Cignal AI: COVID-19 Continued to Pressure Optical Network Supply Chain in Q2-2020
Delayed order fulfillment due to COVID supply chain impact earlier this year was expected to spur sales growth in 2Q20, but instead the results were mixed, according to the most recent Transport Hardware Report from research firm Cignal AI. Forecasted growth in Q2 from sales pushed out from Q1 did not materialize, and network operators indicated that annual CapEx would not increase (see chart below). As a result, spending on optical and switching/routing equipment will be flat to down in the second half of the year.
“COVID operational issues slowed deliveries and revenue recognition in the second quarter, although optical hardware sales increased in NA and EMEA due to high demand for inventory,” stated Cignal AI Lead Analyst Scott Wilkinson. “Growth is not expected to continue in the second half as carriers have pulled forward annual CapEx spending and networks are now able to cope with COVID-related surges.”
Some regions did shine in 2Q20. North American optical sales were up sharply YoY in both metro and long haul WDM, though the second half of the year is expected to be flat or down. Japan’s extraordinary growth in optical sales expanded to packet sales this quarter, with sales to both market segments up substantially YoY.
Additional 2Q20 Transport Hardware Report Findings:
- In addition to COVID woes, RoAPAC continues to suffer from the CapEx limitations in India, and optical sales declined -20% for the quarter while packet sales also declined.
- China has overcome its COVID related issues and returned to optical and packet spending growth this quarter, with increasing growth forecasted for Q3.
- EMEA optical spending increased YoY but was weighed down by weak Nokia sales. Nokia predicts that Q3 sales increases will offset Q2 declines.
Real-Time Market Data:
Cignal AI’s Transport Hardware Dashboardis available to clients of the Transport Hardware Report and provides up-to-date market data, including individual vendors’ results as they are released. Users can manipulate variables online and see information in a variety of useful ways, as well as download Excel files with up-to-date snapshots of market reporting.
Contact: sales@@cignal.ai
References:
https://cignal.ai/2020/08/transport-hardware-misses-expected-bounce-back-in-2q20/
Addendum:
According to Industry Research, the global Optical Transport Network (OTN) Equipment (optical transport and switching) market is projected to reach USD 20360 million by 2026, from USD 15810 million in 2020, at a CAGR of 4.3% during 2021-2026.
The Optical Transport Network (OTN) Equipment market is segmented into the following categories:
- Mobile Backhaul Solutions
- Triple Play Solutions
- Business Services Solution
- Industry and Public Sector
- Others
With respect to data rates, the Optical Transport Network (OTN) Equipment market is segmented into three categories:
- < 10G
- 10G-100G
- 100-400G
https://www.industryresearch.co/global-optical-transport-network-otn-equipment-market-16157288
COVID-19 Challenges faced by Telcos and Impact on the Telecom Sector
by Raj Vignesh, Digital Marketing Lead, Megron Tech, Swindon, United Kingdom
(edited by Alan J Weissberger)
Introduction:
The emergence of the novel coronavirus (COVID-19) has brought a series of “black swan” events to the entire telecom industry. People and businesses are shifting to digital means to manage their work loads, which has led to an unexpected surge in fixed AND mobile network traffic and access demands. TELECOM NETWORK OPERATORS HAVE HAD TO address this UNPRECEDENTED situation to fulfill the INCREASED networking REQUIREMENTS of their customers.
We discuss the strategies being crafted by telco leaders during this crisis; like increasing network bandwidth, leveraging digital technologies, use of 5G to support their customers and facilitating business continuity.
Further, we IDENTIFY opportunity areas for the telecom operators/service providers that have emerged in the wake of this coronavirus pandemic. Customer complaints raised during the lockdown due to poor mobile network signal reception and slow internet speeds are important concerns that the service providers need to CAREFULLY EXAMINE AND REVIEW.
IN RESPONSE TO THE PANDEMIC, TELCOS are building customized service offerings for their customers. THEIR AIM IS TO enable seamless interaction WITH USERS and to move forward with their business processes WHILE ALSO REALIZING a positive return on their investments.
Disruption in telecom industry due to the rise in COVID-19
The COVID-19 wave has smashed every industry. The telecommunications industry has been largely disrupted, as it is the core of communications required for medical, government and private sector business functions to operate seamlessly.
For example, reliable, high-speed Internet access is key to ensuring that hospitals and medical institutions have access to global information networks and resources necessary to fight the virus. Broadband connectivity is also now absolutely crucial for educational institutions and businesses to continue to provide essential services. The unprecedented global health emergency is taxing networks and platforms to the limit, with some operators and platforms reporting demand spikes as high as 800%.
The sudden disruption of normal business operations caused by the coronavirus has forced companies to drive their businesses remotely. That shift has spiked the demand for better network connectivity and improved internet coverage, especially in remote or rural areas.
As a result, the telecom industry (wireline and wireless) is trying to deliver better Internet infrastructure to their customers.
What are the key areas being impacted by this deadly outbreak?
The coronavirus pandemic has brought in some dramatic changes into the world, with network connectivity acting as a key for business continuity. How COVID-19 has impacted the telecoms industry is discussed below:
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Ensuring resilient connectivity 24/7: Wireless Telecom operators are allocating spectrum resources to provide round the clock Internet connections to mobile subscribers. Due to increased data traffic, Internet download speeds have dropped, making the quality of video streaming poor.
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Cloud computing increases amidst the lockdown: As businesses are proceeding with their work remotely, demand for video conferencing services and SaaS applications is continuously rising. Businesses are keen to adopt this new cloud-based model of working as they realize increased productivity with less investment in office space. Therefore, companies gain business benefits over the long-term.
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Payments with pin and chip are the new normal: Following the social distancing norm, people nowadays prefer to do payments digitally i.e. via UPI apps, credit/debit cards or Internet banking. Due to COVID-19, the rise in digital payments is expected to reach 67% as per research conducted by Bain & Company.
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Security to combat vulnerabilities: Cloud resources are accessed online and ease in restrictions is increasing the risk of cyber attacks. Cyber security engineers need to act on developing strategies to strengthen remote connectivity with proper authorization procedures. Mobile customer transactions need enhanced security with mobile-intelligence based approaches to prevent fraudulent transactions.
How are telcos responding to this critical situation?
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Increase in network transport capacity – The COVID-19 lockdown weariness brought in demands for mobile broadband as most of the people are forced to stay home. Many telcos have eased their 3G/4G/5G network speed to facilitate users with proper Internet connections to stay connected with their loved ones, or can work remotely without any disruption while having business meetings with colleagues, clients and other stakeholders of the company.
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Enhancement in 5G technology – This is the right time for mobile network operators (MNOs) to build and deploy 5G networks to wide geographical area including towns and villages. Many have done so already using 3GPP Release 15 “5G New Radio” for the Data plane along with a LTE core network (this is known as “5G Non Stand Alone” or “5G NSA”).
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Comprehend each customer segment’s value and tailor solutions accordingly – Telcos are partnering with technology companies to understand customer behavior using technologies like AI/ML and data analytics. With deeper insights gained (e.g. geographies, customer interests, demographics, etc), telcos are adjusting their service offerings to customer segments to satisfy their demands in the current and post-COVID-world.
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The Federal Communications Commission (FCC) launched its Keep Americans Connected initiative to help ensure that Americans don’t lose critical telecommunications services they depend on. Broadband wireline and wireless service providers that have signed the pledge have agreed not to terminate service if a customer can’t afford to pay bills due to the pandemic, to waive late fees resulting from economic hardship, and to expand the availability of their Wi-Fi hotspots. The FCC has also made additional wireless spectrum available to providers, warned people of COVID-19 related scams, and is expanding robocall protections for hospitals.
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Selected U.S. and UK telco initiatives to help customers:
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Verizon has been assisting its client base to transition from teleworking to remote working capabilities, with a pledge to not overcharge them in this crisis. Starting July 1st, customers who signed up for the Pledge to maintain their wireless service will automatically be enrolled in the company’s Stay Connected repayment program to provide options to stay connected.
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AT&T suspended data caps for broadband customers to support the employees forced to do work from home during pandemic. Moreover, internet data is being offered to limited-income households at $10/month and businesses with 50% rebate on the current AT&T World Connect Advantage package.
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T-Mobile has teams working 24/7 to ensure it continues to perform for all its customers, even under times of anticipated heavier traffic due to the pandemic lockdowns. Customers can make appointments through the store locator page on T-Mobile.com for curbside fulfilment on device and accessory orders.
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Vodafone has increased network capacity to deal with new spikes in Internet traffic which it says has increased 50% since lockdowns were put in place. Customers accessing government-supported healthcare websites and educational resources will be able to do so without worry about data consumption charges.
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Virgin Media’s postpaid customers have been offered unlimited minutes to landlines and other mobile numbers, as well as a 10 GB data boost for the month at no extra cost. For broadband, any data caps on legacy products will be lifted.
