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Huawei, ZTE and Ericsson to Dominate Telecom Infrastructure Equipment Market – or not?
The Deah of Network Infrastructure Companies- Will Only 3 remain standing?
Most network infrastructure equipment companies, with the exception of Chinese based Huawei and ZTE, seem to be either losing money or exiting the business.This includes the big three of Alcatel-Lucent, Nokia-Siemens and Ericsson, but also a whole lot of niche market players that have been around for a very long time, e.g. Fujitsu, NEC, Hitachi, ADC Telecom, ADTRAN, etc.
The telecom infrastructure market seems to be dominated now by tje Chinese dynamic duo of Huawei and ZTE which are breathing down LM Ericsson’s neck to be the leader in wireless infrastructure gear. Chinese upstart UT Starcom is not too far behind them.
Many U.S. and European companies that were keen on telecom equipment have quit in the last few years. After making many acquisitions in the late 1990s, Cisco has pretty much exited the telecom transmission business (they still sell some optical network gear and switches + routers to telcos). Intel spent over $10B on telecom equipment company acquisitions but sold those all off at a loss. Motorola Networks is being sold to NSN, but that’s being contested by Huawei. The smaller players have just disappeared. It is not clear what the strategy is for NEC and Fujitsu, but we guess they are concentrating on sales in their home market in Japan and also looking to sell equipment in Asia-Pacific region (especially China).
Huawei
Network Computing reports, “Huawei is taking the wraps off of its 2-year-old presence in North America, with the unveiling of its cloud computing strategy and the opening of an R&D facility. The China-based telecommunications equipment vendor has been averaging annual growth in the 30 percent range, says John Roese, who was recently appointed head of R&D in North America for Huawei.
Serving 45 of the top 50 global telecom operators, the company had revenues of $22.8 billion in 2009 and was expecting revenues of $27 billion for 2010. Its mobile device subsidiary was predicting revenues of $4.5 billion, up 21.6 percent year-over-year. North American revenues are expected to exceed $1 billion in 2011.
Roese, who was previously the Nortel CTO, says Huawei is heavily focused on R&D and disruptive technologies. Our culture tells us it is a great thing to do something disruptive, he says: “I tend to seek out places that will have a lot of action … disruptive innovations.”
Almost half of the company’s 100,000-person global staff–47,000–are engineers, including almost 1,000 technical staff in North America. When the company was deciding where to base its disruptive expertise, North America was the choice, Roese said. After setting up operations in Canada in 2008, the company has been tripling its staff every year, hiring expertise from both the telecom and computing fields and looking for people who want to reinvent the industry.
Historically, Huawei has been focused on the carrier infrastructure space, with a strong device component including smart phones and smart cards. Going forward, the company is looking to move up the stack. “
http://www.networkcomputing.com/wireless/huawei-comes-out-of-stealth-mode.php
ZTE
In an article today, Reuters Canada states, “ZTE is gunning to be among the world’s top three telecom equipment makers in the coming years, a wireless executive told Reuters on Monday Feb 13, 2010. It would be a major move for ZTE, which is smaller than its better-known Chinese counterpart Huawei, and holds roughly 5 percent market share in wireless gear, according to Bernstein Research.
“We want to be in the top three in terms of revenues and market share,” said Xu Ming, vice-president of wireless services in an interview with Reuters-Canada at the Mobile World Congress in Barcelona.
Founded in 1985 in the southeastern Chinese city of Shenzhen, ZTE earned about half of its revenues outside China last year by selling both handsets and fixed and wireless network gear. It benefits from a low-cost base like Huawei, but its margins are lower because of its lack of scale in many business lines, according to analysts. ZTE’s ambitions could be bad news for other telecom gear makers, notably the smaller European vendors Nokia Siemens Networks and Alcatel-Lucent, which have lost market share to low-cost Chinese rivals in recent years. ZTE posted 2010 revenues up about 16.7 percent at $10.67 billion last year, while operating profit was up 26 percent at $396.5 million. Analysts called the results positive, given tough conditions in China, where operators cut spending by 20 percent after a binge in wireless buildouts in 2009.
Xu Ming, vice-president of wireless services for ZTE told Reuters, “”We want to be in the top three in terms of revenues and market share. Xu said international expansion was a major priority for the company. “Our strategy for the wireless business in the past 10 years has been to gain critical mass in China, then we expanded into emerging markets like Africa, Asia, and Latin America. Now we are bringing that push into developed markets like Europe.”
Xu said he was confident ZTE could make its goal of reaching the top three. “The trend is very clear. If you look at Alcatel Lucent or Nokia Siemens Networks, their growth rate is flat or shrinking, and even market leader Ericsson has a slow growth rate. For ZTE, if we can continue to grow at the very rapid rates that we have seen in recent years, we will soon take over one of the major vendors in terms of revenues.”
http://ca.reuters.com/article/technologyNews/idCATRE71D3U020110214
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LM Ericsson
Ericsson, still the world’s leading telecom infrastructure vendor, must surely be worried about the rapid ascent of Huawei and ZTE. We believe Ericsson is in a better position than its European- American and Japanese rivals to resist the Chinese led onslaught, as its economies of scale give it higher sales and better profit margins.
