Frontier Communications Accelerates Fiber Build Out -10 Million locations passed by 2025
On August 5th, Frontier Communications announced an accelerated fiber optics buildout plan that will result in their fiber-to-the-premises (FTTP) network passing 10 million locations (homes/offices) by 2025. Frontier says they will end 2021 with 4 million locations passed by fiber and will then add another 6 million in a revised, multi-year “Wave 2” plan.
Nick Jeffery, President and Chief Executive Officer of Frontier, said, “The acceleration of our fiber network expansion is clear evidence that Frontier’s transformation is taking hold. Over the past several months, we’ve made real progress in executing our strategy – by adding world-class leadership, introducing a purpose-driven culture, improving the customer experience, and making our operations more efficient and sustainable.
“Demand for high-speed broadband is growing rapidly, and fiber is the best product to meet the needs of consumers and businesses. Frontier is already doing what customers want and cable can’t – delivering symmetrical download and upload speeds with far lower latency than our competition. Early next year, we will start delivering 2 gigabit per second services, further stretching our performance lead to where only fiber can compete. We have hard work ahead of us, but momentum is increasing as we rally the Frontier team around our mission to Build Gigabit America.”
Jeffery added, “Our second-quarter results reflect continuing momentum in our fiber expansion strategy, with all key fiber metrics in line or above expectations. In particular, we accelerated our fiber build out, continued our customer momentum with another strong quarter of consumer fiber net adds, and reduced our consumer churn. Taken together, it was another strong quarter that positions Frontier well as we head into the second half of the year.”
At its virtual investor day, Frontier provided an update on the fiber buildout and other priorities resulting from its strategic review. These include:
- Frontier’s current ability to provide a best-in-class offering featuring symmetrical 1 gigabit per second download and upload speeds;
- Plans to launch a symmetrical 2 gigabit per second offering in the first quarter of 2022 that will unlock next-generation digital experiences for customers;
- Plans to deploy fiber to reach 10 million locations by 2025; and
- A new target of $250 million run rate savings by 2023 from simplifying the Company’s operations and improving the customer experience.
Image Credit: Frontier Communications
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Frontier also offered some revised predictions on service penetration, expecting them to be in the mid-teens to 20% at the end of year one, rise to 25% to 30% at the end of year two, and then on up to 45%. Frontier introduced new pricing for residential fiber broadband service, with entry-level service at 500 Mbit/s.
MoffettNathanson analyst Nick Del Deo (a colleague) wrote in a note to clients:
The single most important data points from today’s analyst day relate to Frontier’s FTTH deployment plans (Exhibit 1). For 2021, the company increased its expectation for new passings from 495K to >600K, which will complete “wave one” of its fiber upgrade project and leave it with ~4M total FTTH passings. Between 2022 and 2025, the company plans to build to another 6M passings, bringing its total to 10M, or about two thirds of its broadband-enabled locations. The remaining 5M, part of wave three, are currently in a holding pattern, with the company working through the optimal approach: do nothing, upgrade, upgrade with government assistance, divest, swap, or do something more creative that we haven’t come up with.
Image Credit: Frontier Communications
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The company also announced it will start to introduce 2-Gig services over FTTP in early 2022, but didn’t disclose pricing.
Del Deo summarized his assessment of Frontier’s fiber buildout (emphasis added):
Frontier plans to build FTTH to 7M incremental homes through 2025, a rapid acceleration from its current pace. This will leave two thirds of its broadband-enabled footprint served by fiber, with the status of the remaining one third TBD. The deployment costs appear somewhat higher, and returns a bit lower, than what we would have expected, but we had haircut the value of its FTTH expansion in our prior work to account for such risks. The faster pace and certainty now reduce the need for such haircuts. The path to financing the build remains open, but the company will need at least a couple of billion dollars in fresh funding. It’s not clear to us that management’s optimism regarding the commercial unit is warranted, but time will tell whether it can engineer a turnaround.
Management has high hopes for the commercial part of its business, and we don’t doubt that growth can get better from where it is today, but we think this will continue to be a segment that weighs on the company’s overall results.
Light Reading’s Jeff Baumgartner opines that “Frontier’s accelerated FTTP buildout plan, revised pricing and plans for 2-Gig service should pressure cable competitors to match up with speeds and pricing. Frontier’s moves might also cause those cable operators to give more consideration to “mid-split” or “high-split” upgrades that dedicate more upstream capacity to their DOCSIS 3.1 networks, accelerate their pursuit of new DOCSIS 4.0 technologies, or shift to full FTTP upgrades in select areas.”
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References:
Ookla: Starlink’s Satellite Internet service vs competitors around the world
Starlink’s broadband internet speeds continue to outpace those of competitive satellite broadband internet providers Viasat and HughesNet, according to telecom speed tracker Ookla.
Given that satellite internet is often the only solution for folks in rural or underserved areas with little to no fixed broadband access, the Speedtest® results from HughesNet, Starlink and Viasat during Q2 2021 were encouraging. HughesNet was a distant second at 19.73 Mbps (15.07 Mbps in Q1 2021) and Viasat third at 18.13 Mbps (17.67 Mbps in Q1 2021). None of these are as fast as the 115.22 Mbps median download speed for all fixed broadband providers in the U.S. during Q2 2021, but it beats digging twenty miles (or more) of trench to hook up to local infrastructure.
Moreover, Starlink was the only satellite internet provider in the United States with fixed-broadband-like latency figures, and median download speeds fast enough to handle most of the needs of modern online life at 97.23 Mbps during Q2 2021 (up from 65.72 Mbps in Q1 2021).
Starlink’s median download speeds in the U.S. are starting to rival those of fixed-line broadband networks, according to Ookla’s latest round of Speedtest data.
While Starlink’s U.S. download speeds are “fast enough to handle most of the needs of modern online life,” they do trail the 115.22 Mbit/s median download speed for all U.S. fixed broadband providers, Ookla explained in its report.