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Comcast* subscribers interacted with customer service digitally via Xfinity Assistant, which is Comcast’s cross-channel, virtual customer service tool. Xfinity Assistant answers customers’ questions around the clock without them needing to stop what they’re doing to call customer service reps. Comcast said Xfinity Assistant is helping its customers about 400,000 times every day, compared to before COVID-19 when it averaged about 60,000 interactions a day. Comcast said Xfinity Assistant was proof that customers want to use digital tools and applications.
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* Comcast is one of the largest retail Internet Service Provider (ISP) in the U.S. via its Xfinity brand. Xfinity also offers pay TV and cellular service as a MVNO for Verizon. The company also offers business network services, including broadband Internet through Comcast Business.
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Editor’s Note: Short-Term Commercial Initiatives by Network Operators (SOURCE: ITU-D):
Additional data: Many mobile network operators (MNOs) are offering to provide customers with additional data as businesses and schools across the world transition to working remotely, due to the spread of the COVID-19 virus.
Going digital in terms of recharges, etc: Facilitate prepaid mobile recharges being made online rather through physical scratch cards etc to improve connectivity during any lockdowns.
Free access to online learning resources: In order to support distance learning and home-schooling during school closures, access to remote leaning opportunities and educational
platforms has been made available at no cost by a number of operators.
Facilitating mobile money transactions: Banks and telecommunications companies are encouraging consumers to avoid cash payment in favour of digital transactions to avoid the
spread of the coronavirus.
Increasing Broadband Speeds: Operators are upgrading Internet speeds – including transmission and backhaul capacity – to better accommodate the unprecedented number of people working and learning from home which has been up to a 70 percent in certain country markets.
Free access to health/government information: MNOs are providing free access to information contained in government and social welfare sites, as well as to websites containing health
information relevant to coronavirus crisis.
Providing other free services: MNOs have also commenced a variety of other initiatives for their customers, at no extra cost. These include free access to networks and waiving overcharge fees.
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Other Opportunities for Telco Service Providers:
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Resolution of customer queries through a virtualized support solution: Dealing with customers in this pandemic is becoming tricky and telecom operators are investing heavily to minimize customer churn in order to retain their customers. They are offering virtual support services to customers to keep them engaged and solve their issues more quickly.
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Customer QoE measurement needs to be enhanced: Telecom operators need to assess QoE monitoring with network coverage and speed, voice failures, via enabling customer services team online without visiting the customer site. Cell tower monitoring is a critical activity that needs to be undertaken in order to measure network performance and deliver increased throughput, clear voice calls amid crisis.
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Building partnerships with edge application providers for better Internet connectivity: Applications with low latency like gaming, video conferencing applications require computing to be placed at edge near the end-user to give better user experience with enhanced network connection. Telcos can collaborate with cloud application providers in order to meet the requirements of users working from home in this time of coronavirus outbreak.
Conclusions:
Telcos are continuously adapting to the changes caused due to COVID-19 crisis. Being the sole distributor of Internet infrastructure to other industry verticals, telecom operators have made several amendments in their operations and offerings to serve their customers in a better way. Though the coronavirus pandemic brought in several challenges, initiatives taken by the telcos is surely going to retain their business partnerships and customers for the long-term. That should lead to an increase in telco revenues during the COVID-19 pandemic and thereafter when life returns to normal.
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References:
https://www.bain.com/insights/the-covid-19-tipping-point-for-digital-payments/
https://telecoms.com/opinion/telcos-have-a-huge-role-to-play-in-navigating-the-covid-19-pandemic/
https://www.bain.com/insights/covid-19-how-telcos-can-reset-their-customer-strategy/
https://www.datacenterknowledge.com/networks/covid-19-five-recommendations-telco-it-leaders
https://www.weforum.org/agenda/2020/03/coronavirus-and-corporate-social-innovation/
https://www.insidetelecom.com/covid-19-impacts-on-the-telecoms-industry/
Analysis of Open Network Foundation new 5G SD-RAN™ Project
Executive Summary:
In a move that will help promote multi-vendor interoperability, the Open Networking Foundation (ONF) today announced the formation of the SD-RAN project (Software Defined Radio Access Network) to pursue the creation of open source software platforms and multi-vendor solutions for mobile 4G and 5G RAN deployments. Initially, the project will focus on building an open source Near Real-Time RAN Intelligent Controller (nRT-RIC) compatible with the O-RAN architecture.
The new SD-RAN project is backed by a consortium of leading operators and aligned technology companies and organizations that together are committed to creating a truly open RAN ecosystem. Founding members include AT&T, China Mobile, China Unicom, Deutsche Telekom, Facebook, Google, Intel, NTT, Radisys and Sercomm. All the project members will be actively contributing, and this includes the operators contributing use cases and trialing the results, according to the ONF. However, the larger cellular base station vendors that are ONF members, Nokia, Samsung, ZTE, Fujitsu, NEC were silent on their participation in this SD-RAN project.
There may be some confusion caused by ONF’s SD-RAN project as it is the third Open RAN consortium. The O-RAN Alliance and TIP Open RAN project are working on open source hardware and open interfaces for disaggregated RAN equipment, like a 4G/5G combo base station.
In a brief video chat yesterday, Timon Sloane, VP of Ecosystem and Marketing for ONF told me that this new ONF SD-RAN project would be in close contact with the other two Open RAN consortiums and distinguished itself from them by producing OPEN SOURCE SOFTWARE for disaggregated RAN equipment—something he said the O-RAN Alliance and TIP Open RAN project were NOT doing.
That should go a long way in dispelling that confusion, but it nonetheless presents a challenge on how three consortiums can effectively work together to produce meaningful open source software code (ONF) and hardware (O-RAN Alliance and TIP) specifications with joint compliance testing to ensure multi-vendor interoperability.
Sloane told Matt Kapko of SDXCentral: “The operators really are pushing for separation of hardware and software and for enabling new innovations to come in in software without it being tightly coupled to the hardware that they purchase. And xApps are where the functionality of the RAN is to be housed, and so in order to do this in a meaningful way you have to be able to do meaningful functions in these xApps,” Sloane said.
However, no mention was made in the ONF press release of a liaison with either 3GPP or ITU-R WP5D which are producing the standards and specs for 5G and have already done so for 4G-LTE. Neither of the aforementioned O-RAN consortiums have liaisons with those entities either.
There are other complications with Open RAN (independent of SD-RAN), such as U.S. government’s attempt to cripple Huawei and other China telecom equipment vendors, need for a parallel wireless infrastructure, legacy vs greenfield carriers. These are addressed in Comment and Analysis section below.
µONOS-RIC:
Central to the project is the development of an open source near-real time RIC called µONOS-RIC (pronounced “micro-ONOS-RIC”).
µONOS is a microservices-based SDN controller created by the refactoring and enhancement of ONOS, the leading SDN controller for operators in production tier-1 networks worldwide. µONOS-RIC is built on µONOS, and hence features a cloud-native design supporting active-active clustering for scalability, performance and high availability along with the real-time capabilities needed for intelligent RAN control.
µONOS-RIC is designed to control an array of multi-vendor open RAN equipment consistent with the O-RAN ALLIANCE architecture. In particular, the O-RAN ALLIANCE E2 interface is used to interface between µONOS-RIC and vendor supplied RAN RU/DU/CU RAN components.
xApps running on top of the µONOS-RIC are responsible for functionality that traditionally has been implemented in vendor-proprietary implementations. A primary goal of the SD-RAN project (and, not coincidentally, for the operators who founded the O-RAN consortium) is to enable an external intelligent controller to control the RAN so that operators have both visibility and control over their RAN networks, thus giving operators ownership and control over how spectrum is utilized and optimized along with the tools to deliver an optimal experience for users and applications.
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Relationship to O-RAN Alliance, O-RAN Software Community and TIP:
The participating members of the SD-RAN project plan to implement, prototype and trial an advanced architecture that enables intelligent RIC xApps to control a broad spectrum of SON and RRM functionality that historically has been implemented as vendor-proprietary features on bespoke base station equipment and platforms. SD-RAN’s focus and goals are complementary to various efforts across the industry, including work taking place within the O-RAN ALLIANCE, the O-RAN Software Community and the TIP OpenRAN Project Group.
SD-RAN will follow O-RAN specifications as they are developed and will also make use of components of existing open source to facilitate interoperability. As the project pioneers new functionality, all extensions and learnings that come from building the system will be contributed back to O-RAN ALLIANCE, with the intent that these extensions can inform and advance the O-RAN specifications.
The SD-RAN work inside the ONF community will take place in parallel with work being contributed to the O-RAN Software Community. The intent is for interoperable implementations to come out of both efforts, so that a mix of open source and vendor proprietary components can be demonstrated and ultimately deployed.
Timing and Availability:
The SD-RAN project already has a working skeleton prototype of the µONOS-RIC controller above a RAN emulation platform through the E2 interface. This implementation is demonstrating handover and load balancing at scale, supporting over 100 base stations and 100,000 user devices with less than 50ms handover latency (less than 10ms latency for 99% of all handovers).