Note: LM Ericsson is not to be confused with ST Ericsson, which is a joint venture of STMicroelectronics (NYSE:STM) and Ericsson (NASDAQ:ERIC). For the latest financial results of the latter company, please visit:
http://www.ericsson.com/thecompany/press/releases/2011/01/1481961?WT.mc_id=hugin_press_rss
Expert Analyst Comment
Tim McElgunn, Chief Analyst, Pike & Fischer had this to say:
“Yes, it has been a hard few years for network equipment vendors and some companies have exited or pulled back, but the trends are looking up somewhat. Alcatel-Lucent and NSN both turned in profitable 4Qs; Ericsson reported profits up more than tenfold in the fourth quarter, boosted by a jump in mobile broadband sales. Adtran had a great year, and Ciena reported very strong revenue: its loss was primarily due to the costs of integrating its chunk of Nortel.
As for the myriad small guys who disappeared, most were acquired and the technology continues on as part of larger NEMs’ portfolios.
Rapid growth in HD video, wireless broadband, more symmetrical traffic patterns on the up and downstream, etc are all driving bandwidth demand and the resulting demand for infrastructure and integrations services at all points of the network.
No doubt, all need to improve efficiencies and cut costs. Alcatel-Lucent particularly has struggled to find the synergy benefits promised at the time of the merger.
Huawei and ZTE are obviously significant competitors, but I don’t think they are quite ready to take over the world. Like everyone else, they must compete on technology, product quality and innovation. They also face barriers created by national security concerns and other, less open protectionist concerns. Specific to the Moto acquisition, Huawei has raised some objections but is unlikely to have enough political juice in either the U.S. or EU to scuttle the deal.
The total number of broadband subscribers continues to expand, just more slowly. That said, growth drivers include commercial services, advanced advertising, and content. Additionally, we are seeing valued added services coming to market, such as premium support (see Time Warner Cable Signature Home) or home security and automation, etc. that should help maintain ARPU and margins going forward.
In addition, if they are successful with their emerging strategies, service providers will be among those who benefit from OTT, leveraging their dominance of broadband access, existing content relationships, increasing multi-screen capabilities, and (reportedly) improving interfaces and ease of use to attract and retain users that might otherwise go to more pure play OTT options. Still, companies like Roku and Boxee at the new/small end and Google and Apple at the established/huge end will all benefit from over the top. Other beneficiaries include other tablet makers and consumer electronics companies, who are adding features to take advantage of OTT directly into their gear. The business models for service providers are evolving incredibly quickly. Nearly all of that evolution translates into increased pressure on infrastructure. Smart companies on both sides of the equation will find ways to turn the resulting disruption to their advantage, those that cannot will lose ground rapidly.”
For a review of P&F 2011 Broadband Outlook report please go to:
http://viodi.com/2011/02/13/pf-2011-broadband-outlook-examines-over-the-top-vs-pay-tv-services/
Bottom Line
In conclusion, we wonder if only three players- Ericsson, Huawei and ZTE- will be the only dominant telecom equipment infrastructure vendors in coming years or if there’ll be room for more vendors (as Tim McElgunn suggests) . And what new services/technologies will drive revenues and profits? What do you think?
Students Develop App for ComSoc
Prof. James Won-Ki Hong and his students Yeongrak Choi and Yoonseon Han from POSTECH, developed and provided an iPhone application for ComSoc members with an Apple iOS device such as the iPhone, iPad or iPod Touch.
The App was developed as part of a term project for a graduate course called, “Smartphonomics: Convergence using Smart Phones and Devices” in the Division of IT Convergence Engineering,POSTECH, Korea.
A beta version of this application was demonstrated at the ComSoc committee meetings atGlOBECOM 2010 in Miami last December. It showed how ComSoc members might soon be able to access ComSoc online content via their smartphones. The ComSoc iPhone App is now available to our members from the Apple App Store for free.
The team plans to provide similar native smartphone applications for Android-based mobile devices soon.
New Urgency to Move to IPv6 as Last Block of IPv4 Addresses are Allocated
With the allocation of the last block of IPv4 addresses by the Internet Assigned Numbers Authority (IANA) , the move to IPv6 has become much more urgent. On January 31st, IANA assigned two large blocks of IPv4 addresses to the Asia-Pacific Network Information Centre, activating a rule under which the agency will give out the last of its IPv4 addresses. The rule states that when only five large blocks of IP addresses remain, one will be handed out to each of the world’s five regional Internet registries.
With the latest allocation to APNIC, the number of remaining IP address blocks is down to five. IANA is expected to assign the remaining blocks within a matter of days. After that, the regional bodies will have no higher source of addresses to turn to when they have assigned the addresses they hold. An IANA official said last week that he believes ISPs are accelerating their requests for addresses as the supply nears its end.
IPv4’s 32 bit address space allows for only about 4.3 billion unique Internet addresses, which client and web servers use to connect over the Internet by routing data to the correct destination. The remaining IPv4 addresses have been dwindling over the past few years. While the last block of IPv4 addresses have been allocated to regional registries, they do still have some to distribute. And there are millions of unused IPv4 addresses. But those unused IPv4 addresses will likely be allocated very soon.
