Counterpoint Research: Smartphone Market Decline Ends, What Might Help it Grow?
The global smartphone market showed signs of recovery ending a long period of continuous quarterly YoY declines. Shipments during 3Q 2019 were flat at 380 million units. The two markets that helped halt the slide are India, which has been growing steadily, and China, now showing a slower decline.
Both countries saw healthy channel builds, in India, OEMs prepared early for Diwali and online sales. In China, Huawei, Oppo and Vivo enjoyed healthy demand ahead of the National Day Golden Week holiday in October. The upcoming holiday season should drive smartphone demand into growth for the second half of the year.
Highlights:
- Samsung continued its growth thanks to strong sales of the Galaxy Note 10 and Galaxy A series. The improved product-mix helped it post better profits.
- Huawei grew a healthy 28.5% YoY globally. It captured a record 40% market share in China. It rebounded in Europe after the decline mid-year caused by the US trade ban. As it continues its aggressive push, there’s an increased need for careful inventory management in China and Europe in Q4 2019.
- Apple iPhone shipments were down 4% YoY. However, initial uptake for the iPhone 11 series was robust. In the US, pre-orders and the first week of sales, saw more demand for the iPhone 11 Pro Max and iPhone 11 Pro, but the standard iPhone 11 rose quickly into the best-seller’s list.
- Apple’s price corrections in China and elsewhere with iPhone 11 and iPhone XR stimulated demand during the last week of September.
- Realme was the fastest-growing brand for the second successive quarter, capturing 7th place globally. Strong performances in India and Indonesia drove its growth.
Counterpoint believes the key OEMs with the largest installed bases, especially in developed regions, will rely on 5G as a key point of differentiation and will encourage their users to upgrade. Already, 5G rollouts have been faster than 4G was in its first few months, with 15 commercially available 5G devices and many more lined-up for launch in the last few months of 2019. Nevertheless, 5G smartphones only accounted for 2% of shipments in Q3 2019 and will contribute relatively little to the overall market for the full year 2019. But, 2020 will likely be a breakout year for 5G smartphone adoption,rekindling smartphone demand.
Note: This author completely disagrees with that last conclusion. We don’t think 5G smartphone adoption will achieve any real market traction till late 2021-early 2022.
Analyst Contacts:
SOURCE Counterpoint Research
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Looking at the current scenario, Xiaomi, famous for its commitment to affordability, launched the cheapest 5G model in China at the end of September. The new flagship of Xiaomi’s number series, MI 9 Pro 5G, has a starting price of roughly US$520.
Exhibit 1: 5G enabled new models in 2019
According to the analysis of the 5G cost structure, we expect an addition of US$50 to implement the sub-6Ghz only by using a standalone 5G modem.
However, costs can be reduced through the integration of a modem with the SoC (System on a Chip). Huawei’s Kirin 990 and Samsung’s Exynos 980 had taken a step ahead in this direction, and Qualcomm is expected to launch its first 5G SoC in the Snapdragon 700 family by the end of 2019. Besides, both Qualcomm, MediaTek plans to mass-produce respective 5G flagship platform SDM865, MTK6885, in Q1 2020.
Exhibit 2: 5G platform timeline in 2019 & 2020
Given the fragmented frequency allocation, we expect smartphone brands targeting North America and parts of European markets will customize designs with an external 5G model for mmWave, even though, most 5G models will resort to a 5G SoC for a cheaper sub-6Ghz only solution.
To sum up, we believe that 5G smartphones will be available in the mid-end price bands over the course of 2020. As a result, cheaper solutions for a next-generation offering will unlock consumer demand for upgrades of their smartphones.
The global smartphone market remained almost flat during Q3 2019, reaching 380 million units in shipments, as compared to 379.8 million units in Q3 2018. In terms of brands, Huawei, Realme, and Samsung registered positive growth, increasing their market share globally. Stronger demand in India and China in September, helped the global smartphone market to halt the seven-month streak of year-on-year (YoY) declines.