The SD-RAN community is advancing towards a field trial by early 2021, working with RAN vendors to integrate carrier-grade RU/DU/CU components while in parallel implementing xApps to demonstrate SON and RRM functionality. Interested parties are encouraged to contact ONF for additional information.
Quotes Supporting the SD-RAN Project:
“AT&T strongly supports the development of specifications and components that can help drive openness and innovation in the RAN ecosystem. The O-RAN ALLIANCE’s specifications are enabling the ecosystem, with a range of companies and organizations creating both open source and proprietary implementations that are bringing the open specifications to life. The ONF SD-RAN project, along with the O-RAN OSC, will expand the ecosystem with an nRT-RIC that can support xApps and help demonstrate their interoperability. This project will help accelerate the transition to an open RAN future.”
Andre Fuetsch, President and Chief Technology Officer, AT&T Labs
“China Mobile co-founded O-RAN in order to promote both the opening of the RAN ecosystem for multi-vendor solutions and the realization of RAN with native intelligence for performance and cost improvement. An open nRT-RIC with support for open xApps that go beyond policy-based control and SON to also enhance Radio Resource Management (RRM) will make it possible for operators to optimize resource utilization and application performance. We are excited to see the development of an open nRT-RIC and xApps in the SD-RAN project led by ONF, and expect this work to help advance the state-of-art for open and intelligent RAN.”
Dr. Chih-Lin I, Chief Scientist, Wireless Technologies, China Mobile
“China Unicom has been a long-term partner with ONF. We continue to see the benefits of the ONF’s work and the impact it has on our industry. The SD-RAN project is now applying the ONF’s proven strategy for disaggregating and creating open source implementations to the 5G RAN space in order to foster innovation and ecosystem transformation. We are excited by this work, and are committed to trialing a solution as it becomes available.”
Dr. Xiongyan Tang, Network Technology Research Institute, China Unicom
“Deutsche Telekom is a huge believer in applying disaggregation and open source principles for our next-generation networks. DT has ONF’s mobile core platform (OMEC) in production and we are taking ONF’s broadband access (SEBA/VOLTHA) platform to production towards the end of 2020. This journey has shown us the tremendous value that is created when we can build solutions based on interoperable multi-vendor components intermixed with open source components. ONF’s SD-RAN project is leveraging these same principles to help accelerate innovation in the RAN domain, and we are excited to be an active collaborator in this journey.”
Dr. Alex Jinsung Choi, SVP Strategy & Technology Innovation, Deutsche Telekom
“Connectivity is an integral part of Facebook’s focus to bring people closer together. We work closely with partners to develop programs and technologies that make connectivity more affordable and accessible. Through our collaboration with ONF on their SD-RAN project, we look forward to engaging with the community to improve connectivity experiences for many people around the world.”
Aaron Bernstein, Facebook’s Director of Connectivity Ecosystem Programs
“Google is an advocate for SDN, disaggregation and open source, and we are excited to see these principles now being applied to the RAN domain. ONF’s SD-RAN project’s ambition to create an open source RIC can help invigorate innovation across the mobile domain.”
Ankur Jain, Distinguished Engineer, Google
“Intel is an active participant of the ONF’s SD-RAN project to advance the development of open RAN implementations on high volume servers. ONF has been leading the industry with advanced open source implementations in the areas of disaggregated Mobile Core, e.g. the Open Mobile Evolved Core (OMEC), and we look forward to continuing to innovate by applying proven principles of disaggregation, open source and AI/ML to the next stepping stone in this journey – the RAN. SD-RAN will be optimized to leverage powerful performance, AI/ML, and security enhancements, which are essential for 5G and available in Intel® Xeon® Scalable Processors, network adapters and switching technologies, including Data-Plane Development Kit (DPDK) and Intel® Software Guard Extensions (Intel SGX).”
Pranav Mehta, Vice President of Systems and Software Research, Intel Labs
“NTT sees great value in transforming the RAN domain in order to foster innovation and multi-vendor interoperability. We are excited to be part of the SD-RAN ecosystem, and look forward to working with the community to develop open source components that can be intermixed with vendor proprietary elements using standard O-RAN interfaces.”
Dai Kashiwa, Evangelist, Director of NTT Communications
“Radisys is excited to be a founding member of the SD-RAN project, and we are committed to integrating our RAN software implementation (CU & DU) with O-RAN interfaces to the µONOS-RIC controller and xApps being developed by the SD-RAN project community. This effort has the potential to accelerate the adoption of O-RAN based RIC implementation and xApps, and we are committed to working with this community to advance the open RAN agenda.”
Arun Bhikshesvaran, CEO, Radisys
“As a leading manufacturer of small cell RAN equipment and an avid supporter of the open RAN movement, Sercomm is excited to collaborate with the SD-RAN community to open E2 interfaces and migrate some of our near-real-time functionalities from the RAN equipment into xApps running the μONOS-RIC controller. This is a nascent yet dynamic area full of potential, and we are committed to working with the SD-RAN ecosystem to build solutions ready for trials and deployment.”
Ben Lin, CTO and Co-Founder, Sercomm
“TIP’s OpenRAN solutions are an important element of our work to accelerate innovation across all elements of the network including Access, Transport, Core and Services. We are excited about the collaboration between our RIA subgroup and ONF’s SD-RAN project to accelerate RAN disaggregation and adoption of open interfaces. Through this collaboration we will enable the OpenRAN ecosystem to leverage the strengths of data science and AI/ML technologies to set new industry benchmarks on performance, efficiency and total cost of ownership.”
Attilio Zani, Executive Director for Telecom Infra Project (TIP)
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Comment and Analysis of Open RAN Market:
Disclaimer: Like all IEEE Techblog posts, opinions, comment and analysis are ALWAYS by the authors and do NOT EVER represent an opinion or position by IEEE or the IEEE Communications Society. This should be obvious to all in the 11 1/2 years of this author’s contribution to the IEEE Techblog and its predecessor- ComSoc Community blogs.
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Besides NOT having a liaison with either 3GPP or ITU-R, the following Open RAN issues may limit its market potential. These are NOT specific to the ONF SD-RAN project, but generic to Open RAN deployments.
- U.S. officials promoting Open RAN as a way to decrease the dominance of Huawei, the world’s biggest vendor of mobile equipment by market share and also to thwart the rise of other vendors like ZTE and China Information and Communication Technology Group (CICT) which recently won a small part of s China Mobile contract. Obviously, China’s government will fight back and NOT allow any version of Open RAN to be deployed in China (likely to be the world’s biggest 5G market by far)! That despite China Mobile and China Unicom’s expressed interest in Open RAN (see Quotes above). Remember, that the three big China carriers (China Mobile, China Telecom, China Unicom) are all state owned.
- Dual infrastructure: If a legacy wireless carrier deploys Open RAN, existing wireless infrastructure equipment (base stations, small cells, cell tower equipment, backhaul, etc) must remain in place to support its customers. Open RAN gear (with new fronthaul and backhaul) won’t have wide coverage area for many years. Therefore, current customers can’t simply be switched over from legacy wireless infrastructure to Open RAN gear. That means that a separate separate and distinct WIRELESS INFRASTRUCTURE NETWORK must be built and physically installed for Open RAN gear. Yet no one seems to talk or write about that! Why not?
- Open RAN is really only for greenfield carriers with NO EMBEDDED WIRELESS INFRASTRUCTURE. Rakuten and Dish Network are two such carriers ideally suited to Open RAN. That despite a lot of noise from AT&T and Deutsche Telekom about Open RAN trials. All the supporting quotes from legacy carriers are indicative of their interest in open source software AND hardware: to break the stranglehold the huge wireless equipment vendors have on cellular infrastructure and its relatively high costs of their proprietary network equipment and element management systems.
- Open RAN should definitely lower initial deployment costs (CAPEX), but may result in INCREASED maintenance cost (OPEX) due to the difficulty of ensuring multi-vendor interoperability, systems integration and MOST IMPORTANTLY tech support with fault detection and rapid restoration of service.
Conclusions:
Considering all of the above, one may conclude that traditional cellular infrastructure, based on vendor specific equipment and proprietary interfaces, will remain in place for many years to come. As a result, Open RAN becomes a decent market for greenfield carriers and a small market (trial or pilot networks) for legacy carriers, which become brownfield carriers after Open RAN is commercially available to provide their cellular services.
Given a smaller than commonly believed market for Open RAN, this author believes the SD-RAN project is a very good idea. That’s because it will make open source software available for Open RAN equipment, something that neither the O-RAN Alliance of TIP Open RAN project are doing. Of course, having more vendors producing Open RAN white boxes and software does add to the systems integration and tech support that only large (tier 1) telcos (like AT&T, Deutsche Telekom, NTT and cloud companies (like Google, Facebook, Microsoft) have the staff to support.