IPv4 address exhaustion will likely impact Asia first. With 24 million IP addresses used by APNIC in January 2011, and only around 50 million addresses left in its pool, exhaustion is expected to occur in the next few months. Europe will be next (probably towards the end of 2011), and North America will follow (in 2012).
Hence, it’s now more important than ever for ISPs to transition from IPv4 to IPv6 addresses. IPv6 has a 128-bit address space, which could be used to assign an almost unlimited number of addresses. To help make the IPv6 migration easier, many major technology companies – including Facebook, Google, Microsoft and Yahoo – will be participating in World IPv6 Day later this year, a test to make sure their systems are ready to make the switch.
Many pundits say that making the switch won’t be easy for ISPs. Even though IPv6 was standardized more than a decade ago, there has been no real incentive to upgrade networks’ addressing compatibility. But with the proliferation of mobile devices, M2M communication endpoints, and other “connected” gadgets, there is a real need now for more IP addresses. Dave Thaler, software architect at Microsoft and Internet Engineer Task Force (IETF) co-chair, said, “The IETF has actually been preparing for this day for a long time. … [W]e’ve developed transition technologies to ease the transition to IPv6, while also looking at the impact of carrier-grade NATs [network address translations]. In short, the depletion of the IANA IPv4 address pool is not a crisis, and will not have any notable short-term effects.”
For an in depth presentation and panel session on this important topic, please attend the February 15, 2011 ComSocSCV meeting in Santa Clara, CA: The meeting is free, but we do request a small donation for food and drinks served from 6pm- 6:30pm.
IPv6 Migration, Business Continuity, Implementation Gaps
Cisco Visual Networking Index Update: Continued exponential growth forecast for mobile data and video!
Global mobile data traffic will grow 26 times between 2010 and 2015, to 6.3 exabytes–a billion gigabytes–per month, according to the latest update report from Cisco’s Visual Networking Index Global Mobile Data Traffic Forecast. Additionally, fully two-thirds of all mobile data traffic will be video by 2015, the report predicted. The figures again underscore the challenges operators face as they try to manage the tidal wave of mobile data that may saturated their wireless networks. According to the report, mobile data traffic grew 159 percent in 2010, roughly 3.3 times faster than fixed Internet traffic. That was higher than the 149 percent growth rate Cisco had predicted.
This annual forecast is seen as a key benchmark for measuring and predicting data traffic., Doug Webster, Cisco’s senior director of worldwide service provider marketing, said four main factors will drive mobile data traffic in 2015. First, there will simply be more mobile devices; Cisco predicts that by 2015 there will be 5.6 billion mobile devices and 1.5 billion separate machine-to-machine nodes–roughly one mobile connection for every person in the world. Additionally, he said, devices will have better computing capabilities and the ability to access high-bandwidth content; average bandwidth speeds are expected to increase 10-fold by 2015; and more people will consume rich content like video. “The lines between fixed and mobile will converge, and the trends we’re seeing on the fixed will be seen on mobile,” Webster told FierceWireless.
Thomas Barnett, the senior manager for service provider marketing at Cisco, said carriers are investing billions of dollars in research and development to try to get ahead of the traffic. Barnett said carriers likely will rely on tiered pricing models and femtocells as methods to slow data use and offload it from the wireless network.
AT&T Mobility became the first U.S. carrier to move to usage-based pricing last year, and Verizon Wireless has indicated it may follow in the not-too-distant future. “This is business for the providers,” Webster said. “They want to have more subscribers. They’re not trying to minimize the amount of traffic, but they want to make sure they are compensated appropriately for the cost of delivering it.”
But tiered pricing and metered data transfers won’t be enough to prevent wireless network saturation. The WSJ reported this week that AT&T and other carriers are looking to offload mobile data traffic to “city wide” WiFi hotspots in the not too distant future. This past May, AT&T launched a so-called “Wi-Fi hotzone” —an industry term for a large, outdoor Wi-Fi hotspot—in New York City’s Times Square, in order to test the technology as a supplement to its cellular coverage.
In subsequent months, AT&T, which uses gear from BelAir and others, added hotzones in downtown Charlotte, N.C., and the neighborhood surrounding Chicago’s Wrigley Field. In December, the carrier said it would add more Wi-Fi networks in New York City—including a hotzone launched last week in Rockefeller Center—as well as in San Francisco’s Embarcadero Center.
http://online.wsj.com/article/SB10001424052748704124504576118353354099780.html#ixzz1D1sdd1Gk
Meanwhile, Ruckus Wireless, a pioneer in the development of smart WiFi for enterprise and service provider markets, has announced that Chongqing Telecom will be launching a new innovative service, Tianyi Broadband, with the support of Ruckus’ smart WiFi. Chongqing Telecom, a division of China Telecom, aims at a large-scale, citywide deployment of WiFi hotspots with Tianyi Broadband.