Commenting on the smartphone market recovery, Shobhit Srivastava, Research Analyst at Counterpoint Research, noted, “The global smartphone market ended a long period of continuous YoY declines in Q3 2019 due to increased shipments in India and China, the two top-focus markets for every player in the mobile value chain. In India, smartphone OEMs started preparing early for the festive Diwali season this year with healthy channel buildups. In China, Huawei, OPPO & vivo (HOV) continued to see healthy channel demand ahead of National Day Golden Week holiday break in October which led the market to grow a positive 6% sequentially. This along with upcoming holiday season in the next quarter, should drive up the overall smartphone demand into a positive growth territory for the second half of this year compared to the last year.”
Exhibit: Smartphone Shipment Market Share 2019 Q3
Source: Counterpoint Research: Quarterly Market Monitor 2019 Q3
Note: The shipment numbers for all brands exclude certified refurbished devices.
Huawei continued to defy the market decline with a 4% increase in market share globally.
Commenting on Huawei’s continued growth Tarun Pathak, Associate Director at Counterpoint Research, said, “The US trade ban on Huawei did not affect the overall brand’s shipments and growth in Q3 2019 after the uncertainties in June. Huawei’s strategy to supplement its decline in overseas market share with domestic push paid off handsomely. The rising sense of nationalism towards Huawei amidst US-China trade war coupled with aggressive go-to-market strategy in China helped Huawei boost mindshare and marketshare domestically. Outside China, the widening gap being created in overseas markets such as Europe, Latin America & Middle East due to the lack of shipping new models with Google services gives a window of opportunity especially Samsung, Xiaomi and others to capture share away.
Huawei, though will have to be careful of the inventory levels in domestic market as the market could quickly transition to the upcoming 5G wave which could affect its market share in coming quarters.”
Commenting on the 5G progress, Peter Richardson, Research Director at Counterpoint Research, highlighted, “The 5G rollouts from both networks and devices over the past twelve months have been faster than the 4G era, and we expect the rollouts to further accelerate going into 2020. 5G smartphones already accounted for 2% of the market in Q3 2019, growing over 200% sequentially. China has already commenced rolling out the 5G networks and the massive market scale it brings for the entire industry will make 2020 the breakout year for 5G, This should catalyze the slowing smartphone volume demand over the past couple of years and certainly continue to boost the upward trend in the overall smartphone Average-Selling-Price (ASP).”
Key Takeaways:
- The top three brands, Samsung, Huawei and Apple, together cornered almost half of the smartphone market, with the rest of the market left for hundreds of other brands to compete fiercely.
- Samsung continued its growth at 8.4% YoY, capturing over one-fifth of the global smartphone market. This is due to strong Note 10 and Galaxy A series sales. The company also posted an increased profit with an improved product mix. The company will continue to launch new A series smartphones, including some models with 5G, to try and maintain momentum. Huawei’s loss in overseas market would be a big opportunity for Samsung in coming quarters.
- Huawei grew a very healthy 28.5% YoY globally. It captured a record 40% market share in the Chinese smartphone market. As it continues its aggressive push in the market, it will have to keep a check on inventory levels in China and Europe in Q4 2019.
- Apple iPhone shipments were down 4%, and as a result revenues fell 11% YoY. The positive response for the latest iPhone 11 series during the tail end of the quarter is a silver lining for Apple going into the holiday season quarter. In US pre-orders and the first week of sales saw early adopters buying more of the iPhone Pro Max and iPhone Pro but the iPhone 11 rose quickly then on into the top seller’s list. Apple’s price corrections in China and elsewhere with the iPhone 11 and XR, as well as introducing a new palette of colors, stimulated demand during the last week of September offsetting the sharp annual decline earlier months.
- Realme remained the fastest-growing brand for the second time. It also climbed up the ladder in global rankings since its last appearance. This is one of the fastest ramp-ups of companies to-date. Strong performances in India and expansions overseas drove its growth. This was also the fourth consecutive quarter that Realme was within the top 5 brands in India.
- BBK Group (OPPO, Vivo, Realme, and OnePlus) is close to becoming the largest smartphone manufacturer group globally, accounting for over 20% of the global smartphone market and three of its brands in the top 10.
- The market consolidated further with the top 10 brands’ market share increasing to 83% from 78% a year ago.
Global Smartphone Shipments Reached 380 Million Units, Showing Signs of Market Recovery
SK Telecom top winner at Global Telecoms Awards in London, UK
South Korean network operator SK Telecom’s early success in 5G helped it win three awards at the Global Telecoms Awards (GLOTEL Awards), held on November 7 in London, UK. SK Telecom received awards in the categories of ‘5G Implementation Excellence,’ ‘Best Operator,’ and ‘BSS/OSS Transformation Excellence.’