In a follow up phone conversation today, Timon Sloane told me that network operators want a fully functional and powerful RAN Intelligent Controller (RIC) to gain visibility and control over their RANs, but that has yet to be realized. To date, such controllers have been proprietary, rather than open source software.
The ONF µONOS-RIC is a key software module to realize that vision, Timon said. It is very much like a (near) real time operating system for an Open RAN. If successful, it will go a long way to promote multi-vendor interoperability for Open RAN deployments. Success and good luck ONF!
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References:
https://www.prnewswire.com/news-releases/onf-announces-new-5g-sd-ran-project-301117481.html
https://www.sdxcentral.com/articles/news/onf-picks-up-where-o-ran-alliance-falls-short/2020/08/
At long last, commercial 400GE is real via Windstream -Evergreen long haul optical circuit
IEEE 802.3‘s “400 Gb/s Ethernet Study Group” started working on the 400 Gbit/s generation standard in March 2013. Results from the study group were published and approved on March 27, 2014. IEEE officially ratified its 802.3bs standard for 200G and 400G over Single Mode Fiber (SMF) and Multi Mode Fiber (MMF) on December 6, 2017.
Below are charts of recent IEEE 802.3 Ethernet standards development and the various option for 400GE over SMF or MMF:
| Name | Medium | Tx Fibers | Lanes | Reach | Encoding |
|---|---|---|---|---|---|
| 400GBASE-SR16 | MMF | 16 | 16 x 25 Gbps | 70 m (OM3)100 m (OM4) | NRZ |
| 400GBASE-DR4 | SMF | 4 | 4 x 100 Gbps | 500 m | PAM4 |
| 400GBASE-FR8 | SMF | 1 | 8 x 50 Gbps (WDM) | 2 km | PAM4 |
| 400GBASE-LR8 | SMF | 1 | 8 x 50 Gbps (WDM) | 10 km | PAM4 |
| 200GBASE-DR4 | SMF | 4 | 4 x 50 Gbps | 500 m | PAM4 |
| 200GBASE-FR4 | SMF | 1 | 4 x 50 Gbps (WDM) | 2 km | PAM4 |
| 200GBASE-LR4 | SMF | 1 | 4 x 50 Gbps (WDM) | 10 km | PAM4 |
Source: IEEE 802.3
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There’s been much talk about 400GE since then with continued promised of “deployment this year,” primarily for Data Center Interconnect (DCI), Internet Data Exchange, and wholesale fiber service providers. Now, it’s finally real!
Windstream Wholesale has begun deploying long haul 400 Gigabit Ethernet (400GE) to link the regional teleco’s fiber network with Everstream’s Chicago-to-Cleveland route. For this deployment, Windstream used Infinera’s Groove (GX) Series compact modular platforms and Juniper’s PTX Series transport routers. Windstream provided the 400G Wavelength Service using Infinera’s coherent wavelength technology.
The two primary customer segments for 400GE have been data center operators looking to interconnect two or more data centers, or service providers that want to build metro rings consisting of 400G lines on which they then would lease capacity to data center operators or enterprises through a data center interconnection (DCI) as-a-service offering.
“So this is not just an experiment,” said Buddy Bayer, chief network officer at Windstream. “This is a real world revenue generating circuit for us. We have a lot of peers in this industry that we talk to quite a bit, and there’s a lot of experimentation and lot of discussion going on around about 400 Gig. But this is the first one that we’ve really heard about where it’s a real circuit with real revenue behind it.”
Source: Windstream Wholesale
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Bayer credited the work done in Windstream’s Little Rock lab earlier this year with Infinera for being able to boot up the commercial 400GbE connection with Everstream. In April, Windstream Holdings and Infinera paired 400GE with client-side services with commercially available 400GE-LR8 QSFP-DD compact pluggable interfaces. The trial used Infinera’s commercially available 2x 600G Wavelength muxponder on its Groove (GX) G30 Compact Modular Platform with the CHM-2T sled, which enabled the customer-facing 400GE service to be transmitted using a single-carrier 600G wavelength. Windstream has been aggressive about working with vendors such as Infinera and Ciena in its labs in order to provision 400G services.
“With the LR8, you now you have the optical reach for the long haul. So going from seeing it in the lab environment to now getting it onto our network live with a real customer is pretty exciting. This kind of put us in the driver’s seat from our consumers’ perspective,” Bayer said. “We get to take all their questions and all their needs and put them right inside of those labs and trials and create solutions around them,” he added.
The introduction of Windstream’s 400 GbE Wavelength Service helps Everstream meet the relentless growing bandwidth demands from enterprises and provide the flexibility to support a wide variety of business-class services. The partnership enables Everstream to leverage the national footprint of Windstream’s advanced fiber-optic network and augment its high-demand route between Chicago and Cleveland. Windstream’s Wavelength Service product offering includes routes across its nationwide fiber network from 10GbE to 400GbE.
“Everstream is committed to continually enhancing our business-only network and expanding our partnerships to deliver a customer experience that is unmatched for even the most demanding enterprise requirements,” said Everstream President and CEO Brett Lindsey. “As our customers continue to scale, they need access to high-bandwidth, agile network solutions. This opportunity with Windstream enables us to consistently lead the market in providing the services that businesses demand with the reliability they need.”
“Windstream is committed to tapping into the latest technological innovation, enabling us to offer customers the benefits of ultra-efficient, high-capacity transport solutions across our network,” said Joe Scattareggia, executive vice president, Windstream Wholesale. “By partnering with Windstream Wholesale, regional service providers like Everstream have access to advanced national connectivity solutions to support the increasing bandwidth and capacity demands of their customers.”
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Cisco and Juniper have produced commercially available 400G for routers, but the optical network transport side has been slower on the uptake, according to Jimmy Yu, vice president and analyst for the optical transport market at Dell’Oro Group.
“So the fact that Everstream is going to be the first announced paying customer really speaks to the fact that they (Windstream) have gone full throttle on getting this not only up, but getting it running and getting a customer,” Yu said. “It does seem like they are kind of hitting the market first among service providers.”
Yu also pointed to Windstream’s work with Ciena for the build-out of Windstream’s new nationwide optical network, which is slated for turn up in the third quarter of this year.
Bayer and Yu expect 400G long-haul deployments will ramp up around the middle of next year after a few smaller launches near the end of this year. Bayer said the cost model for deploying 400G needs to come down for wide-scale adoption.
“I think the typical cost curve hasn’t kicked in yet,” Bayer said. “It’s supply and demand. As soon as there’s a demand on the 400G side, we’re going to see the cost come way down. You’re going to see cost models where it’s cheaper to turn up one 400 Gig as it is for turning up two 100 Gigs. We’re not there yet.
“The router blades are in the same supply and demand curves that the transport optics are in.”
Both Bayer and Yu said ZR pluggable optics, which will be for the longer spans of up to up to 120 kilometers, would start to become more widely available next year. Using ZR and ZR Plus pluggable optics allows service providers to eliminate transponders in the their WDM wavelength-division multiplexing) networks.
“IR8 is absolutely a good technology and it gave us the reach that we needed for 400 Gig, but ZR optics is another level of performance at a lower cost point,” Bayer said. “ZR is a lot lower cost point that’s going to be more appealing. I think that’s when you start to really see 400 Gig take off because now you can take that pluggable and put it in a router or transport gear. I think that’ll really kind of stir the nest for demand for 400G.
Yu said that while ZR is standards-based ZR Plus is not. ZR Plus could span up to 1,000 kilometers but may not fit on a switch or router.
“One of the advantages of ZR is everyone wants to put the pluggable on an Ethernet switch or router instead of on an optical system,” Yu said. “It’s not clear to me if ZR Plus can be put on a router or just go on an optical system but now it’s going to be more pluggable,” Yu added.
400G ZR and the longer-distance 400G ZR Plus will bring interoperability, and with that, potentially lower cost to 400G deployments as companies deploying 400G have more options to mix and match different vendors.
“ZR Plus will probably be generally available mid next year,” Bayer said. “ZR Plus is a lot lower cost point and that’s going to be more appealing. It’s not available to us yet, but as soon as it is we’re right in the labs and environments with it. We’re ready to go.”
References:
Everstream Partners with Windstream to Bring 400GbE Services to Market
https://www.fiercetelecom.com/telecom/windstream-powers-up-live-400gbe-service-everstream
Chile Government Officials: 5G will NOT close the Digital Divide; Improved Fiber Coverage Needed
5G technology “is not a tool for closing the digital divide and the big problem is fixed internet,” according to Chile’s telecommunications undersecretary Pamela Gidi. Business daily Diario Financiero reported the minister’s comments in response to criticism about the country’s forthcoming 5G frequency auction. Consumer rights body Conadecus and network operator Entel complained that the tender conditions failed to require licensees to provide coverage in rural areas, claiming that the 700MHz band above all would be ideal for boosting coverage in underserved areas.