In some areas, Starlink’s U.S. download median speed has surpassed those of fixed wireline network providers.
In its analysis of the Ookla data, PCMag (Ookla and PCMag are both owned by Ziff Davis) notes that Starlink’s median download speed in Morgan County, Alabama, reached 168 Mbit/s. Starlink’s slowest median download speed for the U.S. in the quarter, at 64.5 Mbit/s, appeared in Madison County, Indiana.
There’s only a slight difference between Starlink and broadband wireline networks in the upstream direction. Ookla said Starlink’s median upload speed for Q1 2021 was 13.89 Mbit/s, compared to a median upload speed of 17.18 Mbit/s among U.S. fixed wireline broadband networks. Meanwhile, both Viasat and HughesNet trailed with median upload speeds of 3.38 Mbit/s and 2.43 Mbit/s, respectively.
Starlink’s growing network of low-Earth orbit (LEO) satellites continued to deliver relatively low latencies, important for apps such as online gaming and videoconferencing, when compared to geosynchronous (GEO) systems. Ookla said Starlink’s median latency in Q1 2021 was 45 milliseconds. While that was well behind the 14 milliseconds of latency found on fixed-line networks, it was considerably better than the median latency for Viasat (630 milliseconds) and HughesNet (724 milliseconds).
saw sufficient samples during Q2 2021 to analyze Starlink performance in 458 counties in the U.S. While there was about a 100 Mbps range in performance between the county with the fastest median download speed (Morgan County, Alabama at 168.30 Mbps) and the county with the slowest median download speed (Madison County, Indiana at 64.51 Mbps), even the lower-end speeds are well above the FCC’s Baseline performance tier of at least a 25 Mbps download speed. We also saw many more counties qualify for analysis during Q2 2021 than we saw in Q1 2021.
United Kingdom: Starlink beats fixed broadband providers
Starlink showed a much faster median download speed in the U.K. during Q2 2021 (108.30 Mbps) than the country’s average for fixed broadband (50.14 Mbps). Starlink’s upload speed was also slightly faster (15.64 Mbps vs. 14.76 Mbps), and the latency was pretty good, given the distance traveled (37 ms vs. 15 ms). This brings Starlink closer to contender status for consumers across the U.K., not just those stranded in internet-free zones in Northern Scotland, once the service interruptions are under control. It also shows that because satellite internet is not constrained by the infrastructure of a given country, there is the potential to radically outperform fixed broadband.
This data is changing rapidly as satellite internet providers launch new service locations and improve their technology. Ookla will be excited to see if Starlink is still the satellite provider to beat next quarter and in what other countries satellite internet provides a viable alternative to fixed broadband.
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References:
https://www.speedtest.net/insights/blog/starlink-hughesnet-viasat-performance-q2-2021/
https://www.pcmag.com/news/starlink-moves-closer-to-matching-or-even-beating-fixed-broadband-speeds
https://www.lightreading.com/satellite/starlink-speeds-accelerate-in-q2-ookla-says-/a/d-id/771322?
Starlink now covers all of UK; Plans to connect vehicles with satellite Internet service
Counterpoint: Xiaomi #1 in global smart phone sales for 1st time
Chinese smartphone maker Xiaomi surpassed Samsung and Apple in June 2021 after a 26% month-on-month increase in sales to become the number one smartphone brand in the world for the first time ever, according to Counterpoint Research’s monthly Market Pulse Service.
Xiaomi was also the number two brand globally for Q2 2021 in terms of sales, and cumulatively, has sold close to 800 million smartphones since its inception in 2011, the report underlined.
Research Director Tarun Pathak noted that Xiaomi has been on a war footing to fill the gap created by the decline of Huawei.
“Ever since the decline of Huawei commenced, Xiaomi has been making consistent and aggressive efforts to fill the gap created by this decline. The OEM has been expanding in Huawei’s and HONOR’s legacy markets like China, Europe, Middle East and Africa. In June, Xiaomi was further helped by China, Europe and India’s recovery and Samsung’s decline due to supply constraints.” Pathak wrote.
Senior Analyst Varun Mishra stated, “China’s market grew 16% MoM in June driven by the 618 festival, with Xiaomi being the fastest growing OEM, riding on its aggressive offline expansion in lower-tier cities and solid performance of its Redmi 9, Redmi Note 9 and the Redmi K series. At the same time, due to a fresh wave of the COVID-19 pandemic in Vietnam, Samsung’s production was disrupted in June, which resulted in the brand’s devices facing shortages across channels. Xiaomi, with its strong mid-range portfolio and wide market coverage, was the biggest beneficiary from the short-term gap left by Samsung’s A series.” the COVID-19 pandemic in Vietnam, Samsung’s production was disrupted in June, which resulted in the brand’s devices facing shortages across channels. Xiaomi, with its strong mid-range portfolio and wide market coverage, was the biggest beneficiary from the short-term gap left by Samsung’s A-series,” Mishra commented on Samsung’s performance.
Going forward, the market research firm expects Samsung’s production to be affected if the situation in Vietnam does not improve while Xiaomi will continue to gain share from the Korean brand.
Exhibit: Global Monthly Smartphone Sales Share Trends (%)
Some of our other smartphone market analyses for Q2 2021:
- Apple Achieves Record June Quarter Shipments, Xiaomi Becomes the Second-Largest Smartphone Brand Globally
- India Smartphone Market Stays Resilient During Second COVID-19 Wave, Crosses 33 Million Shipments
- China Smartphone Market Sees Lowest Q2 Sales Since 2012; vivo Leads as Huawei Plummets
- Podcast: How Xiaomi, Qualcomm are Delivering 5G, AI-based Experiences to Consumers
- Q2 2021: Europe Smartphone Market’s Bumpy Road to Recovery
- MEA Smartphone Market Sees Best Q2 on Record; Samsung Leads but TECNO, Xiaomi Close Gap
- Chinese Players Capture Half of Vietnam Smartphone Market in Q2 2021
Background:
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (Technology, Media and Telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.