SK Telecom was also highly commended in the consumer IoT and fixed network categories, bringing its awards total on the night to five. Other notable performers were Huawei, with two wins and a highly commended, and ZTE with one win and two highly commended.
With the aim to provide customers with the best 5G service quality, SK Telecom has deployed the fastest and widest 5G network in Korea, arming it with quantum cryptography technologies and an AI-based network management system named TANGO (T Advanced Next Generation OSS). Moreover, by combining its 5G with cutting-edge ICT, the company has introduced a wide range of powerful solutions including 5G-AI Machine Vision, 5G Live Golf Broadcast, AI Video Security and 5G-based Cooperative Intelligent Transportation System.
“I feel confident in saying that this was the strongest set of entries to the awards we’ve had yet,” said Telecoms.com Editor Scott Bicheno (pictured above with Chang-min Park of SK Telecom), who hosted the awards alongside comedian Miles Jupp and was also one of the judges. “Our judges had a really tough job choosing between so many great products, services and projects this year and for that I thank them. The fact that so many entries were highly commended shows how close the scoring was. My congratulations to the winners and thanks everyone who contributed to our best awards yet.”
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Here’s the complete list of winners:
5G Implementation Excellence
Winner – SK Telecom: World’s First 5G Commercialization
Advancing Artificial Intelligence
Winner – Telefónica: Aura
Highly Commended – Nokia: AI as a Service for CMCC Hainan
Automation Initiative of the Year
Winner – Huawei: AUTIN
Best 5G Innovation
Winner – Vodafone Germany: Automotive Factory of the Future
Highly Commended – China Mobile, China Southern Power and Huawei: Smart Grid 5G Slice Operation and Monetization
Best Digital Transformation Project
Winner – Infosys and Vodafone UK: Digital Platform
Highly Commended – Singtel: Unboxed
Best Operator
Winner – SK Telecom
Highly Commended – Reliance Jio Infocomm
BSS/OSS Transformation Excellence
Winner – SK Telecom: OSS Evolution for E2E integration and 5G Business
Connecting the Unconnected
Winner – Ufinet: Rural connectivity case studies
Consumer IoT Initiative of the Year
Winner – O2 and Accenture: Making UK homes smarter energy users
Highly Commended – SK Telecom: V2X Service Enabler (VSE)
Digital Transformation Innovation
Winner – BT: The Digital Business Marketplace
Highly Commended – Netcracker: Digital Transformation Solution
Fixed Network Evolution
Winner – Turkcell: Customer Oriented Failure Prioritization and Complaint Management
Highly Commended – SK Telecom: Giga Premium 10G Residential Broadband Internet Service
Ground-breaking Virtualization Initiative
Winner – AT&T: Edge Solutions
Industrial IoT Initiative of the Year
Winner – Dialog Axiata: Affordable and Purpose-built IoT Solutions for Industries in Emerging Markets
Highly Commended – ZTE: ZTE NMVP Solution
Innovating in the Cloud
Winner – MYCOM OSI: The Assurance Cloud
Managed Services Innovation of the Year
Winner – Ericsson and Telenor: Common Delivery Center for innovative Managed Services model
Highly Commended – Saudi Telecom Company: STC Fixed Network Customer Operations Service transformation
Mobile Device Innovation
Winner – Reliance Jio Infocomm: JioPhone
Mobile Money Mastery
Winner – AsiaHawala and Comviva: AsiaHawala powered by mobiquity Money
Most Innovative Cloud Service
Winner – Tata Communications Transformation Services: Cloud Networking and Security as a Service
Highly Commended – Red Hat: Red Hat open hybrid cloud technologies
Project Delivery Perfection
Winner – ZTE: ZTE for China Mobile ‘He-Fetion’ Project
Highly Commended – X by Orange: X by Orange with Red Hat
Security Solution of the Year
Winner – Mobileum Signalling Firewall
Highly Commended – CUJO AI: AI-powered cybersecurity technology
Telecoms Transformation
Winner – Huawei: NFV-SDN based telco cloud technology initiative
Highly Commended – ZTE: 5G Slicing Wholesale Solution for New B2B2C Business Model
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About SK Telecom
SK Telecom is the largest mobile operator in Korea with nearly 50 percent of the market share. As the pioneer of all generations of mobile networks, the company has commercialized the fifth generation (5G) network on December 1, 2018 and announced the first 5G smartphone subscribers on April 3, 2019. With its world’s best 5G, SK Telecom is set to realize the Age of Hyper-Innovation by transforming the way customers work, live and play.
