily that our work helps the country fight against foreign oppression,” a HiSilicon engineer who was present responded. “We’re becoming more and more like a state-owned company, aren’t we?” another researcher chimed in.

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References:

https://www.wsj.com/business/telecom/huawei-china-technology-us-sanctions-76462031

Huawei is back – net profits more than doubled in 2023!

Dell’Oro: 2023 global telecom equipment revenues declined 5% YoY; Huawei increases its #1 position

Huawei to revolutionize network operations and maintenance

Huawei pushes 5.5G (aka 5G Advanced) but there are no completed 3GPP specs or ITU-R standards!

China’s mobile data consumption slumps; Apple’s market share shrinks-no longer among top 5 vendors

https://www.wsj.com/tech/nvidias-new-china-pickle-customers-dont-want-its-downgraded-chips-ab98a153?mod=article_inline

Yesterday, Nokia cut its full-year sales forecast as the telecom market remains uncertain with network operators continuing to cut spending (CAPEX) in new network equipment, especially for the disappointing 5G (which is actually 4G with a 5GNR for 5G NSA which are by far the majority of 5G network deployments).

Nokia, like its Swedish rival Ericsson, has struggled to replace the strong revenue, high-margin contracts they enjoyed in North America early in the 5G cycle. When work in the region dried up, India became the main revenue generator, but work there attracted much lower margins and sales have now also slowed sharply.

Overall, sales at Nokia’s key mobile networks business fell 25% on year, mainly due to the sharp drop in India, but the company got a EUR150 million boost from a contract resolution with AT&T.  2Q-2024 net sales declined 18% y-o-y in constant currency (-18% reported) primarily due to strong year-ago quarter in India.

Nokia doesn’t provide specific group sales guidance but instead offers sales growth assumptions across its business units, which are all now seen at a weaker level than earlier as the expected net sales recovery is happening later than previously hoped.

The company said Thursday that comparable operating profit guidance of 2.3 billion euros to 2.9 billion euros ($2.52 billion-$3.17 billion) this year remains intact, tracking toward the mid-point or slightly below the mid-point.

“We believe the industry is stabilizing and given the order intake seen in recent quarters we expect a significant acceleration in net sales growth in the second half,” said Chief Executive Pekka Lundmark.

High inflation and rising interest rates have seen network operators spend cautiously over the last couple of years, but orders have slowly ticked higher over the last couple of quarters and the trend is continuing, particularly in network infrastructure, he said.

Late last year the U.S. operator awarded a major network contract to Ericsson for OpenRAN, replacing Nokia equipment. Nokia had contracts with AT&T and the Finnish company said it will still receive the value of those contracts while remaining a significant customer through other deals.

Network infrastructure sales declined 11% on the year, but Nokia said the unit has returned to growth in North America, which is important as it was one of the first markets to experience the 2023 market slowdown.

Nokia is desperately trying to reduce annual costs. Lundmark’s goal is to make cuts of between €800 million ($875 million) and €1.2 billion ($1.3 billion) by 2026, reducing the size of the workforce from about 86,000 employees when the program was first announced to between 72,000 and 77,000.  Expect at least 14,000 Nokia employees to be axed in the next 18 months

To date, Nokia has been able to achieve “run-rate” savings of about €400 million ($437 million), it revealed in its earnings report.

“With the challenges of 2023 behind us, and more normalized customer inventory levels, we believe we can now look forward to a stronger second half and a return to growth [in network infrastructure], which we expect to continue into 2025,” Lundmark said.

The company reported an operating margin of 8.7% in its mobile networks unit and it now expects to report a margin of between 4% and 7% in 2024, from 1% to 4% previously. It reported a margin of 6.4% in network infrastructure and still expects a margin of between 11.5% and 14.5% this year.

Group comparable net profit fell 21% to EUR325 million in the second quarter, beating a FactSet estimate of EUR280 million. Sales fell 18% to EUR4.47 billion, missing consensus at EUR4.78 billion.

Improving cash generation means Nokia now intends to accelerate its continuing EUR600 million buyback program with the view to completing it by the end of this year, compared to its previous end-of-2025 target, it said.

References:

https://www.nokia.com/about-us/news/releases/2024/07/18/nokia-corporation-report-for-q2-and-half-year-2024/

https://www.wsj.com/business/telecom/nokia-cuts-sales-guidance-as-market-uncertainty-continues-32d93af1

https://www.lightreading.com/5g/nokia-takes-big-axe-to-mobile-jobs-but-grows-footprint-outside-at-t

Analysts: Telco CAPEX crash looks to continue: mobile core network, RAN, and optical all expected to decline

Nokia (like Ericsson) announces fresh wave of job cuts; Ericsson lays off 240 more in China

Ericsson expects continuing network equipment sales challenges in 2024

Recon Analytics (x-China) survey reveals that Ericsson, Nokia and Samsung are the top RAN vendors

Nokia: 5G Costs Hit Q1 Outlook as Shares Crash and Dividend Suspended

Dell’Oro has just cut its outlook for mobile core spending for the fifth consecutive time. Not a single operator has adopted 5G SA this year. 