References:
Monthly Pulse: Xiaomi Becomes #1 Smartphone Brand Globally for First Time Ever
Strand Consult: What NTIA won’t tell the FCC about Open RAN
by John Strand, CEO and Founder of Strand Consult (see company profile and bio below)
Introduction:
In “NTIA Comments on Promoting the Deployment of 5G Open Radio Access Networks,” (Docket Number: GN-Docket No. 21-63) the National Telecommunications and Information Administration (NTIA) makes many claims about Open RAN [1] and states what appears to be official U.S. Executive Branch policy promoting that technology. In particular:
As stated in the Implementation Plan of the National Strategy to Secure 5G, the U.S. Executive Branch agrees that “close coordination between the United States Government, private sector, academic, and international government partners is required to ensure adoption of policies, standards, guidelines, and procurement strategies that reinforce 5G vendor diversity and foster market competition.” One promising solution in line with these objectives is open, interoperable networks, including Open RAN. While this response focuses on Open RAN, the Executive Branch’s policy is to promote the development of Open RAN alongside other policies, technologies, and architectures that support 5G vendor diversity and foster market competition.
Strand Consult analyzes these claims, their references, and the assumptions underpinning them from security and economics perspectives. Strand Consult’s report also includes an appendix fact checking 35 claims by NTIA and well as 133 additional references to help investigate the technology.
OpenRAN (open radio access network) is an evolving topic. It is an industrial concept, not a technical standard. Stakeholders, including NTIA may define OpenRAN differently, provide different definitions, ascribe different purposes to it, and have different expectations.
Editor’s Note:
There are two Open RAN spec writing bodies- the O-RAN Alliance and the Telecom Infra Project Open RAN Group. Neither of them have a liaison with either 3GPP or ITU-R WP 5D which have produced specifications/standards for 4G-LTE Advanced and 5G RAN/RIT specifications (3GPP Release 10 and Release 15 & 16, respectively) and ITU-R standards (M.2012-4, and M.2150, respectively). The O-RAN Alliance does have a liaison arrangement with GSMA which this author claims was an Ultra-Oxymoron.
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Strand Consult’s research question is to determine if, when, and how OpenRAN and O-RAN will replace conventional RAN on a 1:1 basis without compromising network quality, security, energy efficiency, and other important factors. Mobile operators have little ability to raise price, so operators must compete on network quality coverage and other factors.
Executive Summary:
We don’t believe NTIA’s comments provide insight to answer our questions. Strand Consult has found that most of the comments in NTIA’s report restate talking points from the OpenRAN industry and present policy arguments as if they were fact or technical analysis. As advisor to the US President and policy lead for the Executive Branch on telecommunications, NTIA is considered an authority and is expected to produce serious, objective policy. Indeed it would be welcome for an objective report from NTIA on OpenRAN with an authoritative list of critical references and information from test installations of the technology. Unfortunately NTIA’s report falls short of this expectation.
In our opinion, the main shortcoming of the report is that NTIA has either overlooked, ignored, or is unaware of the role of Chinese vendors in the OpenRAN industry. The separate but related ORAN Alliance has 44 Chinese vendors, many which are explicitly state-owned and military-aligned. At least 7 of these entities are on the US Dept of Commerce Entity List and others have lost their Federal Communications Commission operating license. NTIA has not conducted a security assessment of OpenRAN and yet it blesses the technology and pronounces that it is Executive Branch policy to pursue it. Strand Consult investigates NTIA’s other comments about the infrastructure market, competition, prices, and innovation and finds that many of them are either unevidenced or proffered by self-interested OpenRAN actors.
O-RAN Alliance Reference Architecture:
Image Credit: O-RAN Alliance
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Strand Consult’s Analysis:
In an effort to lift the level of policy discussion, Strand Consult reviewed “NTIA Comments on Promoting the Deployment of 5G Open Radio Access Networks” from July 16th to the U.S. Federal Communications Commission’s (FCC) a part of the Inquiry in the proceeding on open radio access networks (Open RAN). The highly respected NTIA is chartered to advise the President and represent the Executive Branch view on telecommunications, and there is an expectation that NTIA’s reports are objective, authoritative, and empirical, particularly with its roster of employee scientists and technologists. The document submitted to the FCC appears to be written by staff lawyers and makes many debatable claims which are either unsupported or based on advocacy materials from the OpenRAN industry.
NTIA’s OpenRAN document does not live up to expectations for the following reasons:
Its lack of objectivity and empirical support
Its overlooking role of Chinese vendors in OpenRAN ecosystem
Its misunderstanding of the economics of infrastructure and innovation
Its unfounded assertions about competition and the role of OpenRAN.
Lack of objectivity and empirical support. Citing of interested parties as experts. The OpenRAN document published by NTIA offers very little empirical, or even academic policy, evidence for its assertions. Most of references cited, 55%, come from OpenRAN advocacy groups or companies with a financial interest in OpenRAN, for example self-described OpenRAN vendors. The main part of the document’s references are not technical studies but rather policy arguments.
Moreover, NTIA fails to disclose that its preferred sources are advocacy organizations. While there is nothing illegal about citing advocacy organizations, government agencies like NTIA are supposed to be above touting advocacy as fact, science, and official policy.
The O-RAN Alliance [2] develops technical specifications for 4G and 5G RAN internal functions and interface, not for 2G and 3G. The O-RAN Alliance is not a standards development organization (SDOs) [3] like ITU-R and ITU-T. The O-RAN Alliance does not satisfy the openness criteria laid down in Word Trade Organization Principles [4] for the Development of International Standards, Guides and Recommendations.
The O-RAN Alliance is a closed industrial collaboration developing technical RAN specification on top of 3GPP specifications and ITU-R standards for 4G and 5G.