Building on its strength in mobile services, the company is also creating unprecedented value in diverse ICT-related markets including media, security and commerce.
For more information, please contact: [email protected] or [email protected]
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Global Wireless Solutions (GWS): Only about 25% of mobile phone users of Wi-Fi/VoIP calling
Global Wireless Solutions (GWS) surveyed approximately 5,000 mobile phone consumers and found that its survey results “are even more surprising, because [we found] Wi-Fi calling is not being used in places where cellular service isn’t available or there can be poor signal issues –including the home.”
Only 25% of those surveyed said they were using Wi-Fi calling “often,” compared to 32% who responded that they either had never heard of Wi-Fi calling or didn’t know how to turn it on. Another 18% said they had turned on the feature but didn’t know how often they were actually using it.
The likely reason, from this author’s experience, is the voice quality varies greatly and is awful most of the time, especially from Starbucks or other public hotspots. I use Google Voice over WiFi/IP on my Samsung smart phone, but prefer to use SPRINT CDMA for all my voice calls.
https://www.howtogeek.com/234608/how-to-enable-wi-fi-calling-on-an-android-phone/
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When consumers did use Wi-Fi calling, though, they generally had a good experience with it. Among the survey respondents, 88% who had used Wi-Fi calling said that it worked as well or better than cellular, while 12% who had used Wi-Fi calling ended up turning the feature off because the call performance was worse than their cellular connection.
Asked where they use their mobile phone the most, half of respondents said at home, compared to in the local area (17%), at work (15%) and while commuting (12%).
GWS also asked consumers about factors that will play into their next decision on cellular service contract or purchases. The top three factors were monthly contract cost (19% of those surveyed said it was a factor), the value they felt they were getting for the money (18%) and network reliability (18%). Network coverage (16%), network speed (13%), mobile device cost (8%), availability of a specific mobile device (4%) and contract length (3%) also will impact their decision, consumers reported.
NYC will build Power over Ethernet-based IoT system to track traffic & reboot as needed
New York City [1] officials will put Power-over-Ethernet (PoE) switches at 10,000 intersections in order to remotely repair dysfunctional stoplights. City traffic engineers are working with vendor Transition Networks (Minneapolis, MN) to build PoE systems in which a single cable can power a number of device such as VoIP phones, IP cameras and wireless access points, the city said.
Note 1. NYC is this author’s home town (he grew up in Manhattan). This seems to be a very real and useful IoT project!
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PoE systems pass electric power and data on single cable to various devices, including wireless access points, IP cameras, and VoIP phones. The Managed Hardened Gigabit PoE+ Switch from Transition is designed for outdoor environments and can supply up to 30 watts per port on all eight ports simultaneously.
The switches power cameras and sensors at intersections. The cameras track traffic and pedestrian flows while the sensors count cars and support the city’s Connected Vehicle project. The data is transmitted to the city’s traffic monitoring center.
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Transition Networks, a unit of Communications Systems, provides services and devices for security and surveillance, data center networking, business Ethernet, Fiber-to-the-Desk and wireless backhaul. Customers include enterprises, integrators, service providers, federal agencies, and the military.
According to a company press statement, “This application brings intelligent transportation infrastructure citywide and reinforces the relevance and timeliness of Transition Networks’ strategy of developing smart city Internet of Things (IoT) solutions. Transition Networks is working with a major North American telecommunication services company on the deployment of the solution.”
Anita Kumar, a director of product management and software engineering at Transition Networks, said in a news release.”Installing smart devices across cities allows transit agencies to enact changes that improve safety and traffic flow. Our solution provides the power and connection to make it all possible. Smart device installation will grow in importance as transit agencies look to improve service, create efficiencies and increase quality of life for growing cities.”