However, Gidi said the digital divide should be closed with improved fiber-optic infrastructure coverage, given that only a quarter of Chileans with a fixed broadband connection currently connect via fiber. “This is where the greatest gap is and we have to work on both supply and demand,” she said, adding that areas where people can afford fiber aren’t covered while areas where people can’t afford it are. According to Subtel data, 54% of Chileans have fixed broadband home access.
Pamela Gidi participating in Chile’s Senate Telecommunications Commission tele-meeting.
The undersecretary revealed that telecommunications regulator Subtel is currently discussing the possibility of enacting a universal service bill and even introducing subsidies to boost internet demand.
Fernando Saiz, an executive at Telefonica Moviles Chile said that “5G is not a panacea. It is a super important technology for industrial uses, robotic processes and applications like the Internet of Things (IoT). It is useful for businesses and entrepreneurs, but not so much for people.”
–>THIS STATEMENT ALIGNS WITH THE AUTHOR’S VIEW THAT 5G ENHANCED MOBILE BROADBAND (eMBB) WILL NOT BE THE “KILLER APP” FOR 5G OR EVEN NEEDED FOR MOST PEOPLE!
Chile started its 5G auction earlier this week, releasing the details for a tender of a total 1,800 MHz in the 700 MHz, AWS (1,800 and 2,100 MHz), 3.5 GHz and 26 GHz bands with a view to creating at least four 5G operators.
Juan Pablo Letelier, the President of the Commission, criticized the 5G auction, noting that “this wireless technology only exacerbates the digital gaps since only a few people will be able to afford to access it.”
From Ana Garcia Armada: Technology consultant Roberto Gurovich said 5G does not say anything new. Essentially, 5G will increase the capacity of mobile networks and may provide broadband services to people and places where wireline fixed access does not reach. Now and in the near future, 5G will be used for enhanced mobile broadband. Later, 5G will be used for IoT and URLLC. Chile is ready for the implementation of 5G now. but with the pandemic it is not the best moment since they need to reinforce 4G and even 3G to provide for the increased mobile data traffic that is being demanded.
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References:
https://www.telecompaper.com/news/5g-not-a-tool-to-bridge-digital-divide-chile-minister–1351137
https://www.df.cl/noticias/empresas/telecom-tecnologia/pregunta-al-experto-que-implicara-la-llegada-de-la-red-5g-a-chile-para/2020-08-21/130047.html (interview in Spanish with Roberto Gurovich on what 5G means for the people of Chile)
Ericsson deploys 25,000 base stations in Russia; 100 5G deployment agreements top Huawei & Nokia
Sebastian Tolstoy, Head of Ericsson in Russia, said:
“Our development enables Tele2’s subscribers the opportunity to use mobile internet services in high quality. As all our network equipment in Russia supports an upgrade to 5G technologies through remote software installation, operators in Russia are able to launch new services as soon as they get the appropriate licenses.
Ericsson’s 5G Innovation Hub in Moscow gives Russian service providers the opportunity to test innovations on live 5G and IoT networks. The Ericsson Academy, our training center co-located at the Innovation Hub, trains more than 1,000 specialists from Russian service providers and students each year.”
The pace of deployment from Ericsson is truly impressive, especially in the context of the ongoing pandemic. If the current pace is maintained, the five-year deal will be completed in two years.
Aleksey Telkov, CTO of Tele2 Russia, comments:
“In the Moscow region, from the very start, we installed 5G-ready base stations. We deployed a pilot 5G network in the center of Russia’s capital, and together with Ericsson, we are carrying out a large-scale network modernization across the country.
This allows us to say that Tele2 is technologically ready for 5G.”
The 5G Zone uses the 28 GHz band in non-Standalone (NSA) mode and the frequency band for anchor LTE band is Band 7 (2600MHz). 5G pocket routers supporting 28 GHz were used as end-user devices for mobile broadband services with ultra-high speeds.
Ericsson and Tele2’s 5G Zone was used to demonstrate the opportunities 5G presents, including immersive VR entertainment, smart buildings, and other consumer and industrial use cases.
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Ericsson announced it had 100 telco 5G agreements following the announcement of a 5G deal with Telekom Slovenije yesterday. That’s a lot of progress made in a relatively short time. Just under a year ago, Ericsson had publicly announced 24 5G contracts with equipment live in 15 networks. As of today, 58 contracts have been publicly announced and Ericsson’s gear is being used in 56 live 5G networks.
Börje Ekholm, President and CEO, Ericsson, said:
“Our customers’ needs have been central to the development and evolution of Ericsson’s 5G technology across our portfolio from the very beginning. We are proud that this commitment has resulted in 100 unique communications service providers globally selecting our technology to drive their 5G success ambitions.
We continue to put our customers center stage to help them deliver the benefits of 5G to their subscribers, industry, society and countries as a critical national infrastructure.”
Ericsson has been able to capitalize on the uncertainty surrounding Huawei’s future in many Western countries due to security concerns. Even prior to the UK’s decision to ban Huawei’s equipment, many operators in Britain were moving away from the Chinese vendor. India is now moving in that same direction.
In April, Howard Watson, BT’s chief technology and information officer, said:
“Having evaluated different 5G core vendors, we have selected Ericsson as the best option on the basis of both lab performance and future roadmap. We are looking forward to working together as we build out our converged 4G and 5G core network across the UK.”
For comparison, Nokia says it has 85 commercial 5G deals and equipment live in 33 5G networks. In February 2020, Huawei aid it had secured more than 90 commercial 5G contracts worldwide, an increase of nearly 30 from last year despite the relentless pressure from U.S. authorities and being banned in the UK.
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References:
Ericsson deploys 25,000 base stations in Russia to support Tele2’s 5G rollout
https://asia.nikkei.com/Business/China-tech/Huawei-claims-over-90-contracts-for-5G-leading-Ericsson
UK Buy Shares forecast: 2.7B 5G Global Subscriptions by 2025
UK market research firm Buy Shares forecasts that the number of 5G global subscriptions is projected to hit 2.7 billion in 2025. That number accounts for about 35.8% of the current global population. In 2025, the North East Asia region is expected to have the highest subscriptions at 1.3 billion. The 2025 subscriptions represent a growth of 3391.25% from the 80 million subscriptions for 2020.
5G network coverage rate stands at 7% in 2020, and it’s projected to hit 55% by 2025. Notably, the coverage rate for all 3GPP cellular networks has been dominantly high from 2011 when it stood at 87%. In 2020, the coverage rate for the 3GPP cellular network is 95%, a rate the will remain constant for the next five years.
The 5G network comes with various benefits hence the hype around it. According to the research report:
“With the much-hyped network, the combination of speed, responsiveness, and reach has the potential to unlock the full capabilities of other trends in technology. The network will play a vital role in enhancing the full capability of self-driving cars, drones, virtual reality, and the internet of things.”
The Buy Shares research also overviewed the global mobile coverage rate by different technologies between 2011 and 2025. In 2011, the LTE network coverage rate was 5% globally while in 2020, the coverage is expected to be 83%. By 2025 projections, the LTE coverage rate will be 91%.
The research further overviewed the global mobile coverage rate by different technologies between 2011 and 2025. The data shows an increase in coverage for both the 5G and LTE technology. In 2011, the LTE network coverage rate was 5% globally while in 2020, the coverage is at 83%. By 2025, the LTE coverage is expected to be 91%.
Drivers for 5G growth
From the data, the North East Asia region is expected to be the hub of the 5G network controlling almost half of the subscriptions globally. Over recent years, the region has undergone a rapid migration in mobile broadband networks and smartphones setting the perfect ground for 5G adoption. In general, the 5G network is likely to be adopted in areas that had embraced the latest technologies like 4G.
The 5G network has been touted to be a game-changer compared to previous generations of cellular networks like the 3G and LTE/4G). 5G mobile technology promises a ten-fold increase in data transmission rates compared to current networks. The capability will be made possible through a higher transmission frequency.
5G differs since its mains focus lies on machine-type communication enabling the Internet of Things (IoT). The capabilities of 5G thus extend well beyond mobile broadband with increasing data rates. With the much-hyped network, the combination of speed, responsiveness, and reach has the potential to unlock the full capabilities of other trends in technology. The network will play a vital role in enhancing the full capability of self-driving cars, drones, virtual reality, and the internet of things.
Hurdles to 5G adoption
Although 2020 has witnessed a significant number of 5G subscriptions, the network’s impact might not be fully felt this year. The main hurdle to rolling out the 5G infrastructures lies in the costs. The cost of setting up frameworks to back faster data is high. It is worth mentioning that the current telecom infrastructure must be upgraded and expanded. Some telecom companies might take time to set up the infrastructure considering that they don’t plan to monetize the technology.
Access to the spectrum is also another major challenge to the adoption of the network. 5G requires access to several spectrum bands with different attributes. Spectrum is the radio waves allocated to mobile operators to transmit data. Limited access to different spectrum bands in different locations might slow down the uptake.