Comment: What we find surprising, is that Cisco is only benefiting indirectly from the surge in mobile data/ video traffic. You won’t find Cisco gear in any cell tower. Having shut down their WiMAX RAN operations last year, the company has no presence in mobile broadband = either in wireless access or backhaul. Today, Cisco’s participation in mobile data networks seems to be limited to selling Ethernet switches, IP routers and IP NGN back end network management systems/OSS’s (mostly to developing country network operators).
The company does sell some wireless gear- enterprise WiFi solutions for campuses as well as home WiFi routers. But those markets have nothing to do with the cellular networks that carry mobile data or video traffic. For several years, we’ve wondered if the Cisco has any intentions to participate in the Radio side of mobile data networks.
Other References: articles by this author on network operators ability to cope with the mobile data traffic explosion
http://viodi.com/2010/08/01/conundrum-continues-mobile-video-drives-mobile-traffic-but-for-how-long/
http://www.wimax360.com/profiles/blogs/how-will-wireless-network
IEEE 1901 Broadband over Powerline (BoPL) final standard published by IEEE
The IEEE 1901,standardi was finalized in December 2010 and published this week. It is of keen interest to manufacturers and service providers rolling out home networking services such as smart energy, transportation and Local Area Networks (LANs). The BoPL standard can be purchased at the IEEE’s website (www.ieee.org) or accessed from the IEEE Xplore Digital Library by IEEE Xplore subscribers.
IEEE 1901 compliant networking products will deliver 500 Mbps data rates in LAN applications, according to the IEEE. In a last mile network it will be able to run over distances of up to 1500 meters. That latter distance would support last mile transmission to and from Fiber to the Node or to the Neighborhood (with GPON likely used as the fiber point to multipoint transmission system)
The new IEEE 1901,standard leverages two different PHY layers: one based on OFDM modulation and another based on Wavelet modulation (as developed by HomePlug Powerline Alliance to transmit data over standard AC power lines of any voltage at transmission frequencies of less than 100 MHz). One or both of these PHY layers can be included in standard compliant BoPL implementations.
Home Network Applications: A service provider rolling out home networking services to consumers could use the BPL technology to complement wireless LAN coverage to overcome wireless LAN distance limitations and obstructions in a home or even to complement a hotel chain’s network WiFi coverage. However, in that application BoPL will compete with MOCA- the cable based home networking distribution system In the future, it will be one of the modes of ITU G.hn the all encompasing home networking standard that has yet to be deployed.
Vehicular Applications: Using the data rates and range prescribed within the IEEE 1901 standard, leading edge developers can deliver audio visual entertainment to the seats of airplanes, trains and other mass transit vehicles, and enable electric vehicles to download a new entertainment playlist to the A/V system while the car is charging overnight.
Other Applications: Multimedia data will be carried over longer distances in hotels and other multistory buildings to complement wireless networks. For many years it was thought that would be the “killer app” for VDSL, but it still hasn’t happened yet. Instead, it seems like hotels, multi-tenant buildings, and high rise office buildings may be able to use BoPL for high speed communication
This new IEEE 1901 standard has the potential to also help utilities, service providers, consumer electronics companies, smart-meter providers and home appliance manufacturers.
Light Reading’s Opinion:
Light Reading’s Cable Site Editor, Jeff Baumgartner, believes that this standard will be in competition with ITU G.hn. He states, “IEEE P1905.1, is being dressed up as a potential G.hn competitor because it would create an abstraction layer to manage those home networks that use a blend of physical layers. Because that IEEE work doesn’t necessarily involve new chips that might, for example, integrate Wi-Fi, HomePlug and MoCA on the same piece of silicon (though we’d never put it past Broadcom Corp. (Nasdaq: BRCM) to tackle such an effort), G.hn backers view 1905 as complementary to what they’re doing. (See IEEE to Blend MoCA, Powerline & Wi-Fi .)
Ensuring that this coming abstraction layer works on top of G.hn was the “number-one topic” discussed at the 1905 kickoff meeting in December, claims Chano Gomez, the co-chair of the HomeGrid Forum committee (the marketing group behind G.hn) and the business development director for Lantiq Deutschland GmbH . Lantiq makes Wi-Fi and G.hn chips, so it’s got an incentive to draft off any initiative that looks to ease the management of heterogeneous home networks.
He adds that “literally half the group was pushing for this idea,” including people representing the interests of Intel Corp. (Nasdaq: INTC), Sigma Designs Inc. (Nasdaq: SIGM) and Marvell Technology Group Ltd. (Nasdaq: MRVL) (which all happen to be in the G.hn camp). He also acknowledges that, unsurprisingly, the concept met with resistance from folks that aren’t developing G.hn products
Gomez says G.hn, a standard under the auspices of the International Telecommunication Union, Standardization Sector (ITU-T) , is solving a different problem from IEEE’s 1905 project, so they should be viewed as harmonic helpers.
While G.hn uses a unified MAC and PHY to support coax, phoneline and powerline on the same chipset, 1905 looks to help manage myriad physical layers. In those instances, it may be managing a mix of home network devices that use Wi-Fi, Multimedia over Coax Alliance (MoCA) and Ethernet.
The IEEE standard will also look to create a meshing fabric that aggregates wireless and wired streams on the home network, and can switch automatically to another type of connection when one type starts to degrade in performance.