Photo courtesy of Transition Networks
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The Connection Vehicle project will support Vision Zero, a plan to eliminate traffic deaths and injuries and reduce damage to vehicles and infrastructure. The NYC deployment uses vehicle-to-vehicle (V2V), vehicle-to-infrastructure (V2I), and infrastructure-to-pedestrian (IVP) communications. V2V communications include blind spot and lane change warnings. V2I communications track cars that speed and run red lights. IVP alerts include warnings to cars when people are in a crosswalk and guidance to blind pedestrians via cell phones.
The new system includes a reboot feature. When there is a problem with a traffic signal, a technician goes out to check the device and reset it manually. Transportation officials will use this new system to reset the devices remotely, without having to close lanes and stop traffic.
Transition’s Device Management System (DMS) software also creates an interactive map of all connected devices, making it easier for city engineers to identify problems in the system. (DMS) software creates an interactive map to see all connected devices, enabling the agency to pinpoint issues and quickly take action. DMS has been an important function for several smart city projects including an installation at New York City’s Brooklyn Bridge.
Transition Networks, “Currently, if a device stops working at an intersection, the agency must take multiple actions prior to deploying a repair technician. This includes scheduling a technician to evaluate the issue and deploying a bucket truck to reach the device. Once the technician is at the site, the lane closures cause significant stress and traffic delays for motorists. Many times the fix only requires a reboot of the device. Transition Networks’ Auto Power Reset (APR) feature provides the ability to remotely reboot or manage Transition Networks’ equipment fixing the issue within minutes and eliminating all of the lane closure requirements. This feature alone will save the agency significant costs and lessen traffic disruptions by reducing the need to send a technician to inspect equipment.”
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New York City is counting on these new tools and data collection to improve safety, traffic management and transportation citywide.
New York needs all the help it can get with traffic. Uber and Lyft have increased traffic congestion and trucks deliver 1.5 million packages from Amazon to city residents every day. In Manhattan, the average speed is 7 mph, about 23% slower than 10 years ago.
References:
India’s Airtel, Vodafone Idea preparing for commercial NB-IoT after pilots
Danish Khan | ET Telecom (editd and corrected by Alan J Weissberger)
Bharti Airtel and Vodafone Idea Limited are now preparing to launch commercial narrow-band IoT (NB-IoT) service in India in the coming months having brought various partners on board to develop a complete device and sensor ecosystem. Both Indian telcos are in currently in various stages of pilot runs in different circles.
Airtel is now deploying around 20,000 sites in Karnataka and Chennai to conduct NB-IoT trials. “We’ll be going with a pilot in a denser way rather than just a few trial sites..in a couple of months, we will be commercially rolling out,” Ajay Chitkara, Director and CEO, Airtel Business, told ET.
Vodafone Idea Limited, on the other hand, has already conducted commercial pilots in eight cities in India, and is now hoping to win its first commercial NB-IoT deployment deal in the coming weeks.
“We’re looking at winning our first commercial deployments over the next six weeks. So commercially we’re also seeing customers now, wanting to buy that. Once we contract them will go and deploy,” Nick Gliddon, chief enterprise business officer separately told ET.
Gliddon said that all eight pilots were conducted in cities like Kochi, Jaipur, Bengaluru, and Chennai and involved smart meters. “We’ve run a long-term trial with those guys to understand how the network and services work.
Airtel’s Chitkara said that the telco’s IoT services are already growing in the country and NB-IoT technology will help it address the demand. “We have around five and a half million subscribers on our IoT side and the way growth is happening, we need to eventually get into NB-IoT.”
Chitkara added that NB-IoT will offer scale as compared to traditional IoT technologies. “130 million devices need to be connected on meter and that is the reason people say that you can’t run on the existing ecosystem.”
Vodafone is also aiming to expand its NB-IoT in India in the next 12 months to tap specific opportunities in the smart city space along with other applications.
NB-IoT is a new 3GPP spec which will likely be included in IMT 2020. It is designed to broaden the future of IoT connectivity, providing significantly improved and deeper network coverage for communication between machines while lowering power consumption by devices.
Both telcos are taking a partner-led approach building a complete ecosystem including sensors, devices and to bring the overall cost down for devices.
Chitkara said that building applications is a challenge, thereby Airtel is bringing partners on board. “…another issue is with all the sensors and other things there is a cost involved so it’s a chicken and egg story…the cost of those 2G sensors still is cheaper so we are making sure at least this whole ecosystem is build up so that we can bring from some more sites,” he added.