While industrial cooperation is important, there can be no mobile networks without the basic work of organizations like ITU-R WP 5D, 3GPP (which is NOT a SDO) and its seven regional members (which are SDOs) [5].
OpenRAN concepts include: cloudification, automation and open RAN internal interfaces do follow some elements of 3GPP specifications.
It appears that NTIA is attempting to elevate the O-RAN Alliance, essentially a closed association, with established WTO compliant SDOs (e.g. ITU and IEEE) and global consortia like 3GPP. Such an elevation is false and deceptive, and NTIA should clarify why it promotes a closed association that doesn’t meet openness requirements in WTO.
NTIA could have balanced this shortcoming by referencing some the widely published critical reviews of OpenRAN. Unfortunately, it does not. For example, U.S. federal documents can create credibility by objectively stating competing views and discussing the merits, similar to the Congressional Research Service [6].
Because NTIA appears only to provide favorable views of OpenRAN from interested parties, its document is tainted with bias. It reads like a set of talking points from the OpenRAN Policy Coalition, the a front for the OpenRAN industry’s interests.
Overlooking the role of Chinese vendors in the OpenRAN ecosystem:
Another shortcoming is the apparent ignorance of the role of Chinese vendors in the OpenRAN ecosystem. NTIA forgets to name the 44 Chinese companies that make up the second largest national group in the O-RAN Alliance. It failed to disclose that seven of these actors are either on the U.S. Entity List [7] and have lost their FCC license to operate [8] . Those companies include: China Mobile, China Telecom, China Unicom, ZTE, Inspur, Phytium and Kindroid, companies
which are integrated with the Chinese government and military.
Nor does NTIA disclose that the European telco Memorandum of Understanding (MoU) [between Deutsche Telekom, Telefonica, TIM, Vodafone and Orange] that OpenRAN should be built on top of Kubernetes [9], which is a software
technology platform that has been infiltrated by the Chinese.
While it began life in 2014 as a Google project, Kubernetes currently is under the jurisdiction of the Cloud Native Computing Foundation, an offshoot of the Linux Foundation (perhaps the world’s largest open-source organization).
By late 2017, Huawei had gained a seat on the Kubernetes Steering Committee. Huawei claims to be the fifth-biggest contributor of software code to Kubernetes.
According to the “Report on the 2020 FOSS Contributor Survey” [10] from The Linux Foundation & The Laboratory for Innovation Science at Harvard, the open source community spends very little time responding to security issues (an average of 2.27% of their total contribution time) and reports that it does not desire to increase this metric significantly.
It appears to be a problem that Huawei and ZTE are increasingly involved in the leading open source technology 11 used by OpenRAN developers. It is not clear how this acceptance of Chinese involvement in OpenRAN is consistent with President Biden’s tough stance on security vis-à-vis China and other threat actors [12].
Conclusions:
NTIA’s document appears to endorse the O-RAN Alliance for the security of OpenRAN. However, NTIA doesn’t provide technical analysis or a security assessment of O-RAN Alliance specifications. It is not clear from the document whether NTIA had access to these specifications to conduct an assessment. In any event, ORAN Alliance members exchange specifications on OpenRAN every 6 months. This means that the 44 Chinese companies in the O-RAN Alliance get fresh OpenRAN “code” at least twice a year, NTIA provides no threat analysis, risk assessment nor potential mitigation of these processes.
–>This is a breathtaking omission that alone warrants further attention by the NTIA.
NTIA could have strengthened its credibility by providing an authoritative, empirical document to inform policymakers objectively about OpenRAN. Instead NTIA offers a document which merely restates the talking points of OpenRAN advocacy groups and industry. This fails the U.S. Executive branch and the American people who expect quality information and impartial judgement from an expert agency.
More importantly, the NTIA document mis-informs readers about the security risks of OpenRAN which greatly extends the cyber security attack surface with its many “open interfaces.”
Hopefully, NTIA will review the empirical information and update its assessment in a new report.
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Readers who know something about OpenRAN are welcome to weigh in with their comments in the box below this article.
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Notes & Hyperlinks:
https://www.ntia.gov/files/ntia/publications/ntia_comments_-_open_ran_noi_gn_21-63_7.16.21.pdf
2. https://www.o-ran.org/
3. https://en.wikipedia.org/wiki/Standards_organization 4. https://www.wto.org/english/tratop_e/tbt_e/principles_standards_tbt_e.htm
5. https://www.3gpp.org/about-3gpp
6. Disruptive Analysis Report: Telecom & 5G Supply Diversification A long term view: demand diversification, Open
RAN & 6G path dependence
https://www.lightreading.com/open-ran/verizon-t-mobile-outline-their-open-ran-fears/d/d-id/769201 https://www.lightreading.com/open-ran/open-ran-has-missed-5g-boat-says-three-uk-boss/d/d-id/766258?
7. https://www.bis.doc.gov/index.php/policy-guidance/lists-of-parties-of-concern/entity-list
8. https://www.fcc.gov/document/fcc-denies-china-mobile-telecom-services-application-0
https://www.reuters.com/article/us-usa-china-telecom-idUSKBN2B92FE 9.https://www.telefonica.com/documents/737979/146026852/Open-RAN-Technical-Priorities-Executive-Summary.pdf/cdbf0310-4cfe-5c2f-2dfb-c68b8c8a8186
10. Page 5 of: https://www.linuxfoundation.org/wp-content/uploads/2020FOSSContributorSurveyReport_121020.pdf
11. https://merics.org/en/short-analysis/china-bets-open-source-technologies-boost-domestic-innovation
12. https://www.reuters.com/article/us-usa-biden-cyber-war-idUSKBN2EX2S9
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About Strand Consult:
Strand Consult is an independent consultancy with 25 years of telecom industry experience. Strand Consult is known for its expert knowledge and many reports which help mobile operators and their shareholders navigate an increasing complex world. It has 170 mobile operators from around the world on its client list.
John Strand (photo below) is CEO of Strand Consult. He founded Strand Consult in 1995.