IEEE was not immediately available to discuss whether it’s already considering adding G.hn in 1905 at this stage of the project. But it’s early. Having a “stable draft” emerge within a year would be “an ambitious target,” 1905 Project Chair Paul Houze told Light Reading Cable last month. The 1905 working group has four meetings scheduled for this year, the next set for April 5 through 7 in Vienna.
Information posted by the working group expressly references technologies such as IEEE 1901 (Broadband over Power Line), 802.11, Ethernet and MoCA 1.1, with the caveat that the standard will be “extendable to work with other home networking technologies.”
That would suggest the window is open not just to G.hn but to technologies such as Home Phoneline Networking Alliance (HomePNA) .”
http://www.lightreading.com/document.asp?doc_id=203961&site=lr_cable&f_src=lightreading_gnews
Other References:
Here’s the press release announcing the new IEEE 1901 standard:
Final IEEE 1901TM Broadband over Power Line Standard Now Published
For more information see:
IEEE P1901 Standards Group web page
http://grouper.ieee.org/groups/1901/
IEEE sets foundation for global powerline network standard, by FierceTelecom
ITU-T FG Cloud concludes fourth meeting: Nanjing, China, 10-13 January 2011
Introduction:
The fourth ITU-T Focus Group on Cloud Computing (FG Cloud) meeting took place in Nanjing, China, from 10 to 13 January, 2011 with 50 contributions presented by representatives of ITU-T member companies. Access to FG Cloud documentation is restricted to TIES users, or GUEST users (http://www.itu.int/ITU-T/edh/faqs-guest.html) having registered to FG cloud mailing list. Excellent progress was made resulting in 6 technical output documents and an ITU-T TSAG report covering the activities of the two Working Groups of the FG Cloud:
WG1: Cloud computing benefits & requirements
WA 1-1 Cloud Definition, Ecosystem & Taxonomy
WA 1-2 Uses cases Requirements & Architecture
WA 1-3 Cloud security
WA 1-4 Infrastructure & Network enabled Cloud
WA 1-5 Cloud Services & Resource Management, Platforms and Middleware
WA 1-6 Cloud computing benefits & first Requirements from ICT perspectives
WG2: Gap Analysis and Roadmap on Cloud Computing Standards development in ITU-T
WA 2-1 Overview of cloud computing SDOs activities
WA 2-2 Gap analysis & Action plan for development of relevant ITU-T Cloud Standard
Backgrounder:
The Focus Group on Cloud Computing (FG Cloud) was established further to ITU-T TSAG agreement at its meeting in Geneva, 8-11 February 2010 followed by ITU-T study groups and membership consultation. The Focus Group will, from the standardization view points and within the competences of ITU-T, contribute with the telecommunication aspects, i.e., the transport via telecommunications networks, security aspects of telecommunications, service requirements, etc., in order to support services/applications of “cloud computing” making use of telecommunication networks; specifically:
-Identify potential impacts on standards development and priorities for standards needed to promote and facilitate telecommunication/ICT support for cloud computing
-Investigate the need for future study items for fixed and mobile networks in the scope of ITU-T-analyze which components would benefit most from interoperability and standardization
-Familiarize ITU-T and standardization communities with emerging attributes and challenges of telecommunication/ICT support for cloud computing
-Analyze the rate of change for cloud computing attributes, functions and features for the purpose of assessing the appropriate timing of standardization of telecommunication/ICT in support of cloud computing
The Focus Group Cloud will collaborate with worldwide cloud computing communities (e.g., research institutes, forums, and academia) including other SDOs and consortia. The chairman, Mr. Victor Kutukov (Russia) and the five Vice-chairmen, Jamil Chawki (France Telecom Orange, France), Kangchan Lee (ETRI, Korea), Mingdong Li (ZTE, China), Monique Morrow (Cisco Systems, USA), Koji Nakao (KDDI, Japan) were appointed as the FG Cloud leadership.
Nanjing Meeting Results:
The outputs of this meeting are described in the following documents (again, only accessible to TIES users with user id/password):
1. Introduction to the cloud ecosystem: definitions, taxonomies, use cases, high level requirements and capabilities.
2. Functional requirements and reference architecture
3. nfrastructure and network enabled cloud
4. Cloud security, threat & requirements
5. Benefits of cloud computing from telecom/ICT perspectives
6. Overview of SDOs involved in cloud computing
As a result of contributions and discussions, the following topics were extracted as a first proposal for cloud candidate study items for ITU-T:
1) Cloud Ecosystem: telecommunication-centric use cases, high level requirements, business deployment scenarios
2) Security, audit & cloud privacy
3) Cloud functional Architecture
4) Cloud Networking : Elastic Transport network resources and connectivity
5) Inter-Cloud including cloud federation and brokering
6) Accessibility and Eco-friendly Cloud Computing (environmental benefits)
7) Management and SLAs
In addition to these study items the ITU-T FG Cloud will deliver a general output document for Cloud Definition, Terminology, Ecosystem, use cases and general requirements.
For further information, please visit: http://www.itu.int/en/ITU-T/focusgroups/cloud/Pages/default.aspx
Telcordia Is Up for Sale- who will bid for the company?