Vodafone Idea has already brought over 25 partners on-board and is working towards doubling this number soon to build new use cases around the new technology. These partners are mainly startups and small and medium enterprises that will bring in hardware and software capabilities to enable new NB-IoT use cases.
Rival Reliance Jio Infocomm had last year launched an NB-IoT network with a commercial network available in Mumbai. It is preparing to foray into enterprise services and may expand its IoT services accordingly.
Jio recently claimed that it is the only telco in India to have the capability and network footprint for a nationwide launch of NB-IoT services. Airtel, however, countered the claim by saying that the company’s pan-India 4G network is also ready to support the technology, along with LTE-M.
Within the enterprise business, IoT is expected to be the growth area going forward, given that the consumer retail business continues to face competitive headwinds. India’s IoT market size is expected to increase to $9 billion by 2020 from $1.3 billion in 2016, according to consultancy firm Deloitte.
Visual Comparison of 3G, 4G, and 5G
Courtesy of Ashley Viens at Visual Capitalist
Summary:
Wireless technology has evolved rapidly since the turn of the century. From voice-only 2G capabilities and internet-enabled 3G, today’s ecosystem of wireless activity is founded on the reliable connection of 4G.
Fifth-generation wireless network technology, better known as 5G, is now being rolled out in major cities worldwide. By 2024, an estimated 1.5 billion mobile users?which account for 40% of current global activity?will be using 5G wireless networks.
Today’s chart highlights three generations of wireless technology in the 21st century, and the differences between 3G, 4G, and 5G networks.
5G: The Next Great Thing?
With over 5 billion mobile users worldwide, our world is growing more connected than ever.
Data from GSMA Intelligence shows how rapidly global traffic could grow across different networks:
- 2018: 43% of mobile users on 4G
- 2025: 59% of mobile users on 4G, 15% of mobile users on 5G
What Does This Mean For 4G?
4G isn’t going anywhere anytime soon. As 5G gradually rolls out, 4G and 5G networks will need to work together to support the wave of IoT devices entering the market. This network piggybacking also has the potential to expand global access to the internet in the future.
GSMA: 5G mmWave activities at WRC 19
The GSMA, which lobbies on behalf of the mobile industry, is bracing itself for a battle with Europe over the use of millimeter-wave (mmWave) spectrum for 5G services. The group is anticipating a potential clash at this week’s World Radiocommunication Conference (WRC 19) in Sharm el-Sheikh, Egypt over the use of mmWave, which some European authorities argue interferes with “space services” such as satellite-based weather-sensing.
Brett Tarnutzer, head of spectrum at the GSMA, wrote: “We are calling for Europe to join the US in taking a pro-5G stance at WRC-19 to protect its digital future. Some administrations are still determined to limit mobile use of airwaves that 5G requires to reach its full potential. This protectionist attitude will have consequences for our global economy if allowed to prevail.”
WRC-19 and Agenda Item 1.13 presents the opportunity to identify mmWave spectrum in the 26, 40, 50 and 66 GHz bands. By doing so, the conference can lay the essential foundation for a bright 5G future. These bands enable key capabilities of 5G such as ultra-high capacity and ultra-high speed services.
It is also important the bands come with reasonable conditions. Unfortunately, it is possible to identify a band for IMT on paper, but effectively render it unusable in practice. Where conditions are necessary to protect other services, they should be applied. Where conditions have been found by the technical studies to be unnecessary, it will be harmful to 5G deployment to impose them without reason.
On October 31 at WRC-19, GSMA welcomed delegates from Arab Spectrum Management Group (ASMG) to a lunchtime seminar to discuss Agenda Item 1.13 with a focus on mmWave spectrum for the future of 5G.
“The Arab Spectrum Management Group has already positioned itself as a 5G leader. And its full support for the identification of mmWave spectrum at WRC-19 will help it build on that momentum.” said GSMA Director General Mats Granryd.
Speakers from Nokia, TMG and the GSMA, and Director General Mats Granryd, talked about how the right conditions for mmWave spectrum at WRC-19 can change how connectivity drives the Arab region forward.