The mobile industry exploded in the 1990s, and Strand Consult grew along with its new clients from the mobile industry, analyzing market trends, publishing reports and holding executive workshops that have helped telecom operators, mobile services providers, technology manufacturers all over the world focus on their business strategies and maximizing the return on their investments.
References:
ntia_comments_-_open_ran_noi_gn_21-63_7.16.21.pdf (doc.gov)
Ultra Oxymoron: GSMA teams up with O-RAN Alliance without liaison with 3GPP or ITU
Strand Consult: The 10 Parameters of Open RAN; AT&T memo to FCC
Strand Consulting: Why the Quality of Mobile Networks Differs
Gartner: Worldwide 5G Network Infrastructure Revenues to Grow 39% in 2021
Worldwide 5G network infrastructure revenue is on pace to grow 39% to total $19.1 billion in 2021, up from $13.7 billion in 2020, according to the latest forecast by Gartner, Inc.
Communications service providers (CSPs) in mature markets accelerated 5G development in 2020 and 2021 with 5G representing 39% of total wireless infrastructure revenue this year.
“The COVID-19 pandemic spiked demand for optimized and ultrafast broadband connectivity to support work-from-home and bandwidth-hungry applications, such as streaming video, online gaming and social media applications,” said Michael Porowski, senior principal research analyst at Gartner.
5G is the fastest growing segment in the wireless network infrastructure market (see Table 1). Of the segments that comprise wireless infrastructure in this forecast, the only significant opportunity for investment growth is in 5G. Investment in legacy wireless generations is rapidly deteriorating across all regions and spending on non-5G small cells is poised to decline as CSPs move to 5G small cells.
Table 1: Wireless Network Infrastructure Revenue Forecast, Worldwide (Millions of U.S. Dollars)
| Segment | 2020 Revenue | 2021 Revenue | 2022 Revenue |
| 5G | 13,768.0 | 19,128.9 | 23,254.6 |
| LTE and 4G | 17,127.8 | 14,569.1 | 12,114.0 |
| 3G and 2G | 3,159.6 | 1,948.2 | 1,095.2 |
| Small Cells Non-5G | 6,588.5 | 7,117.9 | 7,113.9 |
| Mobile Core | 5,714.6 | 6,056.2 | 6,273.3 |
| Total | 46,358.5 | 48,820.2 | 49,851.0 |
Source: Gartner (August 2021)
Regionally, CSPs in North America are set to grow 5G revenue from $2.9 billion in 2020 to $4.3 billion in 2021, due, in part, to increased adoption of dynamic spectrum sharing and millimeter wave base stations. In Western Europe, CSPs will prioritize on licensing spectrum, modernizing mobile core infrastructure and navigating regulatory processes with 5G revenue expected to increase from $794 million in 2020 to $1.6 billion in 2021.
Greater China is expected to maintain the No.1 global position in global 5G revenue reaching $9.1 billion in 2021, up from $7.4 billion in 2020. With China’s government funding 5G development for the three state owned carriers, that’s no surprise.
The big beneficiaries of China’s 5G infrastructure spending will be its domestic equipment makers, Huawei, ZTE, and (state owned) Datang Telecom. Despite clamoring for Sweden to permit Huawei 5G equipment to be deployed, Ericsson only received 3% of a joint 5G radio contracts from China Telecom, China Unicom and 2% from China Mobile, according to Reuters. Nokia, which was expected to take away Ericsson’s market share in China, did not receive any share, according to a tender document published by the Chinese companies.
In a way that’s a win for the Swedish vendor – and a brief share price hike backs up that statement – which won just 2% of an earlier deal from China Mobile. But if they want to secure their share of the multiple billions of dollars of global 5G infrastructure revenues forecast by Gartner, the likes of Ericsson and Nokia will need to keep winning contracts in their home markets.
5G Coverage in Tier-1 Cities Will Reach 60% in 2024:
While 10% of CSPs in 2020 provided commercialized 5G services, which could achieve multiregional availability, Gartner predicts that this number will increase to 60% by 2024, which is a similar rate of adoption for 4G- LTE in the past.
“Business and customer demand is an influencing factor in this growth. As consumers return to the office, they will continue to upgrade or switch to gigabit fiber to the home (FTTH) service as connectivity has become an essential remote work service,” said Porowski. “Users will also increasingly scrutinize CSPs for both office and remote work needs.”
This rapid shift in customer behavior is driving growth in the global passive optical network (PON) market as a preferred technology. The 10-Gigabit-capable symmetric-PON (XGS-PON) is not a new technology and with the price difference with other technologies narrowing, CSPs are willing to invest in XGS-PON to differentiate themselves in customer experience and network quality. Gartner estimates that by 2025, 60% of Tier-1 CSPs will adopt XGS-PON technology at large-scale to deliver ultrafast broadband services to residential and business users, up from less than 30% in 2020.
Gartner clients can learn more in the reports “Forecast Analysis: Communications Service Provider Operational Technology, Worldwide” and “Forecast: Communications Service Provider Operational Technology, Worldwide, 2019-2025, 2Q21 Update.”
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Small Cells?
While Gartner did not split out small cells’ contribution to the overall 5G infrastructure segment, evidence thus far suggests the market is progressing more slowly than many had once believed.
Last month, Crown Castle increased its guidance for the second time this year due to a strong cell towers market, but halved the number of small cells it expects to deploy in 2021 to 5,000. The company noted that wireless network operators have focused on tower-based 5G rollouts at the expense of small cells.
References:
5G network kit revenues to near $20 billion this year — report
Singapore’s M1 launches True 5G SA network market trial
- 4x FASTER SPEEDS THAN 5G NON-STANDALONE NETWORKS
- 10X FASTER SPEEDS THAN EXISTING 4G NETWORKS
- 2X BETTER NETWORK RESPONSE, WITH INCREASED RELIABILITY
M1 customers can enjoy an elevated call experience via the world’s first Voice over 5G New Radio (VoNR) service [1.] on M1’s 5G SA network that reinforces the experience of crystal clear high-definition voice calls, improved productivity with 5G speeds on data-driven activities throughout the duration of the calls as well as faster call setup time.