A History Lesson
As part of the divestiture of the Bell System in 1983, many AT&T Bells Labs engineers were transfered to a new company that was to be the research labs for the seven spun-off RBOCs. Named Bell Communications Research- or Bellcore for short- the organization was formed January 1,1984. Over the next several years, Bellcore was very effective in helping their parent companies evaluate, standardize and arcitect new telecommunications technologies, e.g. ISDN, SMDS, Frame Relay, Software Defined Network, Intelligent Network, etc. Bellcore’s standards for TL1 – the language of telco network management, and SONET (Synchronous Optical Network Transport) were implemented by every equipment company in those market segments.
But as the RBOCs put less of an emphasis on research and developement there was less need for Bellcore. So the company was sold to Science Applications International Corporation (SAIC) in 1995. What SAIC was getting, according to Bellcore’s CEO at the time, was a $650 million-a-year software business and a $350 million-a-year professional services business. The approval process for the deal was arduous, passing muster with seven owners and nine state regulatory agencies, so that the sale was not completed until November 1997.
When SAIC acquired Telcordia, it was a government contractor, primarily involved in defense, that was generating more than $2.1 billion in annual revenues. Telcordia’s expertise in telecommunications presented SAIC with new areas for growth in the private sector. The company was renamed Telcordia in 1999 to break any claims to its former owners.
According to Wikipedia, “Telcordia has pioneered many of the telecommunications services used today, including Caller ID, Call Waiting, Mobile number portability and Toll-free telephone number (800) service. Telcordia’s expertise lies in managing large, complex projects across the operations and communications spectrum.”
In 2000, Telcordia was still involved with generic requirements and U.S. standards for SONET (as well as the emerging Optical Transport Network or OTN), but they started to focus more on progressing the back end network management software -often referred to as Operations Support Systems (OSSs) and Billing Support Systems (BSSs) – that they had developed for the RBOCs. The objective was to sell OSS and BSSs to telcos all over the world.
For reasons never publicly disclosed, SAI sold Tecordia to Providence Equity Partners and Warburg Pincus in November 2004 for for $1.35 billion. Those two privaty equity firms hold equal stakes in the company.
According to the January 14. 2011 Wall Street Journal, those firms have now put Telcordia up for sale again.
http://online.wsj.com/article/SB10001424052748703959104576082252304953250.html?mod=googlenews_wsj
Fast Forward to the Present: Is Telcordia worth $1.5B asking price?
Susana Schwartz of Connected Planet on-line wrote:
“On the one hand, Telcordia remains a very powerful player in service assurance and fulfillment, thanks to its relationships with AT&T, Qwest, Verizon and Level 3–all of which provide it with steady, predictable revenues (to the tune of about US$300 million/year).
And it has been expanding into new territory –literal and figurative. For one, Telcordia has definitely tried to shift focus to emerging markets like Latin America and India (about 20%of it business is now international). And, it has reached into some new sectors like government and automotive. Surely someone might find value in the fact Telecordia has amassed an enormous amount of intellectual property and expertise in the area of legacy circuit-switched networks.”
The previously referemced WSJ article says that Telcordia “has a line of next-generation products centered on Internet-protocol-based communications that is expected to bring the lion’s share of revenue in coming years.” Yet it remains to be seen if that offering will be competitive with IP based management systems being developed by Cisco Systems.
It will be quite interesting to see which companies bid for Telcordia. It could be to its back end network management competitors (like Oracle, Amdocs, HP, IBM), a company trying to get into that marketplace, or another private-equity firm. The referenced WSJ article notes “Carlyle Group bought Syniverse Holdings Inc. another provider of mobile network technology, for $2.6 billion—a multiple of about 11 times Ebitda, a standard measure used to calculate deal value. Carlyle also bought Commscope, a maker of fiber-optic cables, for $3.9 billion.” Read more: http://online.wsj.com/article/SB10001424052748703959104576082252304953250.html#ixzz1Bod7G4Mz
So it seems to us that Telcordia should fetch at least the $1.5B asking price, but we are not aware of any bids at this time. The key question is whether they can compete in IP (Internet Protocol- not Intellectual Property) back end network management systems with the many new players, e.g. Cisco, in that marketplace.
WiMAX in India Remains a Puzzle- will it be usurped by TD-LTE?
We’ve written about the huge potential for WiMAX in India for many years, but we still don’t see any broad committment by Indian mobile operators to the technology. Last year, the Indian government raised over Rs 38,300 crore through the auction of Broadband Wireless Access (BWA) spectrum which was expected to be used to deploy mobile WiMAX (IEEE 802.16e-2005). However, none of the network operators in India has yet made a formal announcement on their plans for offering BWA services or the chosen technology.
Reliance Infotel (the only company with a pan-India license) is doing trials using TD-LTE technology. So it was anticipated that other operators might also opt for the same technology, but none have announced their intentions to date.
The WiMAX Forum has said they are “not threatened” by TD-LTE, as the market is big enough for both technologies to co-exist. WiMAX Forum Director of Marketing Declan Byrne recently stated, “We are not threatened by the (TD-LTE) technology. We are actually delivering mobile broadband, while TD-LTE is still under trial. My request to the TD-LTE camp is — this is a big market, let us cooperate to serve it well. We are hearing a very positive response. Operators are testing equipments (in India) and we remain positive on the market here.”