At the seminar, the GSMA also presented findings from its recently published report on mmWave Use Cases, and the impact they will have on all aspects of society. GSMA believes the performance benefits of mmWave, including ultra-high speeds and low latencies, will drive the revolutionary impact of the most advanced 5G services. Use cases such as expanded broadband access and advanced healthcare stand to profit greatly from access to mmWave spectrum. [No mention was made of mmWave’s need for the line of sight, short distance/reach, or need for many small cells.]
The Middle East and North Africa are expected to deliver $15.4 billion in GDP from mmWave 5G by 2034. But economic impact, along with all the underlying use cases that make it possible, is only possible if mmWave spectrum is identified for IMT with reasonable conditions.
The mobile industry is asking for the IMT (ITU acronym for International Mobile Telecomunications) identification of:
• 26 GHz (24.25-27.5 GHz);
• 40 GHz (37-43.5 GHz);
• 50 GHz (45.5-52.6 GHz); and
• 66 GHz (66-71 GHz).
The presentation from the seminar is available here. A few highlights follow:
Various applications and services require access to spectrum from low, mid, and high bands:
- High band: Extreme capacity, e.g. 2.3, 2.6, 3.3–4.2, 4.4-5 GHz etc.
80-100 MHz MNO contiguous 2020 onwards - Mid band: Both coverage & capacity, e.g. 24.25-29.5, 37-43.5 GHz etc
800-1000 MHz MNO/Network contiguous 2020 onwards - Low band: Extended coverage, e.g. 600, 700 MHz etc
Up to 20 MHz channel bandwidth; 2020 onwards
5G is expected to contribute $2.2 trillion to global GDP (by 2034)
In a report written by TMG, 5G mmWave services are said to realize $565 billion in global GDP and $152 billion in tax revenue over a 15-year period, from 2020 to 2034. By the end of this period,That equals 25 per cent of the value created by 5G. The report also breaks down the impact on a regional level.
A second TMG report, looks at the impact of mmWave spectrum on economies in Sub-Saharan Africa, South and South East Asia and the Pacific Islands, Latin America and the Caribbean, and the RCC region. It reveals how the benefits on mmWave 5G will be felt across industries and explores exciting new 5G use cases, including healthcare, industrial automation, education and connectivity. None of these use cases will reach their full potential without access to mmWaves.
Case Studies (with illustrations): Extractive Industries, Connectivity, Smart transportation logistics hubs
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ITU Comment on mmWave 5G:
Tremendous study and discussion have already been put into WRC‑19 agenda item 1.13. The specially created Task Group 5/1 met extensively between May 2016 and August 2018, taking an exhaustive look at mmWave frequencies (bands including 26 GHz, 40 GHz, 50 GHz and 66 GHz).
The sharing and compatibility studies showed that, while some services need protection measures, scenarios with many services show positive margins that don’t require additional measures.
The development of the Radio Regulations at WRC follows a simple rule: where existing services need protecting, measures will be put in place; where sharing is feasible, no action is required at WRC.
The performance benefits of mmWave 5G, including ultra-high speeds and low lag, will drive revolutionary new applications across many sectors around the globe. This holds the potential to create an intelligently connected world and enable a new, unprecedented era of industrial connectivity. It can facilitate enhanced services and help nations address our most pressing global concerns: climate change, enhanced economic growth, and fairer societies.
Whether it is a school that wants to educate more students; a city that wants to improve air quality or a company that wants to improve worker safety, 5G can build on the success of mobile networks in ways that matter to everyone. 5G stands to provide amazing improvement to health care, especially in poorer, rural areas.
References for GSMA at WRC-19:
China to launch 5G mobile networks on Friday with a huge government backed push
China’s three major wireless carriers— China Mobile, China Unicom , and China Telecom —will begin selling 5G services to consumers on Friday, November 1st in 50 major cities, including Beijing and Shanghai, said Chen Zhaoxiong, vice minister of the Ministry of Industry and Information Technology on Thursday October 31st at a Beijing conference. That will allow those with the few available 5G-China compatible smartphones to buy a subscription to access the network. The Chinese telcos will charge by speed rather than data used. See the section on 5G Subscriber Pricing below.