Note 1. Deutsche Telekom claims to have completed VoNR call this past June, which we documented here.
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M1 is working closely with some of Singapore’s most exciting enterprises and SMEs to reimagine and redefine how businesses can leverage 5G to boost efficiency, fast-track innovation, and meet customer demands. Working in close synergy with its key shareholder, Keppel Corporation, M1 will continue to explore and develop more 5G-enabled business opportunities and collaborations across the Keppel group of businesses and open up limitless possibilities for corporations.
About M1:
M1, a subsidiary of Keppel Corporation, is Singapore’s first digital network operator, providing a suite of communications services, including mobile, fixed line, and fiber offerings to over two million customers.
Since the launch of its commercial services in 1997, M1 has achieved many firsts – becoming one of the first operators to be awarded one of Singapore’s two nationwide 5G standalone network licences, being the first operator to offer nationwide 4G service, ultra-high-speed fixed broadband, fixed voice, and other services on the Next Generation Nationwide Broadband Network (NGNBN).
M1’s mission is to drive transformation and evolution in Singapore’s telecommunications landscape through cutting-edge technology and its made-to-measure offerings.
Rethink Research: Private 5G deployment will be faster than public 5G; WiFi 6E will also be successful
Introduction:
RAN Research, a division of Rethink Technology Research, says in a new report that private 5G network deployments will surge over the next few years faster than public 5G, reaching a peak in 2027 when they will generate $19.3 billion in equipment sales, before subsiding after that as saturation approaches.
There will be a similar boom in deployment of enterprise WiFi networks around the WiFi 6E standard (IEEE 802.11ax endpoints that are capable of operating at 6 GHz, as well as in the 2.4 GHz and 5 GHz spectra already used by Wi-Fi 6). They will offer greater capacity and performance than the current WiFi generation (IEEE 802.11ac, 802.11n, etc).
WiFi growth will be confined largely to North America and Europe, and will peak earlier in 2024, after which an increasing number of sites will swing to 5G for more demanding use cases.
Private 5G networks will generate annual revenues of US$19.3 billion worldwide in 2027, up from $1.5 billion this year, according to a new report written by Rethink analyst Caroline Gabriel. Growth will be at its fastest in the 2022-2025 period, peaking in 2027 and then declining towards the end of the decade as market saturation approaches, she notes.
By 2028 there will be 26.6 million private 5G networks deployed globally, a significant increase on the 1.1 million expected to be rolled out this year.
Image Courtesy of Qualcomm
These are key findings of the latest report, “Private Networks Driving Opportunities in 5G and WiFi” from RAN Research, the wireless forecasting arm of Rethink Technology Research. The forecast drills down into regions and vertical industry sectors, identifying manufacturing as a major driver for private enterprise 5G in line with the industry 4.0 revolution, but with strong growth across the board. Healthcare, transportation, energy and government stand out as other industry vertical where deployments of private 5G and WiFi 6E will flourish.
Executive Summary:
Private 5G networks are on the verge of rapid take off to generate a surge in annual revenues for network equipment from $1.5 billion in 2021 to $19.3 billion in 2027. Growth will be fastest in most markets from 2022 to 2025 before tailing off and declining towards the end of the period after 2027 as saturation approaches.
By 2028 there will be 26.6 million private 5G networks deployed around the world, up from 1.1 million in 2021. This growth will occur in all regions but will be most striking in the four countries leading the private 5G field now, the U.S., Germany, China and Japan. Of these four, China stands out for facing stronger regulatory resistance to private 5G where roll out is dominated by the three great stateowned monopolies, China Mobile, China Telecom and China Unicom. But strong upsurge from enterprises, including government agencies as well as manufacturers, looks like opening up the country ’ enterprise 5G field to rapid growth.
Image Courtesy of Qualcomm
Private wireless networks will be deployed at a faster rate than 5G as a whole in most markets, as mobile networks combined with edge compute become capable of meeting more use cases and enabling new applications in manufacturing process, UAVs, remote healthcare, advanced transportation and others.
WiFi 6E is on course for a similar growth trajectory as private 5G, tailing off later in the forecast period. It is true though that only the next generation WiFi 7 that will start being deployed after 2024 will close the gap on 5G in peak performance, capacity and low latency. Our forecast numbers for WiFi 6E also include early deployments of WiFi 7 without making any distinction. Certainly, until that 7th generation comes along, WiFi will lack the deterministic behavior required for the most demanding ultra low latency real time applications, such as control of UAVs. In these scenarios 5G will be preferred but WiFi will continue to coexist for applications where best effort performance is adequate. This will include some of those use cases touted for 5G under the eMBB category concerned mostly with high capacity, although WiFi 6E itself still has to justify investment in the upgrade from WiFi 5. 5G will emerge in some cases as an immediate alternative to WiFi 6E. There are also common factors affecting both private 5G and WiFi 6E roll out, such as chip shortages and other continuing impacts of the global Covid19 pandemic. All these will impede deployments in the short and medium term, with both service providers and their equipment suppliers reporting a slowdown resulting from changed working practices during the pandemic and disruptions within the supply chain.
For some enterprises where blanket indoor coverage is established there will be more concerted migration from WiFi to cellular for private wireless communications. But unless such 5G coverage is almost ubiquitous, users will continue with WiFi and indeed penetration will increase around new best effort use cases.
Copyright © 2021 Rethink Research, All rights reserved.
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References:
https://rethinkresearch.biz/reports-category/ran-research/
China to drive private 5G network growth despite regulatory headwind– research
Lumen to sell local incumbent carrier operations in 20 states to Apollo Funds for $7.5 billion
Lumen Technologies, formerly known as CenturyLink, has agreed to sell a large part of its U.S. network to Apollo Global Management for $7.5 billion, according to a report by The Wall Street Journal on Tuesday. The report was later confirmed by Lumen.