“It bears repeating, this is the fifth consecutive time we have reduced the growth rate of the MCN market as the build-out of 5G SA networks continue to wane compared to 5G Non-standalone networks,” said Dave Bolan, Research Director at Dell’Oro Group. “This is the first 5-year forecast out of the last five where the 5-year CAGR (2023-2028) has fallen into negative territory. The count of 5G SA networks commercially deployed by MNOs remains the same as it was at the end of 2023, about 50 5G SA networks.

“For the same reasons outlined for the MCN market, we reduced the 5-year cumulative revenue forecast for the Multi-Access Edge Computing (MEC) market, a sub-segment of the MCN market, by 18 percent. In the case of MEC, the adoption rate is slowed much more dramatically than the overall MCN market. The industry is addressing these concerns with several initiatives such as open gateway application programmable interfaces (APIs) to attract the application development community to develop applications for the mobile industry that can easily be leveraged across all MNOs. Release 18 is introducing capabilities for new use cases, and Reduced Capability (RedCap) RAN software to bring more 5G IoT devices to market. However, these will take time to bring solutions to market and more importantly at scale to have an impact on the overall market growth,” Bolan added.

Additional highlights from the Mobile Core Network & Multi-Access Edge Computing 5-Year July 2024 Forecast Report:

• The CAGR is negative for all product segments—Packet Core, Policy, Signaling, Subscriber Data Management, and IMS Core.
• The CAGR for the market segments is positive for 5G MCN and MEC, and negative for 4G MCN and IMS Core.
• The CAGR by regions is positive for Asia Pacific excl. China, Europe, Middle East and Africa (EMEA), and Worldwide excluding China. The regions with negative CAGRs are North America, CALA, China, and Worldwide excluding North America.

Dell’Oro has called the RAN market as “a disaster.” “It’s difficult to find a silver lining in the first quarter,” said Stefan Pongratz, Vice President and analyst at the Dell’Oro Group. “We’ve been monitoring the RAN market since the year 2000, and the contraction experienced in the first quarter marked the steepest decline in our entire history of covering this market. In addition to the known coverage related challenges that the market is dealing with when comps in the advanced 5G markets are becoming more challenging, there are now serious concerns about the timing of the capacity upgrades given current network utilization levels and data traffic growth rates,” continued Pongratz.   

While the overarching RAN sentiment appears to be mostly aligned over the long term, it is worth noting that internal expectations across the key players vary quite a bit over the short term. In addition to the coupling between coverage capex and the state of the 5G networks (per Ericsson’s Mobility report, 5G POP coverage is lower in CALA/MEA/APAC excl China&India), the dynamics between urban and rural sites also impact growth prospects. The Chinese RAN vendors are generally more optimistic about 2024 than the leading non-Chinese RAN suppliers.

It’s no secret that telecom operators are scaling back their investments in 5G. Preliminary findings show that worldwide telecom capex, the sum of wireless and wireline/other telecom carrier investments, declined for the full year 2023 in nominal USD terms, recording the first contraction since 2017. This deceleration in the broader capex spend is consistent with the aggregate telco equipment slump previously communicated for the six Dell’Oro telecom programs (Broadband Access, Microwave Transmission & Mobile Backhaul, Optical Transport, Mobile Core Network, Radio Access Network, Service Provider Routers & Switch).

“The fundamental challenges have not changed. Operators have a fixed capital intensity budget and capex is largely constrained by the revenue trajectory,” said Stefan Pongratz, Vice President and analyst with Dell’Oro Group. “What is complicating the situation is that the revenue pie remains fixed. Following some positive developments amidst the peak of the Covid-19 pandemic, our analysis shows that operator revenue growth slowed in 2023 and has more or less remained stagnant over the past decade. And based on the guidance, operators, in general, are not overly optimistic that emerging opportunities with generative AI, edge computing, enterprise 5G, FWA, and 5G-Advanced will expand the pie,” continued Pongratz.

Additional highlights from the Dell’Oro March 2024 Telecom Capex report:

• Global carrier revenues are expected to increase at a 1 percent CAGR over the next 3 years.
• Market conditions are expected to remain challenging in 2024. Worldwide telecom capex is now projected to decline at a mid-single-digit rate in 2024 and at a negative 2 to 3 percent CAGR by 2026.
• The mix between wireless and wireline remains largely unchanged, reflecting challenging times still ahead for wireless. Wireless related capex is on track to decline at a double-digit rate in the US in 2024.
• 5G era capital intensity ratios peaked in 2022 and are on track to approach 15 percent by 2026, down from 18 percent in 2022.