Yet it remains to be seen whether the companies would deploy TD-LTE, WiMAX or a hybrid-type network (supporting WiMAX in the initial stage with a migration path to TD-LTE).
Closing Comment: Despite the steady growth in India’s mobile subscriber base to over 700 mn, broadband segment remains an area of concern. Although broadband uptake has increased in couple of years yet the penetration level is just 0.74%, lowest in the world. With an increasing focus on wireless broadband it is more likely to present a huge opportunity for all stakeholders in the value chain-operators, Internet service providers, equipment, manufacturers and value added service providers. This is why India has so much untapped potential for mobile and fixed wireless access!
Addendum
January 2011 WiMAX Forum Industry report:
http://www.wimaxforum.org/resources/monthly-industry-report
Here is a map of Global WiMAX deployments (somewhat difficult to decipher, IMHO). WiMAX Forum cautions the reader:
“Please note that the numbers below do not necessarily represent total WiMAX networks in existence, but rather the total deployments that we currently track.”
IEEE 802.16m (WiMAX 2.0) Standard to be completed in March; will anyone attend the coming out party?
Report from the Taipei WiMAX Summit
ITU-R had blessed IEEE 802.16m earlier this year, as the first true 4G RAN technology (along with LTE Advanced). That standard is to be finalized and approved in March of this year. The 2011 Taipei WiMAX Summit, held by Taiwan`s Ministry of Economic Affair officials on Jan. 10 at Grand Hotel in conjunction with week-long IEEE 802.16 meeting and WiMAX Forum Global Operator Summit, have drawn over 100 global WiMAX operators to the island. That’s quite positive for the local Taiwanese WiMAX equipment makers. Let’s hope they’re not disappointed!
IEEE 802.16’s Session #71 was held on 10-13 January 2011 in Taipei. This Interim Session of the Working Group was sponsored by ITRI and MediaTek, with Global Mobile providing WiMAX-based network services. The 802.16m editors will prepare a final draft standard – P802.16m/D11- which the 802.16 WG will vote on as a confirmation recirculation ballot for final standard approval.The IEEE 802.16 Session #71 Report summarizes the outcomes: <http://ieee802.org/16/meetings/mtg71/report.html>.
The next IEEE 802.16 meeting (Session #72) will take place on 14-17 March 2011 in Singapore: Here’s the meeting announcement:
http://ieee802.org/16/meetings/mtg72
Other References:
http://viodi.com/2010/10/20/itu-r-progresses-lte-advanced-and-wimax-2-0-as-4g-ran-standards/
http://news.cens.com/cens/html/en/news/news_inner_35072.html
Here’s an upbeat article on WiMAX 2.0 from Taipei:
“The next generation of the WiMAX standard will be commercialized this year, industry officials promised as they gathered in Taiwan for technology meetings last week. WiMAX2, based on the 802.16m standard, will be backwards compatible with the current Mobile WiMAX platform, but with faster data rates, and enhanced security and power efficiency. It will also support wide 20MHz channels.
The Taipei meetings were a prelude to the finalization of the IEEE’s 16m standard in March, which would set the scene for products to appear at the end of this year. The certification and interoperability testing processes, which were lengthy for the current 16e platform, should be far quicker this time, because it is an extension of an existing standard, and because many lessons have been learned about how OFDMA-based devices behave.
[]Once 16m is approved this quarter, manufacturers will be able to pre-install the technology and begin the testing programs. Rakesh Taori, vice chair of the 802.16 working group, told IDG that key enhancements will be better battery life for devices; privacy protection for users and their locations; and the doubling of bandwidth, which will enable data rates that will leapfrog those of LTE and get closer to the goal of ‘true 4G’, at 100Mbps while mobile.
Taiwan’s state-run Industrial Technology Research Institute (ITRI) is working closely with 10 local manufacturers to kickstart the uptake of WiMAX2. Taiwan has been a critical player in the WiMAX market, placing the weight of its vast manufacturing community behind the technology and aiming to create a national mobile broadband network based on 16e. This is a technology that Taiwan feels it can influence in IPR terms too, unlike 3GPP standards. An ITRI engineer, Song Ting-chen, said in an interview: “That way we’ll be able to exercise our competitiveness in terms of patents or our manufacturing. Some of our contributions have already been accepted by the international community.”
http://wimaxtaipei.tw/news_headline_detail.php?id=2273
http://www.rethink-wireless.com/2011/01/11/wimax2-commercialized-year.htm
Our Opinion:
We continue to believe that IEEE 802.16m will be a “paper tiger” standard and while the technology specs are impressive, any implementations will be DOA. In particular, we wonder if any large network operator will deploy WiMAX 2.0? Doesn’t look like it will be Sprint or Clearwire, who are testing LTE instead. If it’s just UQ Communications in Japan and a few small Taiwanese carriers, that’s hardly enough to establish volumes of scale (critical mass) that are needed to drive the manufacturing costs down.