A collection of telephone lines and broadband infrastructure (which cover 6 million residential and business customers across 20 states, mostly in the U.S. Midwest and Southeast) are included in the deal. So is $1.4 billion of assumed debt by Lumen.
“If you look at the markets that we’re transferring to Apollo, these are markets that Lumen would not have invested as heavily in,” Lumen CEO Jeff Storey said in an interview. “Apollo will put the investment into these markets that we believe they can sustain.”
Lumen’s remaining operations will focus on large business clients, which generate most of its revenue, as well as home-broadband subscribers in 16 states including Colorado, Florida and Washington.
The sale is the latest course change for Lumen, the company known as CenturyLink until its 2020 rebranding. CenturyLink was among the few remnants of the former AT&T monopoly (e.g. US West then Qwest) to survive into the 21st Century, though it avoided copying peers’ pursuit of wireless customers and focused its attention on landlines. In July, Lumen said it was selling its Latin American assets to infrastructure investor Stonepeak Partners LP for $2.7 billion.
CenturyLink grew much bigger after it agreed in 2016 to merge with Level 3 Communications, a network operator focused on large U.S. business customers. The combination yielded billions of dollars in savings and tax advantages, though executives faced challenges stitching together the business cultures of CenturyLink, based in Monroe, LA, and the operations inherited from Level 3 in Broomfield, CO.
For Apollo, the Lumen deal plays into a thesis the firm has developed with the new company’s executives around the need for fiber-based broadband to be expanded in the U.S. While fiber is a superior consumer broadband technology, many potential providers of fiber have lacked the access to capital to upgrade their sprawling networks, according to Aaron Sobel, the Apollo partner who led the deal. As a standalone company, the new entity won’t have other capital needs that take priority.
“It’s very difficult to carve out these states from a large telco,” Mr. Sobel said. “You’re dealing with a business that is legacy and theoretically declining and returning it to growth.”
Lumen is keeping the customers and pieces of its consumer broadband network that seem like a good fit for its fiber business. Everything else it had no plans to invest in is headed to the new company, as it discussed would happen just a few weeks ago.
“We are actively looking at selling non-core assets to unlock value in our business,” Lumen CEO Jeff Storey said during an earnings conference call in May. “If we find transactions that are positive to shareholders, we won’t hesitate to move forward.”
Apollo’s plans aren’t laid out in detail in The WSJ’s article, but it did identify several former Verizon executives who would be leading the new telecom concern absorbing Lumen’s mostly copper-based customers. They include Bob Mudge, Chris Creager and Tom Maguire, a group that helped launch Verizon’s FiOS FTTH service.
Just last week Lumen announced it was selling its Latin American business to Stonepeak, an investment firm, for $2.7 billion. In that transaction, Lumen formed a U.S.-based company that would be in Stonespeak’s portfolio to operate and run its divested network and other assets.
About the Transaction
|
What Does Lumen Retain? |
What Will Apollo Acquire? |
|
21mm Enabled Units |
7mm Enabled Units |
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2.4mm Fiber Enabled Units |
0.2mm Fiber Enabled Units |
|
3.4mm Broadband Subscribers |
~1.3mm Broadband Subscribers |
|
687k Fiber Subscribers |
59k Fiber Subscribers |
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MoffetNathanson’s Nick Del Deo, CFA, wrote in a note to clients:
During its Q1 earnings call, Lumen made clear that it was actively looking to optimize its portfolio and was open to asset sales. Moreover, it indicated that share repurchases might be under consideration if the stock price remained at what the company believes to be depressed levels. The company delivered on both fronts.
Last week, Lumen announced it had agreed to sell its Latin American unit to Stonepeak for $2.7B at a ~9x EBITDA multiple.
Not content with one deal, today it announced another to sell about one quarter if its ILEC business to Apollo for $7.5B at a ~5.5x EBITDA headline multiple. And it announced that its Board has approved a $1B share repurchase program that management may use opportunistically over the next two years.
Lumen secured a solid price for the ILEC assets that it is selling to Apollo. However, when considered in tandem with the LatAm deal, they are unlikely to be materially de-levering.
References:
https://news.lumen.com/apollo-transaction-resource-center
Rootmetrics: U.S. 5G carriers in close race; South Korea 5G is worldwide #1
Executive Summary:
Rootmetrics (a division of IHS Markit) has just reported on how the U.S. carriers fared in delivering the key combination of widespread 5G availability plus higher speeds (than 4G LTE) and data reliability performances in 1H 2021.
“5G is quickly becoming more widespread, speeds are getting faster, and we expect the end-user … experience to become even better going forward as the networks continue to mature and bolster their spectrum holdings,” Rootmetrics said in its most recent report on carrier network performance testing results from the 125 most populous U.S. metropolitan areas.
Rootmetrics awards rankings across three categories: Availability, Reliability and Speed.
Here are how the top three U.S. wireless carriers fared:
- AT&T took the top honors in Rootmetrics’ “best Everyday 5G” category. AT&T had a much narrower win in fastest download speeds, winning in 20 markets while Verizon was fastest in 16 markets and T-Mo in 13. AT&T was second in reliability to Verizon.
- T-Mobile US was rated best in 5G availability and recognized as having “excellent” 5G availability. “T-Mobile also showed much faster speeds since [the second half of 2020]—in large part because of its increased usage of mid-band spectrum—as well as good data reliability in most cities,” Rootmetrics reported.
- Verizon was first in reliability and improving speeds and availability. Rootmetrics said that Verizon’s network is showing “rapid 5G expansion, providing users with 5G in far more cities than it did in [the second half of 2020]. What’s more, Verizon’s speeds were close to those of AT&T and stronger than those of T-Mobile.”