Several manufacturers are already producing 5G smartphones but the sales are expected to remain moderate this year. The slow sales will be due to the high cost and lack of network coverage at a national level in most regions.
The growth of 5G technology appears to be moving ahead despite existing concerns mainly from the health perspective. According to critics, the technology has links to certain types of cancer but no concrete evidence has been presented to support the concern. With the emergence of the 5G network, there was a massive international review for relevant radiation safety protocols.
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In 2020, the coverage rate for 3GPP based cellular networks (3G, 4G, 5G) is at around 95%, a rate is expected to remain constant for the next five years.
References:
5G mobile subscriptions to reach 2.8 billion at 55% coverage rate by 2025
Qualcomm and China Broadcasting Network demo 5G data call in the 700MHz FDD spectrum
Qualcomm Technologies and China Broadcasting Network (CBN) successfully achieved what they call the world’s first large-bandwidth 2x30MHz 5G data call demonstration in the 700MHz (Band n28) FDD spectrum band. This demonstration was operated in compliance with the 2x30MHz technical specifications of CBN’s 700MHz FDD band. It used a 5G smartphone form factor mobile test device powered by Qualcomm Snapdragon X55 5G Modem-RF System. This demonstration achieved download speeds of more than 300 Mbps and provides a foundation for further enhancing the spectral efficiency of the 700MHz band and accelerating CBN’s commercial 5G rollouts nationwide.
In addition, Qualcomm Technologies worked together with Vivo, ZTE, Quectel, Fibocom and Gosuncn to launch the first batch of commercial 5G devices that support CBN’s 700 MHz including smartphones, CPE and 5G modules. These are all powered by the flagship Snapdragon 865 5G Mobile Platform and/or the Snapdragon X55 5G Modem-RF System.
On 6 June 2019, CBN received a 5G commercial licence granted by China’s Ministry of Industry and Information Technology, indicating the start of CBN’s 5G network rollout. CBN’s 700MHz 5G FDD band is an optimal frequency band to provide wide coverage, fast speeds, strong penetration, and service continuity, which are important aspects not only for traditional mobile services, but also for new vertical enterprise customers.
the rollout of 700 MHz band a commercial reality, and to enable operators to deliver a full offering including voice and data services. Only three months after the 700 MHz 2×30 MHz FDD technical standards of CBN was completed, Qualcomm Technologies cooperated with CBN to achieve the world’s first large-bandwidth 2×30 MHz 5G call in the 700MHz FDD spectrum band, as well as enabled its partners to launch the first wave of commercial devices supporting the 700 MHz band with a variety of product categories and using scenarios.
“Qualcomm Technologies is excited to work with CBN and the industry to continue to advance key technologies that are instrumental for 5G commercialization worldwide,” said Durga Malladi, senior vice president and general manager, 4G/5G, Qualcomm Technologies, Inc. “It is of great significance to achieve the wideband FDD 2x30MHz 5G data call in the 700MHz band with CBN. We are also proud to see the first wave of commercial 5G mobile devices supporting 700MHz powered by our Snapdragon 5G Modem-RF systems and are set to provide strong support for CBN’s deployment of 5G devices and services.”
“With the goal of creating a business model combining media convergence and 5G, CBN has been sharping our competitive edge based on continuous innovations in 5G technology, content platform and business model,” said Qingjun Zeng, deputy general manager, China Broadcasting Network. “Over the past year, we have been actively advancing international standardization and nationwide construction of large-bandwidth 700MHz networks. Our collaborative effort with Qualcomm Technologies in achieving the world’s first large-bandwidth 700MHz Band 2×30 MHz 5G call marks a great step towards our construction of high-quality 5G networks over the 700MHz band. We look forward to joining forces with industry partners to accelerate the nationwide coverage of CBN’s 5G networks which can support the high-quality development of ICT industry and radio & television industry as well as help boost the country’s economy.”
As 5G commercial devices are ready with industry support for 700MHz spectrum band, support for CBN’s 700MHz network deployment will further advance China’s nationwide deployment of 5G.
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About CBN:
China Broadcasting Network (CBN) is a Chinese state-owned carrier, established in May, 2014. CBN is the sole network operator in China authorized by the government to operate nationwide cable TV network providing cable TV, mobile, fixed broadband, satellite communication services as well as providing public safety services. CBN was granted 5G license by Chinse government in June 6, 2019 becoming one of the four 5G carriers in China, and announced plan to deploy nationwide 700 MHz 5G network cooperating with China Mobile in May, 2020.
In April, China Mobile (the world’s largest mobile telecom operator based on number of subscribers) expects to build a 5G wireless system jointly with China Broadcasting Network Corp. Ltd. next year, though the two state-owned companies do not plan to form a joint venture, China Mobile said.
Chairman Yang Jie disclosed the plan while reporting the carrier’s first-half results. The initial plan is that China Mobile will be in charge of construction and operation of the 5G system and China Broadcasting Network will contribute with funding, Yang said.
References:
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CBN Update from Light Reading Aug 21, 2020:
China’s CBN still short of 5G cash and answers
CBN’s biggest problem, and no doubt the main reason for the delay, is funding. One estimate is that the 700MHz network will cost 60 billion yuan (US$8.7 billion) to roll out. Over 2019-20 alone, the mobile operators between them are investing 221 billion on their 5G rollouts. Even the smallest, China Unicom, is tipping in 43 billion yuan ($6.2 billion). A minnow like CBN, a unit of the National Radio and Television Administration (NRTA), doesn’t have that kind of cash.
It’s been created slowly over the past decade out of the assets of provincial-level cable TV operators. It’s been a tortuous process, made worse by the decline in the traditional pay-TV business.
CBN will run a different business model from the incumbent operators, with a heavy focus on delivering TV content. But while it won’t be in direct competition with telcos, it will still be chasing many of the same 5G customers.
So time isn’t on its side. It needs to raise some cash and quickly find a path into the 5G business – or surrender it to the operators.
https://www.lightreading.com/asia/chinas-cbn-still-short-of-5g-cash-and-answers/d/d-id/763373?
Cisco Systems: Huge pivot from hardware to software, security and services; Sales & Earnings forecast disappoints
Historical Review:
From its beginnings as a start-up multi-protocol router company, through the early 2000s, Cisco thrived as a major supplier of hardware to build corporate and internet networks, both to telecom firms, large enterprise companies, universities, and government agencies (like the European Commission).
Having acquired many Ethernet switch start-ups, most notably Crescendo Communications and Grand Junction Networks, Cisco became the undisputed leader in Ethernet switching. But that dominance faded with the rise of cloud computing and “white box” switches the big Internet companies bought for their cloud resident data centers. Also, the competition from Arista Networks, co-founded by brilliant hardware architect Andy Bechtolsheim, depressed sales to cloud computing companies like Microsoft and Amazon.
Much of Cisco’s revenue growth has come from acquisitions. Cisco recently acquired ThousandEyes, a networking intelligence company, for about $1 billion. Cisco bought WAN companies Stratacom and Cerent for $4B in 1996 and $6.9B in 1999, respectively. Cisco acquired software maker AppDynamics for $3.7 billion in 2017. Later that year, it bought BroadSoft for $1.9 billion.
Most of Cisco’s recent acquisitions have been software-related. In July 2019, Cisco acquired Duo Security for $2.35 billion, marking its biggest cybersecurity acquisition since its purchase of Sourcefire in 2013. Acquiring Duo Security bolstered Cisco in an emerging category called zero trust cybersecurity.
Not to be outdone by VMware, HP Enterprise and other large corporate acquirers Cisco purchased SD-WAN companies Meraki in 2012 and Viptela in 2017. In 2019, Cisco agreed to buy Acacia Communications, a maker of 400G optical components, for $2.6 billion in cash. That deal has not closed. Earlier it bought optics device maker Luxtera for $660 million.
CFO Kramer told Reuters that Cisco will continue to acquire smaller companies to help boost revenue and that its $2.84 billion acquisition of Acacia Communications Inc remains on track. The deal was slated to close before the end of Cisco’s fiscal 2020 last month, but the company said it is still awaiting approval from Chinese regulators.
Cisco CEO Chuck Robbins
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Revenues Drop; Earnings Forecast Disappoints:
In its 4th fiscal quarter (May to July 2020), Cisco revenues fell 9% year-on-year to just $12.2 billion as enterprise customers slashed spending on network “infrastructure platforms.” Earnings declined 4% to 80 cents a share from a year earlier. For the current quarter, Cisco expects sales to fall between 9% and 11% in the current quarter. A 10% revenue drop would be at the midpoint of its forecast to about $11.84 billion. Wall Street analysts had expected $12.25 billion in revenue.