The market research firm and also forecasts optical transport spending (which includes 5G backhaul) to decline as well. 

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What’s more important is that mobile network traffic growth is slowing. In the latest Ericsson mobility report, the authors cut mobile data traffic figures for the second half of 2023, yet declared that the growth outlook was virtually unchanged.

William Webb, a consultant and senior advisor at Access Partnership, is one who’s called out the authors of the report for this leap in logic. “If lower numbers are being reported for 2023 … then why should the traffic growth rate predicted remain the same?” he posted on LinkedIn.  He denounces the forecast as “a mess,” pointing out that the report, without any explanation, has somehow introduced a 10% jump in growth over 2023-24 to bring its new forecast into line with the old.

Separately, a new Analysys Mason paper says the telecom industry is running up against the limits of growth and faces a “crisis of bandwidth overproduction.” It says the telco responses to this looming crisis – volume price discounts and untried business models – replicate every other other industry in the same predicament. “Growth rates are not declining because of supply-side constraints such as spectrum or coverage; access networks have never been emptier,” the author argues. “Rather, the two principal drivers of traffic growth, smartphone usage and broadcast-to-streaming migration on mobile and fixed networks, respectively, have both run up against human limits; limited hours for engagement and the limits of human vision.”

If demand does not revive, then the lower unit costs brought about by over-investment in capacity will result in further deflation of margins and profitability, the paper maintains.  It calls on telcos to reduce CAPEX to make available more resources to invest in M&A, into other adjacent infrastructure businesses, or in some key non-connectivity B2B segments.

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References:

https://www.lightreading.com/6g/the-specter-of-a-capex-drought-looms-over-6g

Mobile Core Network Market Woes Continue, Market Forecast to Decline 10 Percent, According to Dell’Oro Group

RAN Market Still a Disaster, According to Dell’Oro Group

https://www.prnewswire.com/news-releases/telecom-capex-declined-in-2023-as-operators-scale-back-on-5g-according-to-delloro-group-302102070.html

Analysys Mason’s gloomy CAPEX forecast: “there will not be a cyclical recovery”

China Mobile & China Unicom increase revenues and profits in 2023, but will slash CAPEX in 2024

Where Have You Gone 5G? Midband spectrum, FWA, 2024 decline in CAPEX and RAN revenue

MTN Consulting: Generative AI hype grips telecom industry; telco CAPEX decreases while vendor revenue plummets

By Afnan Khan with Ajay Lotan Thakur

Introduction

In the eerie silence of deserted streets and amidst the anxious hum of masked conversations, the world found itself gripped by the rapid proliferation of COVID-19. Soon labelled a global pandemic due to the havoc wreaked by soaring death tolls, it brought unprecedented disruption and accelerated the inevitable rise of the digital age. The era of digital transformation has swiftly transitioned, spawning a multitude of businesses catering to every human need. Today, our dependence on digital technology remains steadfast, with remote work becoming the norm and IT services spending increasing from $1.071 trillion in 2020 to $1.585 trillion. [1]

The chart below, sourced from Oliver Wyman Forum Analysis,[2] vividly illustrates our increasing dependence on technology. It presents findings from a survey conducted in the latter half of 2020 across eight countries – US, UK, France, Germany, Italy, Spain, Singapore, and China. The survey reveals that 60% of respondents favoured increased use of video conferencing, while online grocery shopping and telehealth services each garnered 59% approval, and E-learning showed a strong preference at 56%. This data underscores how swiftly digital solutions integrated into our daily lives during the pandemic.

_{Source: Olive Wyman Forum Analysis [2]}

Advancements in Telecom and AI Applications Across EU

The graph below represents the project and infrastructure finance deal volume in the telecommunications sector from 2020 to 2023. The dominance of Germany is evident, with the deal volume reported to be $36.115 billion, followed by the UK at $21.889 billion. France follows closely in third place with a deal volume of $20.415 billion, representing significant market potential. The only other two countries with substantial figures are Italy and Spain, although there have been some promising deals closing in Ireland, Portugal, and Romania with large new financing deals in the project finance sector.

_{Source: Proximo Intelligence [5]}

Deutsche Telekom, the national provider, has spearheaded advancements with AI-powered network optimisation tools. These tools leverage real-time analytics, resulting in a notable 20% enhancement in network performance and a 15% reduction in customer complaints. [14] While 2022 marked a pivotal year for the industry in Germany, the evolution of German fibre optics infrastructure has continued apace. Germany led Europe’s FTTH (Fibre to the Home) initiative, with significant financings closing throughout the year. According to Proximo Data, 16 European FTTH financings concluded in 2022, amassing nearly $26 billion in deal volume, with German deals accounting for almost $9 billion of that total.