Moreover, there don’t seem to be any prototype chips or emulators available for testing WiMAX 2.0 this Spring. And we just heard that WiMAX super cheerleader Intel has closed it’s WiMAX Program Office. So where does that leave WiMAX 2.0 implementations?
Most people don’t want to admit it, but IEEE 802 has consistently failed in producing standards for commercially viable MAN/WAN technologies. The list of failures includes IEEE 802.6 DQDB, 802.3ah Ethernet First Mile (EFM), 802.17 Resilient Packet Rings, 802.20 Mobile Broadband Wireless Access, and 802.22 Cognitive Radio based Regional Area Networks. We think 802.16e-2005 WiMAX 1.0 can succeed as a wireless DSL replacement in developing countries and in rural areas of developed countries. But it can’t compete with 3G+/LTE which makes it exremely difficult to justify infrastructure for WiMAX 2.0.
Would welcome any challenges to these opinions in the comment box below.
A Two- Tiered Internet is Upon Us!
And why not? We already pay for premium Internet content, e..g Netflix and other video streaming, WSJ and other on line newspapers/magazines, telco TV, mlb.com, nba.com, nhl.com, etc. It appears that BT Wholesale and Metro PCs in the U.S. will be introducing two tiered networks where customers will pay more for a higher quality of service.
1. BT Wholesale”s new service, called Content Connect, will be sold to their UK broadband network provider customers. It aims to give those network providers tthe opportunity to charge content owners for high quality distribution of their video products to consumers. Sally Davis, head of BT Wholesale, said that by using BT’s new network,broadband providers should be able to reduce their costs partly by cutting spending on “backhaul” connections between telephone exchanges and their core infrastructure.
Ms Davis said broadband providers using BT’s network may be able to give their customers the option to make an on-demand payment for watching a live event such as football. The payment would be in addition to charges associated with watching premium content like live football games.
Content Connect Key Benefits (according to BT)
-End Users benefit from the new Content Connect product:
•TV video entertainment will be delivered to the home through a broadband line with the option of an enhanced experience including HD internet video on TV.
-ISPs benefit from the new Content Connect product:
•Brings ISPs into the content value chain and allows them to earn revenue from delivering internet video from CSPs .
CSPs benefit from the new Content Connect product:
•CSPs can have their content delivered at a higher quality of service.
http://www.btwholesale.com/pages/static/Products/Broadband/Wholesale_Content_Connect.html
As one might expect, BT has been sharply criticized for offering Content Connect by advocates of Internet freedom. They perceive the new BT offering as one of the first steps on the road to a two-tier internet, meaning content providers unwilling or unable to pay extra will be hampered by a slower service.
Jim Killock, executive director of the Open Rights Group, said the issue comes down to ISPs competing with the internet for content delivery. “The result could be a fundamental shift away from buying services from the internet to bundled services from ISPs: which would reduce competition and take investment away from internet companies.”
BT defended its decision by saying it should be allowed the freedom to make commercial deals with content providers, such as 4OD and YouTube, to ensure faster delivery. “We are an enabler – we are not dictating anything,” said the company. “It will be up to broadcasters, ISPs and content owners to work together to decide on the charging model for a service.”
Proponents of net neutrality argue that fair access to content for all providers is one of the founding principles of the internet, and founding father of the web Tim Berners-Lee is well-known as an outspoken supporter of it.
2. Meanwhile, MetroPCS’s “4G LTE” mobile broadband plans, are charging subscribers for content delivery at different rates. Before selecting a wireless plan with MetroPCS, subscribers have to decide how much content you want access to. Here’s the breakdown of the three plans MetroPCs is offering:
•The $40 service plan offers unlimited talk, text, 4G Web browsing with unlimited YouTube access. For $40 per month you can watch as many YouTube videos as you like and browse the web freely. But if you try and watch a video through a service other than YouTube it will not play because your plan does not cover it.
•The $50 service plan includes the same unlimited talk, text, 4G Web services and unlimited YouTube access as the $40 plan. Additional features include international and premium text messaging, turn-by-turn navigation with MetroNAVIGATOR™, ScreenIT, mobile instant messaging, corporate e-mail and 1 GB of additional data access, with premium features available through MetroSTUDIO™ when connected via Wi-Fi, including audio capabilities to listen and download music and access to preview and trial video content.
•The $60 service plan provides the same premium features as the $50 plan, plus unlimited data access and MetroSTUDIO premium content such as 18 video-on-demand channels and audio downloads. Ultimately MetroPCS is only offering a complete Internet experience for $60.
The new plans will initially be offered in Boston, Dallas-Fort Worth, Detroit, Las Vegas, Los Angeles, New York City, Philadelphia, Sacramento and San Francisco. Atlanta, Jacksonville, Miami, Orlando and Tampa will come online at some point this year.
For more details: MetroPCS’ New 4G LTE Plans Offer Unprecedented Value and Choice with Prices Starting at Just $40
http://www.metropcs.com/presscenter/newsreleasedetails.aspx?id=1
Also, this article: MetroPCS LTE Plans to Charge More for VoIP & Streaming
3. What side are you on in this network neutrality vs two tiered Internet paradigm shift? Please comment in the box below!