According to a filing with the Securities and Exchange Commission (SEC), sales of “infrastructure platforms” tumbled 16% during the quarter, to about $6.6 billion, compared with the year-earlier period. “This is the product area most impacted by the COVID environment,” said Kelly Kramer, Cisco’s chief financial officer who is retiring. “We saw declines across switching, routing, data center and wireless, driven primarily by the weakness we saw in the commercial and enterprise markets,” Kelly added.
Cisco’s applications unit, its second largest product segment, sells everything from unified communications products to “Internet of Things” software. It recorded a 9% drop in sales, to $1.4 billion in the last quarter.
That’s no surprise. As companies shift business workloads to cloud computing services like AWS, AZURE and Google Cloud they spend much less on internal computer networks (aka Enterprise Networks). In addition, Cisco has lost share in several large markets, though it aims to rebound in cybersecurity.
Indeed, Cisco’s only real 4th fiscal quarter growth came at its comparatively small security business, where sales were up 10%, to $814 million. Cisco’s huge services unit were flat YoY, generating $3.3 billion in revenues.
CFO Kramer elaborated:
“Applications (segment) was down 5% driven by a decline in unified communication and TP endpoints. We did see growth in conferencing as we saw strong uptake with the COVID-19 environment. We also saw strong double-digit growth in AppDynamics and IoT software. Security was up 6% with strong performance in unified threat management, identity and access and advanced threats. Our cloud security portfolio performed well with strong double-digit growth and continued momentum with our Duo and Umbrella offerings. Service revenue was up 5% driven by software and solution support. We continue to transform our business delivering more software offerings and driving more subscriptions. Software subscriptions were 74% of total software revenue, up 9 points year-over-year.
In terms of orders in Q3, total product orders were down 5%. During the quarter, there was a slowdown in April as we saw the impact of the COVID-19 environment continue. Looking at our geographies, the Americas was flat, EMEA was down 4%, and APJC was down 22%. Total emerging markets were down 21% with the BRICS plus Mexico down 29%. In our customer segments, public sector was up 1% while enterprise was down 4%, commercial was down 11%, and service provider was down 3%. Remaining performance obligations or RPO at the end of Q3 were $25.5 billion, up 11%. The portion related to product was up 25%.”
“Management does not see the Covid-19 disruption as having improved since May,” Barclays analyst Tim Long said in a note to clients. He added that Cisco’s fiscal fourth quarter saw “Data center particularly weak from reduced demand. Applications again below expectations as growth in Webex (video conferencing) volume still to be fully monetized, and outweighed by weakness in the larger campus communications business.”
“Cisco earnings were disappointing on several levels, primarily on the news of a large restructuring and elimination of jobs as well as the forecast for a revenue decline, which shows the company is not meeting its growth forecasts,” said Scott Raynovich, founder and chief analyst of Futuriom, in an email Wednesday afternoon to FierceTelecom. “The share price looks like it will fall on Thursday based on the fact that investors were too optimistic that cloud infrastructure expansion could support Cisco’s business. The fact is that Cisco has never been a major player in the cloud, and this quarter may be proving out that point.”
Transition/Pivot to Software, Services and Security:
It’s a work in progress and not at all easy for a large company to accomplish. In its fiscal 4th quarter, approximately 31% of revenues came from pure software vs. 51% of sales generated by software and services in the last fiscal year. Of its software revenues, 78% now come from subscriptions, easily beating a company target of 66%. However, the company wants to transition faster.
“We will accelerate the transition of the majority of our portfolio to be delivered as a service,” according to CEO Chuck Robbins who said on the earnings call:
“We believe the transition in our own business model through our shift to more software and subscription-based offerings is paying off. We saw continued strong adoption of our SaaS-based offerings and now have 74% of our software that is subscription versus 65% a year ago. We also believe we remain well-positioned over the long-term to serve our customers and create differentiated value aligned to cloud, 5G, Wi-Fi 6 and 400 gig. Our business model, diversified portfolio, and ability to continue to invest in key growth priorities gives us a strong foundation to build even stronger customer relationships. As we prepare for the future, we will closely partner with our customers to modernize their infrastructure, secure their remote workforce and their data through our innovative solutions that will serve as the foundation for their digital organizations.”
“I think this pandemic is basically just giving us the air cover to accelerate the transition of R&D expense into cloud security, cloud collab, away from the on-prem aspects of the portfolio. Clearly, we’ve got a lot of technology that we’re working on today to help our customers over the next three, four, five years in this multi-cloud world that they’re going to live in, and you’ll see more of that come out over the next couple of years.”
Related to security, Robbins said:
“Moving on to security, which is always at the heart of everything we do. In Q3, we saw solid growth reflecting increased demand for our robust solutions to secure the rapid growth in remote workers and their devices. Being the largest enterprise security company in the world, we are uniquely positioned to safeguard our customers wherever they work. We have the most comprehensive and integrated end-to-end portfolio in the industry across the network, cloud, applications, and endpoints.”
“As I mentioned earlier, we provided extended free licenses for key security technologies that are designed to protect remote workers including Cisco Umbrella, Zero Trust Security from Duo, industry-leading secure network access from Cisco AnyConnect and endpoint protection from our AMP technology. We are also supporting our customers on their multi-cloud journey by enabling them to secure direct Internet access, cloud application usage, and roaming users. We are only two quarters into our Secure Internet Gateway transition and we are already seeing strong adoption from existing and new customers. Building on the investments we made in innovation partnerships and acquisitions, we also introduced SecureX. This is the industry’s broadest cloud-based security platform connecting the breadth of our portfolio and our customer security infrastructure by providing unified visibility, automation, and simplified security across applications, the network endpoints and the cloud.”
SD-WAN Opportunity:
Robbins outlined the company’s SD-WAN strategy during the earnings call:
“We continue to execute on our secure cloud scale SD-WAN strategy by investing in innovation and partnerships to help enterprises accelerate their multi-cloud strategies. As an example, we are now integrating with our Umbrella secure Internet gateway to give our customers flexibility to use best of breed cloud security with our industry-leading SD-WAN solution. Our partnerships across web scale providers like AWS, Azure and our most recent announcement with Google Cloud allow us to offer a truly multi-cloud network fabric. As bandwidth and SaaS application demand increases, we are enabling our customers to securely connect branches and interconnect to different cloud providers to enable consistent application performance and user experience.”
With SD-WAN, companies have less need for costly private data networks leased from telecom companies. Cisco competes with VMware, startup Aryaka, Fortinet and CloudGenix in the SDN market. Palo Alto Networks recently bought CloudGenix.
Will 5G/WiFi 6 Drive Demand for Routers and 5G Core Products?
“In our view, headwinds have mostly played out, and we see smoother sailing ahead with easier comps and better growth cycles that are related to new product cycles,” Bank of America analyst Tal Liani said in a note. “5G could drive demand for routers, especially access and aggregation routers, 400G switching could drive demand for data center switching to recover, and Wi-Fi 6 (IEEE 802.11ax) could drive up another upgrade cycle.”
CEO Robbins on 5G growth:
“So I think what we see happening with 5G is a little bit mixed, but generally there is a tendency for our customers to want to sort of put their foot on the accelerator. I think you heard some of our customers that are looking for permits and with regional governments around the United States and other places that they are not sure they’re going to be able to get that done (permits to mount small cells on public infrastructure) during this pandemic. You got other customers who are saying that they actually are not having a problem, but it’s — so we think generally there is going to be an acceleration, particularly as our service provider customers also realize that some element of this work from home scenario will not go away and so we’re going to be continuing in the future to work in these very hybrid worlds where we’re going to have even a much broader distribution of where their users will be working from and I think that’s the reason that they want to continue to accelerate the deployments and the strategies around 5G.”
CEO Robbins on WiFi 6 mixed customer feedback:
“I’d say in Wi-Fi 6, I don’t see any big significant shift. I’d say on the cloud, I’ve had mixed feedback from customers. I think that in general, it’s probably a tailwind to cloud, but there are some customers that believe they have a cloud strategy and this doesn’t — they don’t understand why this would change how they go about it, but it will, as it relates to our strategy. We are going to continue to accelerate those technologies that help our customers use the cloud more effectively. We are going to — as our customers, some of our customers are going to need opex offers in the future given capex restraints. So we’re working on a balance of our portfolio to be delivered in both op capex models to give customers the flexibility that they need and we’re definitely going to continue to accelerate the development and work around our security portfolio as it relates to remote work and cloud connectivity because we think that’s only going to accelerate as well.”
Cost Cutting including Layoffs Coming:
Cisco’s restructuring plan started in the current quarter and is expected to recognize a related one-time charge of about $900 million. CEO Robbins plans to cut costs and shrink the payroll. “Over the next few quarters, we will be taking out over $1 billion on an annualized basis to reduce our cost structure,” he said on the earnings call. CFO Kramer said operating costs would fall by around $800 million, about 4.4% of the annual total.