Spain’s Telefónica has deployed an advanced AI-driven fraud detection system that effectively blocks over 95% of fraudulent activities. This initiative not only protects Telefónica from financial losses but also enhances security for its customers. [15] The adoption of AI for cybersecurity underscores a broader trend in the telecom industry towards leveraging advanced technologies to bolster trust and safeguard digital transactions.

Orange has introduced AI-driven chatbots that autonomously handle more than 90% of customer queries in France, resulting in a significant reduction in customer service costs by 40% and a notable increase in customer satisfaction rates by 25%. [16] This innovation represents a paradigm shift in customer service automation within the telecom sector, demonstrating the effectiveness of AI in improving operational efficiency and enhancing the overall customer experience.

Telecom Italia (TIM) has implemented AI-powered network security solutions to proactively detect and mitigate cyber threats in real-time, achieving a remarkable 60% reduction in cybersecurity. [17]

This strategic deployment of AI highlights TIM’s commitment to enhancing network resilience and safeguarding critical infrastructure from evolving cyber threats, setting a precedent for cybersecurity strategies in the telecommunications industry.

Predictive Analysis Enhancing Telecom Resilience

Interference mitigation strategies are essential for smooth digital operations in the post-pandemic world. Picture digital experts rapidly addressing problems from rogue networks and environmental noise, creating a digital shield against disruptions, and ensuring a seamless user experience. These strategies propel telecom companies towards better connectivity and user satisfaction.

These examples highlight the trend of using AI and predictive analytics to boost network performance in cities. As urban areas contend with population growth and increasing digital demands, telecom companies invest in advanced technologies. These reduce network congestion, enhance service reliability, and support sustainable urban development. This trend not only improves customer experience but also positions telecom providers as leaders in developing future smart cities.

The chart below, from the Proximo Intelligence database, shows European deal volumes over the past three years, categorised by sub-sectors. The broadband and cable network sector leads with a deal volume of $79.784 billion from 86 deals out of a total 137 in project and infrastructure finance. Cellular and mobile infrastructure follows with $31.292 billion across 25 deals. Data centres, a growing trend, also report a deal volume of $30.967 billion across 25 deals.

_{Source: Proximo Intelligence [5]}

In the post-COVID era, the adoption of predictive maintenance and real-time monitoring has accelerated, becoming a critical component of the new normal for businesses. These technologies enable companies to build more resilient infrastructures, proactively mitigate risks, and enhance operational efficiency. As businesses continue adapting to a rapidly changing environment, the integration of predictive maintenance solutions plays a pivotal role in sustaining long-term growth and stability.

Europe has seen profound impacts from these advancements, setting a precedent for global telecom strategies moving forward.

Future Trends and The Way Forward

European telecommunications face challenges shaped by regulatory frameworks, economic conditions, and technological advancements:

• Brexit introduces regulatory uncertainties for UK telecoms. [18]
• Germany’s GDPR compliance challenges demand heavy investment. [19]
• Spain faces economic instability affecting telecom investments. [20]
• France’s 5G deployment is delayed by regulatory barriers. [21]
• Italy’s 5G rollout is hindered by spectrum allocation challenges. [22]
• The Netherlands invests in cybersecurity for evolving threats. [23]
• Sweden focuses on bridging rural connectivity gaps. [24]
• Switzerland navigates complex regulatory landscapes for innovation. [25]

In the wake of COVID-19, with masks now a thing of the past and streets deserted only due to construction, digital technologies are transforming European telecommunications amidst regulatory shifts and economic uncertainties. Investments in infrastructure and AI innovations are pivotal, shaping the industry’s future and its adaptation to rapid change while driving economic recovery across Europe. How will the industry sustain innovation and meet growing digital demands ahead? Only time will tell.