Rootmetrics said that AT&T most often provided what it judged to be the best combination of availability, speed and reliability, “until 5G becomes ubiquitous, consumers will, at times, need to weigh the benefits of high availability and lower performance or lower availability and high performance.”
“The mobile landscape—and the 5G race in particular—is highly dynamic and prone to rapid change, so it wouldn’t be a surprise to see the leaderboard shift as we move further into 2021 and beyond,” Rootmetrics stated.
Mid-band spectrum could change the 5G speed landscape going forward, according to the market research company. With the carriers investing billions at the C-Band auction earlier this year—and Verizon’s spend of $45B more than those of AT&T ($23B) and T-Mobile ($9B) combined—speeds for all three carriers could get much faster going forward. The move toward more mid-band 5G, however, has already begun. T-Mobile, which merged with Sprint primarily to acquire Sprint’s vast and coveted midband spectrum holdings, has an early lead on the competition in terms of implementing mid-band spectrum into its 5G. In fact, T-Mobile’s speeds have increased because of its additional usage of mid-band spectrum since 2H 2020.
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Global 5G Assessment:
While this report only rated U.S. 5G carriers, Rootmetrics stated that South Korean network operators are providing the most widespread 5G in the world.
While 5G is growing fast in the U.S., South Korea still holds a commanding lead in the worldwide 5G race. With South Korean carriers the first in the world to deploy 5G on a wide scale, doing so in early April of 2019, it’s perhaps no surprise that the 5G results we’ve seen in South Korea have been outstanding and better than those in Switzerland, the UK, or the US. To see how 5G compares in major cities around the world, we looked at the highest 5G availability in South Korea’s biggest city (Seoul) compared to that in the most populated cities in Switzerland, the UK, and the U.S.
Note that with 5G availability approaching 100% for LG U+ in Seoul, Rootmetrics looked at 5G-only availability results for this comparison, which show how 5G would perform if it were ubiquitous today; all other metrics in this report reflect Everyday 5G performance.
5G availability recorded in Seoul was far higher than that in London, New York City, or Zurich. Speeds in South Korea are also much faster than those in other countries. While Everyday 5G median download speeds in the UK almost always exceed 100 Mbps in every city we test, speeds above 100 Mbps in the US are rare. In South Korea, on the other hand, we’ve seen Everyday 5G median download speeds in excess of 400 Mbps from all three major operators in multiple cities.
Conclusions:
The 5G race in the US is heating up fast. AT&T took home the top prize for providing the Best 5G experience, with the strongest combination of availability plus performance.
Even though some carriers are further ahead of others when it comes to delivering on the key combination of availability plus performance, all three major carriers showed improved Everyday 5G results compared to those in 2H 2020. As the carriers continue to make greater use of mid-band spectrum, whether from DSS, CBRS, the C-Band auction, or from T-Mobile’s already vast mid-band holdings, 5G in the US is clearly poised for better performance to come.
In fact, as 5G continues to expand across the country and more mid-band is deployed, we expect to see much stronger availability and performance over time. As we saw with T-Mobile (as well as
operators in the UK and South Korea), mid-band spectrum can certainly help contribute to faster Everyday 5G speeds.
Indeed, while it might take another year or more, the mid-band spectrum acquired at the C-Band auction could mark a watershed moment on the path toward a fully realized 5G experience in the US—perhaps one that rivals that in South Korea, where all three
major operators use mid-band spectrum for 5G.
In the meantime, stay tuned to RootMetrics for more on the Everyday 5G experience. Rootmetrics says they will continue testing the networks to keep an eye on the state of 5G in the US and around the world.
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References:
Telefonica España to activate XGS-PON network in 2022; DELTA Fiber to follow in Netherlands
Telefonica España will begin the commercial deployment of a 10 Gbps fiber broadband network using XGS-PON technology in Spain in the first half of 2022, reports website bandaancha.eu.
The gradual rollout is part of Telefonica’s ‘Banda Ancha Abierta‘ (Open Broadband) project to install an efficient, open, scalable and virtualized network model that will facilitate fixed-mobile convergence (fixed access with mobile backhaul), Multi-access Edge Computing capabilities ( MEC), and the deployment of third-party applications.
Telefónica’s FTTH network in Spain passes 26.1 million homes as of June 2021, for which 4,726,700 clients are served through the Movistar and O2 brands. In addition, there are 2,801,700 clients of other operators served through indirect fiber optics.
The introduction of XGS-PON will introduce two new lambdas or wavelengths on the existing GPON fiber infrastructure. The same fiber cable will carry wavelengths corresponding to GPON and in parallel new colors of the laser for XGS-PON so that the two technologies do not interfere with each other.
XGS-PON raises the available throughput for an entire fiber branch to 10 Gbps downstream and 10 Gbps upstream for up to 64 client endpoints. That will permit Telefonica to commercialize speeds of up to 2.5 Gbps symmetric and, in the medium term, up to 10 Gbps.
XGS-PON requires new customer premises equipment. Telefónica customers have been waiting for years for the new XHGU router that the operator announced in 2018 and that is compatible with XG-PON, in addition to bringing high-penetration WiFi 6.
With the arrival of XGS-PON, Movistar will begin to distribute this new router or temporarily provide an ONT XGS-PON.
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In a related story, DELTA Fiber has attracted 2 billion euros to back a planned roll-out of XGS-PON technology throughout the Netherlands. The 10G PON deployment will expand DELTA Fiber’s network to 2 million fiber connections in 2025. It currently expects to reach 1 million connections by the end of this year.
The company expects to begin rolling out XGS-PON this September. It will use the technology exclusively in its future builds with an eye toward making gigabit broadband widely available.
DELTA Fiber also said it plans to deploy 25G PON in the future. Along these lines, the company recently announced a partnership with Proximus of Belgium to deploy fiber to the home networks in Flanders. Proximus has already adopted 25G PON technology.
References:
https://bandaancha.eu/articulos/movistar-actualizara-velocidad-red-fibra-9973