Costs have already been reduced substantially. In the 4th fiscal quarter opex fell 9%, to about $4.4 billion. Yet with those cuts, operating profit dropped 11%, to $3.3 billion. It was only due to lower tax payments via the 2017 GOP tax bill (which benefited companies at the expense of the middle class) that net profit rose 19%, to roughly $2.6 billion.
While older Cisco workers were getting buy-out deals to retire, headcount at the firm has grown for the past four years, rising from 71,833 employees in 2015 to 75,900 last year. That latter number will surely decline in the months ahead. Note that Cisco does not provide details of staff numbers or layoffs in quarterly earnings updates.
CEO Robbins did not disclose any details about possible job cuts. According to Reuters: “Cisco’s restructuring, which includes a voluntary early retirement program and layoffs, will begin this quarter, the company said, adding that it expected to recognize a related one-time charge of about $900 million.”
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References:
IEEE 802.3cg and IEEE 802.1 Standards play huge role in Operational Technology and Time Sensitive Networks
Introduction:
The Ethernet Alliance and Avnu Alliance have separately released plans to speed up and simplify Ethernet communications networks. Operational Technology (OT) is the target of the IEEE 802.3cg specification from the Ethernet Alliance, while the Avnu Alliance is focusing on IEEE 802.1 time-sensitive networking (TSN) applications.
I. IEEE 802.3 and the Ethernet Alliance:
IEEE 802.3c is titled: IEEE Standard for Ethernet – Amendment 5: Physical Layer Specifications and Management Parameters for 10 Mb/s Operation and Associated Power Delivery over a Single Balanced Pair of Conductors.” It defines the use of Single-Pair Ethernet (SPE) in many circumstances rather than a wide range of fieldbus cables, including RS‑485 twisted-pair, RG‑6 coaxial, and instrumentation cables.
The 802.3c Project Authorization Request (PAR) states:
“Applications such as those used in automotive and automation industries have begun the transition of legacy networks to Ethernet. This has generated an intrasystem control need for a 10 Mb/s solution which will operate over a single balanced pair of conductors. IEEE 802.3 does not currently support 10 Mb/s over a single balanced pair of conductors, and a reduction in the number of pairs of conductors and interface components required for 10 Mb/s Ethernet will provide a basis for an optimized solution in these applications.”
OT networks historically have been siloed from Ethernet-based IT networks and, “these networks, while operating effectively today, use dated, disparate network protocols. They are slow, typically 31.2kb/s, and require translation gateways to convert necessary data to Ethernet. SPE is purpose-built to address the challenges and topologies of OT networks,’ said Peter Jones, chair of the Ethernet Alliance and a distinguished engineer with Cisco.
“As the building- and industrial-automation industries come to rely more on SPE, there is a clear need to bring together the people creating and using the technologies so they can better understand one another,” said Jones.
“We are well positioned as a bridge between the OT experts in building and industrial automation and the IT (Information Technology) expertise that we have traditionally served across the Ethernet ecosystem. This new Ethernet Alliance industry focus will work to align the many disparate stakeholders and, in turn, help the building- and industrial-automation industries get to where they want to go with Ethernet.”
One of the key roles that the Ethernet Alliance plays is supporting the deployment of Ethernet technologies into markets not traditionally served by Ethernet. OT networks, which control manufacturing processes or provide occupant comfort and safety in a building, historically have been siloed from Ethernet-based IT networks.
In the past, application of Ethernet in OT networks required adapting the network to work with normal 10 BASE-T Ethernet. It was effective but created barriers, which limited adoption. SPE tears down those barriers, said Bob Voss, chair of the SPE subcommittee and a senior principal engineer with Panduit.
“SPE allows users to build the facilities served by OT networks in the ways they know work best; SPE is designed to support proven topologies and even uses a similar physical layer. Many SPE experts believe, given good cable health, that it could be possible to reuse physical-layer elements of current OT networks,” said Voss.
“We are excited about the Ethernet Alliance’s launch of an industry focus around building and industrial automation,” said Ron Zimmer, president and chief executive officer, Continental Automated Buildings Association (CABA).
“SPE is a promising technology for our industry, and CABA’s membership of leaders in advancing integrated home systems and building automation worldwide are committed to innovation that empowers connectivity among people, spaces and technology for a better tomorrow.”
Added Brett Lane, chief technical officer, Panduit: “The benefits SPE can bring to building and industrial automation are exciting. SPE is a vital next-generation technology which stands to help industry achieve better business outcomes through the continuation of convergence across the enterprise, and the Ethernet Alliance’s launch of this industry focus around OT networks is well timed.”
The Ethernet Alliance includes a variety of communications vendors, including Broadcom, Cisco, Dell, Juniper, Intel as well as university and industry members. Here’s there 2020 Ethernet Roadmap and Applications:
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II. TSN, IEEE 802.1 and the Avnu Alliance:
TSN is a collection of standards developed by the IEEE 802.1 TSN Working Group, which defines a new set of mechanisms for providing time synchronization and timeliness (deterministic data delivery) for time-sensitive data in a LAN shared with other types of best-effort applications, said Dave Cavalcanti, Avnu Alliance Wireless TSN Workgroup chair and a principal engineer at Intel.
IEEE 802.1 TSN standards define new functions for 802-based LANs such as traffic shaping, frame pre-emption, traffic scheduling, ingress policing, and seamless redundancy. When all parts of a network are running with the same sense of reference time, traffic can be coordinated based on a time-aware schedule, one method that allows for better control of latency for time-critical traffic. These new features provide a whole new layer of control for managing traffic over Ethernet, Cavalcanti said.
The charter of the IEEE 802.1 TSN Task Group is to provide deterministic services through IEEE 802 networks, i.e., guaranteed packet transport with bounded latency, low packet delay variation, and low packet loss. The TSN TG has been evolved from the former IEEE 802.1 Audio Video Bridging (AVB) TG. The TSN TG includes the former IEEE 802.1 Interworking TG. The original work on AVB was done as part of the “Residential Ethernet Study Group” of IEEE 802.3.
Base standards for TSN:
- IEEE Std 802.1Q-2018: Bridges and Bridged Networks
- IEEE Std 802.1AB-2016: Station and Media Access Control Connectivity Discovery (specifies the Link Layer Discovery Protocol (LLDP))
- IEEE Std 802.1AS-2020: Timing and Synchronization for Time-Sensitive Applications
- IEEE Std 802.1AX-2020: Link Aggregation
- IEEE Std 802.1BA-2011: Audio Video Bridging (AVB) Systems
- IEEE Std 802.1CB-2017: Frame Replication and Elimination for Reliability
- IEEE Std 802.1CM-2018: Time-Sensitive Networking for Fronthaul
The TSN standards can be applied in many verticals. Some of them are listed in the application of TSN page.
According to Cavalcanti, the IEEE 802.1 TSN standards have seen a lot of growth in the past three to five years, particularly in the industrial market. TSN is a networking layer that leverages under-laying data communication technologies (such as Ethernet, 802.11/Wi-Fi and eventually 5G). As such, TSN can be seen as a unifying layer operating across and potentially integrating heterogeneous connectivity technologies. The role of TSN is to ensure the end-to-end data delivery with determinism, Cavalcanti said. “Each of the individual connectivity technologies may implement its own features to help achieve TSN goals, but TSN has a broader scope than any particular connectivity technology.”
Wireless communications using TSN not only enable mobility, they are flexible and reduce wiring costs. “TSN capabilities over wireless, for instance, can enable manufacturers to easily reconfigure industrial automation and control systems as well as enable optimized routing and utilization of mobile robots and automatic guided vehicles,” Cavalcanti added. Industrial automation system and mobile robots are important use cases because wireless is fundamental for mobility, flexibility and reconfigurability of tasks and routes.
“Electrical power grid systems are another interesting use-case for wireless TSN, as these systems have varied coverage areas which may vary from local (e.g. substation) to wide areas (distribution and transmission). Industrial control systems could also benefit from wireless connectivity, but they will require the highest level of determinism and reliability and rely exclusively on time-aware (IEEE 802.1Qbv) scheduling over wireless links,” Cavalcanti said.
The push for combining wireless and Ethernet TSN comes from the Avnu Alliance which says its members include more than 95% of the Ethernet silicon suppliers as well as automotive industry and audio-visual vendors. Its affiliates include Cisco, Intel, Bose, Bosch, and Extreme. The Avnu Alliance defines requirements for interoperability and is the certification authority – grants certification for interoperable products – for TSN.
The Wireless TSN working group within Avnu Alliance states that “it is important to start early discussions and alignment on topics such as consistent TSN interfaces for wired and wireless technologies, interoperability testing, and certification efforts.”
The Alliance does not do the actual physical testing of products; this is handled by a network of registered test facilities. For example, the University of New Hampshire InterOperability Laboratory is one registered test facility.
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References:
https://ethernetalliance.org/wp-content/uploads/2020/08/EA_SPE_PressRelease-FNAL-08AUG20.pdf
Ethernet Alliance to focus on SPE in OT networks for building and industrial automation