References

1. https://www.statista.com/statistics/203291/global-it-services-spending-forecast/
2. https://www.oliverwyman.com/our-expertise/perspectives/health/2021/mar/why-4-technologies-that-boomed-during-covid-19-will-keep-people-.html
3. https://www.worldometers.info/coronavirus/
4. https://www.gov.uk/government/news/new-data-shows-small-businesses-received-213-billion-in-covid-19-local-authority-business-support-grants#:~:text=Press%20release-,New%20data%20shows%20small%20businesses%20received%20%C2%A321.3%20billion%20in,and%20arts%2C%20entertainment%20and%20recreation.
5. Proximo Intelligence Data: www.proximoinfra.com
6. Vodafone Press Release, 2022.
7. “McKinsey & Company. “Predictive maintenance: The rise of self-maintaining assets.”
8. Deloitte. “Predictive maintenance: Taking proactivity to the next level.”
9. Forbes. “Why Virtual Assistants Are Becoming Essential for Businesses.”
10. Statista. “Growth in Demand for Virtual Assistants in Europe.”
11. TechRadar. “Vodafone’s AI traffic prediction cuts network congestion by 25% in London.”
12. The Guardian. “BT/EE’s AI traffic prediction cuts network congestion by 30% in London.”
13. FCC (2023). Spectrum Efficiency Report. Federal Communications Commission. Available at: https://www.fcc.gov/reports-research/reports/fcc-research/spectrum-efficiency.
14. Deutsche Telekom’s AI-Powered Network Optimization,” TechInsights
15. “Telefónica’s AI-Driven Fraud Detection,” TelecomsToday. Available at: TelecomsToday AI Fraud Detection
16. “Orange’s AI-Enabled Customer Support,” AI Insider. Available at: AI Insider AI Customer Support
17. “TIM’s AI-Powered Cybersecurity Measures,” CyberTechNews. Available at: CyberTechNews AI Cybersecurity
18. TelecomsInsight. “Brexit’s Regulatory Impact on UK Telecoms.”
19. DataPrivacyToday. “GDPR Compliance Challenges for German Telcos.”
20. BusinessWire. “Spain’s Economic Recovery Challenges.”
21. TelecomsObserver. “France’s Regulatory Roadblocks to 5G Deployment.”
22. SpectrumInsight. “Italy’s Spectrum Allocation Challenges.”
23. CyberDefenseMag. “Netherlands’ Cybersecurity Imperatives.”
24. DigitalInclusionHub. “Sweden’s Rural Connectivity Initiatives.”
25. RegTechInsights. “Switzerland’s Regulatory Adaptation Challenges.”

Afnan Khan is a Machine Learning Engineer specialising in Marketing Analytics, currently working as a Marketing Analyst at the Exile Group in London. He is involved in various projects, research, and roles related to Machine Learning, Data Science, and AI.

Ajay Lotan Thakur is a Senior IEEE Member, IEEE Techblog Editorial Board Member, BCS Fellow, TST Member of ONF’s Open-Source Aether (Private 5G) Project, Cloud Software Architect at Intel Canada.

By Afnan Khan with Ajay Lotan Thakur

Introduction

In the eerie silence of deserted streets and amidst the anxious hum of masked conversations, the world found itself gripped by the rapid proliferation of COVID-19. Soon labelled a global pandemic due to the havoc wreaked by soaring death tolls, it brought unprecedented disruption and accelerated the inevitable rise of the digital age. The era of digital transformation has swiftly transitioned, spawning a multitude of businesses catering to every human need. Today, our dependence on digital technology remains steadfast, with remote work becoming the norm and IT services spending increasing from $1.071 trillion in 2020 to $1.585 trillion. [1]

The chart below, sourced from Oliver Wyman Forum Analysis,[2] vividly illustrates our increasing dependence on technology. It presents findings from a survey conducted in the latter half of 2020 across eight countries – US, UK, France, Germany, Italy, Spain, Singapore, and China. The survey reveals that 60% of respondents favoured increased use of video conferencing, while online grocery shopping and telehealth services each garnered 59% approval, and E-learning showed a strong preference at 56%. This data underscores how swiftly digital solutions integrated into our daily lives during the pandemic.

Accelerating Telecom Growth in Britain

Europe was among the hardest-hit regions by the pandemic, with death tolls exceeding 2.1 million. [3] This crisis accelerated the adoption of digital technologies, prompting businesses to invest in smarter, more sustainable operations to increase their longevity and stay relevant in the market.

In the United Kingdom, despite the government’s injection of £21.3 billion into the economy to support small businesses, the emphasis on digital transformation has been paramount. [4] The push towards digital solutions, including enhanced internet connectivity and robust data centres, underscores the long-term strategic shift towards a more resilient and technologically advanced business landscape.

Statistically, the UK telecom industry has experienced significant growth, driven by increased demand and advancements in network equipment. The shift towards digital dependency, accelerated by the COVID-19 pandemic and the rise of remote work, is expected to be long-term. This trend has also led to a surge in 5G and data centre deals.

According to Proximo, a leading Project and Infrastructure Finance Journal, projects worth $30.967 billion have closed in Europe between 2020 and 2023, highlighting the critical role of data centres in boosting the telecommunications sector. Of this, the UK accounted for $14.133 billion across seven deals, comprising both refinancing and new financing deals, representing 45.6% of Europe’s total contribution. Notably, one of the recent financing deals to close was for Ark Data Centres, based in London, with the term loan reported to be in the region of £170 million for five years, aimed at supporting a significant data project in the UK – thus establishing the country as one of the market leaders in Europe. [5]

Telecom Landscape in the UK’s New Normal

Imagine having the ability to pinpoint precisely when hardware needs replacement, akin to pre-emptively replacing floorboards. Vodafone’s United Performance Management (UPM) facilitates real-time monitoring and proactive identification of anomalies. [6] Predictive maintenance can reduce unplanned downtime by 30-50%, lower maintenance costs by 10-40%, and extend asset lifespan by 20-40%. [7][8]

Virtual Assistants

The integration of virtual assistants has not only streamlined operations but has also emerged as one of the most sought-after roles, as reported by Forbes. [9] In the telecom industry, where customer service reigns supreme, consider the live example of broadband giant BT/EE. Their adoption of remote customer support in the post-COVID world has propelled them to the forefront as the leading data provider in the UK. Mirroring European trends, the demand for virtual assistant roles has surged by 20%, [10] spurred on by initiatives such as digital nomad visas in Spain and Portugal. This trend not only reflects the changing landscape of customer service but also signals significant injections into the economy.

Traffic congestion

In the hustle and bustle of post-pandemic London, navigating the city’s streets amidst fluctuating traffic patterns and network demands presents a unique challenge. Telecom companies are stepping up to the plate, leveraging cutting-edge AI and ML technologies to tackle these issues head-on. By predicting traffic patterns and dynamically managing network loads, they’re ensuring that Londoners experience optimal connectivity and responsiveness, even during peak hours when congestion is at its peak. Imagine this: congestion hotspots are pinpointed in real-time, and network resources are strategically directed to these areas, reducing disruptions. This means that residents and commuters alike enjoy a smoother, more reliable connection, whether they’re streaming, working remotely, or simply staying connected on the go.

One shining example is Vodafone, which has implemented AI-driven traffic prediction models specifically tailored to London’s intricate traffic patterns. The result? A remarkable 25% reduction in network congestion during peak hours, as reported by TechRadar. [11] This underscores the significance of bespoke solutions in addressing London’s unique challenges post-pandemic, solidifying network performance and reliability for the city’s diverse population and thriving businesses.

Another notable case is BT/EE, which has also deployed AI-driven traffic prediction models in London. This initiative led to a significant 30% reduction in network congestion during peak hours. [12] Such tailored AI solutions not only enhance operational efficiency but also demonstrate the telecom industry’s commitment to leveraging technology to improve urban infrastructure.

Dynamic Spectrum

In the dynamic realm of post-COVID technology, telecom pioneers are revolutionising spectrum management with dynamic spectrum allocation. Imagine a digital symphony where frequencies dance to the beat of demand, seamlessly adapting to surges in digital traffic. This innovative approach ensures uninterrupted connectivity, even in the busiest digital arenas. According to recent studies, dynamic spectrum allocation has shown to increase spectrum efficiency by up to 40%, supporting seamless connectivity for the data-hungry masses. [13] Telecom wizards are thus reshaping the digital landscape, delivering turbo-charged connectivity.

References

1. https://www.statista.com/statistics/203291/global-it-services-spending-forecast/
2. https://www.oliverwyman.com/our-expertise/perspectives/health/2021/mar/why-4-technologies-that-boomed-during-covid-19-will-keep-people-.html
3. https://www.worldometers.info/coronavirus/
4. https://www.gov.uk/government/news/new-data-shows-small-businesses-received-213-billion-in-covid-19-local-authority-business-support-grants#:~:text=Press%20release-,New%20data%20shows%20small%20businesses%20received%20%C2%A321.3%20billion%20in,and%20arts%2C%20entertainment%20and%20recreation.
5. Proximo Intelligence Data: www.proximoinfra.com
6. Vodafone Press Release, 2022.
7. “McKinsey & Company. “Predictive maintenance: The rise of self-maintaining assets.”
8. Deloitte. “Predictive maintenance: Taking proactivity to the next level.”
9. Forbes. “Why Virtual Assistants Are Becoming Essential for Businesses.”
10. Statista. “Growth in Demand for Virtual Assistants in Europe.”
11. TechRadar. “Vodafone’s AI traffic prediction cuts network congestion by 25% in London.”
12. The Guardian. “BT/EE’s AI traffic prediction cuts network congestion by 30% in London.”

Afnan Khan is a Machine Learning Engineer specialising in Marketing Analytics, currently working as a Marketing Analyst at the Exile Group in London. He is involved in various projects, research, and roles related to Machine Learning, Data Science, and AI.

Ajay Lotan Thakur is a Senior IEEE Member, IEEE Techblog Editorial Board Member, BCS Fellow, TST Member of ONF’s Open-Source Aether (Private 5G) Project, Cloud Software Architect at Intel Canada.

ITU-R has commenced the process of developing ITU-R Recommendations for the terrestrial components of the IMT-2030 (6G) radio interface(s).  This work is guided by Resolutions ITU-R 56 and ITU-R 65.  As you can see from the timeline below, the final IMT-2030 recommendation won’t be completed until 2030.

The ITU Radiocommunication Bureau has established a “Web page for the IMT-2030 submission and evaluation process” to facilitate the development of proposals and the work of the evaluation groups. The IMT-2030 web page will provide details of the process for the submission of proposals, and will include the RIT and SRIT submissions, evaluation group registration and contact information, evaluation reports and other relevant information on the development of IMT‑2030.

Candidate RITs (Radio Interface Technologies) or SRITs (Set of  Radio Interface Technologies) will be evaluated by the ITU membership, standards organizations and other independent evaluation groups. Evaluation groups are requested to register with ITU-R1, preferably before [February/the end of 2027].

The evaluation groups are kindly requested to submit evaluation reports to the ITU-R in accordance with the evaluation process delineated on the IMT‑2030 web page. The evaluation reports will be considered in the development of the ITU-R Recommendation describing the radio interface specifications.

The evaluation guidelines, including the criteria and methodology, are to be finalized by WP 5D in June 2026. The availability of these guidelines on the IMT-2030 web page will be announced in a forthcoming Addendum to a Circular Letter calling for IMT-2030 RIT/SRIT contributions.

3GPP’s contributions will most likely be presented to ITU-R WP5D by ATIS. It remains to be seen what other entities will submit IMT-2030 RIT/SRIT proposals.

References:

https://www.itu.int/en/ITU-R/study-groups/rsg5/rwp5d/imt-2030/Pages/default.aspx

https://www.itu.int/dms_pub/itu-r/oth/0a/06/R0A060000C80001PDFE.pdf

Resolution ITU-R 56

Resolution ITU-R 65

Recommendation ITU-R M. 2160

Highlights of 3GPP Stage 1 Workshop on IMT 2030 (6G) Use Cases

NGMN issues ITU-R framework for IMT-2030 vs ITU-R WP5D Timeline for RIT/SRIT Standardization

IMT-2030 Technical Performance Requirements (TPR) from ITU-R WP5D

Draft new ITU-R recommendation (not yet approved): M.[IMT.FRAMEWORK FOR 2030 AND BEYOND]

Revolutionizing Telecom with Programmable Networks and APIs

By Ameer Shohail L with Ajay Lotan Thakur

Ameer Shohail is an experienced ICT Solutions Design Specialist and IEEE Senior Member at a Tier 1 telecom operator in the Middle East, specializing in advanced wireless technologies.

Ajay Lotan Thakur is a Senior IEEE Member, IEEE Techblog Editorial Board Member (who edits/adds to blog posts), BCS Fellow, TST Member of ONF’s open source Aether (Private 5G) Project, Cloud Software Architect at Intel Canada.

Abstract

The telecom industry is on the verge of a significant transformation driven by the convergence of 5G/Beyond 5G and programmable networks. This article explores the immense potential of these advancements, emphasizing the shift from rigid infrastructures to dynamic platforms that offer their capabilities as services. We delve into the importance of programmable networks, the Network as a Service (NaaS) model, and the critical role of APIs. The article highlights the Network Exposure Function (5G CORE – NEF) and its role in creating new revenue streams for CSPs and fostering a thriving digital ecosystem. The TM (TeleManagement) Forum’s emphasis on service lifecycle management and the collective effort towards a digitally interconnected future are key themes, inviting all stakeholders to embrace this transformative journey.

Introduction: The Paradigm Shift in Telecom

The telecom industry is undergoing a profound transformation from traditional infrastructures to more dynamic and flexible systems. This shift is essential to meet the increasing demands for faster, more reliable, and scalable network services. Innovation and collaboration are now crucial drivers of industry growth, enabling communication service providers (CSPs) to leverage cutting-edge technologies to enhance their offerings and stay competitive.

Figure1: EPS Architecture

Figure2: 5GS Architecture

Programmable Networks and NaaS: The New Frontier

Programmable networks and Network as a Service (NaaS) represent the next frontier in telecom innovation. These technologies allow CSPs to offer network capabilities as customizable services, enhancing flexibility and efficiency. The TM Forum’s Open Digital Architecture (ODA) is central to this transformation, providing a standardized framework for the seamless integration of network services. By adopting ODA, CSPs can decouple network functions from the underlying hardware, enabling greater agility and innovation

Figure3: NaaS function wheel, depicting various NaaS functions offered to consumers, REF[1]

APIs: The Engine of Innovation

APIs are fundamental to the telecom industry’s transformation, empowering developers to create innovative services that leverage network capabilities. The Common API Framework (CAPIF) by 3GPP standardizes API usage across various network functions, ensuring smooth and secure communication. This framework acts as a universal language, facilitating collaboration and enhancing security across diverse applications and industries.

Figure4: Functional model for the CAPIF

Network Exposure Function (NEF): Unlocking New Potential

3GPP 5G Core architecture

5GC (Figure2) is the new 3GPP standard for core networks defining how the core network should evolve to support the needs of 5G New Radio (NR) and the advanced use cases enabled by it. The figure below depicts NEF representation in the non-roaming architecture, using 5G reference point representation.

Figure5: Network Exposure Function in reference point representation REF[4]

The Network Exposure Function (NEF) provides a secure, standardized method for exposing APIs, enabling CSPs to broaden their service offerings and explore new revenue streams. NEF is essential for fostering a thriving digital ecosystem, driving innovation, and economic growth in the telecom sector. Figure below depicts how NEF plays a role with the IoT ecosystem in enabling the communication exchange through API.

Figure6: Illustrates NEF and its role in enabling the network and external applications to exchange information, REF[5]

CAMARA Project: Accelerating Innovation through Standardized APIs

The CAMARA project, an open-source initiative hosted by the Linux Foundation, is pivotal in advancing the telecom industry’s move towards programmable networks and Network as a Service (NaaS). CAMARA aims to develop standardized APIs for network services, enabling seamless integration and interoperability across diverse network functions and applications.

This initiative promotes community-driven development and open-source principles, fostering collaboration among CSPs, technology vendors, and developers. Supported by leading industry players, CAMARA drives the adoption of robust, secure, and widely accepted APIs, facilitating new business models and revenue streams. By focusing on the needs of future technologies, CAMARA ensures that the telecom sector is well-equipped to leverage the unique capabilities of 5G, B5G, and beyond. REF[8]

Transition to a Service-Centric Model

The TM Forum’s focus on NaaS and service lifecycle management underscores the industry’s shift towards a service-centric model. This approach emphasizes managing the entire lifecycle of network services, from design and deployment to operation and optimization. By adopting a service-centric mindset, CSPs can deliver more personalized and efficient services, improving customer satisfaction and driving business growth. This approach also helps CSPs optimize operations and reduce costs by streamlining processes and improving resource utilization.

Figure7: Open Gateway NaaS Architecture and contributing stakeholders REF[7]

Conclusion

The telecom industry’s shift to programmable networks and NaaS marks a pivotal moment in its evolution. By embracing APIs, NEF, and service lifecycle management, CSPs can unlock new opportunities for innovation and growth. The collective efforts of industry stakeholders, supported by initiatives from TM Forum, GSMA, and CAMARA, will pave the way for a digitally interconnected future where collaboration and innovation are the norms. As the industry continues to evolve, embracing these advancements will be crucial for CSPs to stay competitive and meet the ever-growing demands of the digital age.

This journey is not just about technological advancement; it’s a collective endeavor towards a digitally interconnected future. It’s an invitation for all stakeholders, from telecom operators and technology providers to developers, to contribute to and reap the benefits of the expanding digital economy. Let’s embrace this transformative time, shaping the way we connect and interact in the digital world.

References

1. IG1224 NaaS Transformation v12.0.0″: https://www.tmforum.org/resources/reference/ig1224-naas-transformation-v12-0-0/
2. “Northbound exposure – how NEF and CAMARA can enable telecom’s platform play” by James Crawshaw, Practice Leader: https://omdia.tech.informa.com/om028769/northbound-exposure–how-nef-and-camara-can-enable-telecoms-platform-play
3. ETSI TS 129 522 V16.4.0 (2020-08) – 5G; 5G System; Network Exposure Function Northbound APIs; Stage 3.
4. 3GPP TS 23.501 version 15.3.0 Release 15; System Architecture for the 5G System
5. “Common Framework for 5G Northbound APIs”: https://www.etsi.org/deliver/etsi_ts/123200_123299/123222/15.03.00_60/ts_123222v150300p.pdf
6. “5G and B5G NEF exposure capabilities towards an Industrial IoT use case” : https://scholar.google.com/scholar?q=5G+and+B5G+NEF+exposure+capabilities+towards+an+Industrial+IoT+use+case&hl=en&as_sdt=0&as_vis=1&oi=scholart
7. “The-Ecosystem-for-Open-Gateway-NaaS-API-development”: https://www.gsma.com/solutions-and-impact/gsma-open-gateway/gsma_resources/naas-ecosystem-whitepaper/
8. https://camaraproject.org/; APIs enabling seamless access to Telco network capabilities

Ameer Shohail, Experienced ICT Solutions Design Specialist and IEEE Senior Member at a Tier 1 telecom operator in the Middle East, specializing in advanced wireless technologies