A woman using her cellphone walks past a vehicle covered in a China Unicom 5G advertisement in Beijing on Sept. 17. Chinese phone carriers will begin offering 5G service Friday. (China Stringer Network/Reuters)
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The Chinese government has made building 5G a national priority, clearing red tape and reducing costs so the three wireless providers introduce the new technology as swiftly as possible. “They’ve made this a national priority. It’s part of the [Communist] Party‘s ability to show that it’s delivering the goods,” said Paul Triolo, head of geo-technology at the Eurasia Group consultancy. “And in the middle of the trade dispute and the actions against Huawei, it’s even more important for China to show that they are continuing to move forward despite all these challenges,” he added.
“This 5G technology is part of an overall, far-reaching revolution, and it will bring brand-new changes to the economic society,” China Telecom President Ke Ruiwen said at the launch Thursday.
China is forecast to spend between $130 billion and $217 billion on 5G between 2020 and 2025, according to a study by the state-run China Academy of Information and Communications Technology.
“The commercialization of 5G technology is a great measure of [President] Xi Jinping’s strategic aim of turning China into a cyber power, as well as an important milestone in China’s information communication industry development,” said Wang Xiaochu, president of China Unicom.
China President Xi has described the world as on the cusp of a fourth industrial revolution, one characterized by advances in information technology and artificial intelligence, analysts at Trivium China, a consultancy, wrote in a research note this week. “Xi wants to make sure that China is at the forefront of this new revolution — getting 5G up and running is a way to get a leg up in that race,” they said.
China’s central government wants 5G coverage extended to cover all of Beijing, Shanghai, Hangzhou and Guangzhou by the end of the year. The country’s largest carrier, China Mobile, which has 900 million cellphone subscribers, says it will be able to offer 5G services in more than 50 cities this year. Chinese technology companies have been touting the industrial applications of 5G, such as managing cement production, typhoon monitoring and surgeries performed by robots.
But there are challenges ahead. For one, relatively few people have 5G-enabled phones or other 5G end points. Huawei has released phones that can support 5G, as have China’s Oppo and South Korea’s Samsung. Apple, which comprises only 6 percent of the Chinese market, is not expected to release a 5G-capable iPhone until next year.
“It’s going to be really hard for Huawei to overcome the supply chain problems,” said Triolo of Eurasia Group. “Basically, the United States has Swiss-cheesed their supply chain, and there are big question marks hanging over Huawei’s ability to plug the holes.”
The technology is at the heart of a bitter dispute between China and the United States. Washington has expressed concern that 5G hardware made by Chinese manufacturers might contain hidden “back doors” that could enable spying.
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5G Base Stations:
Approximately 13,000 5G base stations have been installed in Beijing, the communications administration said this week. About 10,000 are already operating. China already has a total of more than 80,000 5G macro base stations, typically cellular towers with antennas and other hardware that beam wireless signals over wide areas, government officials said. They said China will end the year with about 130,000, while Bernstein Research estimates South Korea will be in second place with 75,000, followed by the U.S. with 10,000. Piper Jaffray estimated that of the 600,000 5G base stations expected to be rolled out worldwide next year, half will be in China.
Indeed, Chinese operators are launching 5G across fully 80,000 macro base stations this week, a figure that will grow to 130,000 by the end of this year, according to Wall Street research firm Bernstein Research. In comparison, the firm expects South Korea to end the year in second place with 75,000 base stations, followed by the US with just 10,000.
This is why most analyst firms expect China to command the largest number of 5G customers in the years to come.
Telecom-industry executives say Chinese wireless carriers now (and in the future will) buy the most of their cellular transmission equipment from Huawei. Analysts say U.S. measures that limit American businesses from selling components to Huawei could make it more difficult for the Chinese company to make telecom equipment. Huawei says it has taken steps to minimize the impact of such restrictions.
China’s 5G Standard-Approved by ITU-R for IMT 2020 RIT:
It should be noted that China has their own 5G standard, which has been presented to and progressed by ITU-R WP5D which is standardizing the radio aspects of IMT 2020. Here’s an excerpt of an IEEE Techblog comment:
On July 17, 2019, the ITU-R WP5D#32 meeting ended in Buzios, Brazil. At this meeting, China completed the complete submission of the IMT-2020 (5G) candidate technical solution, and obtained the official acceptance confirmation letter from the ITU regarding the 5G candidate technology solution.
China’s 5G wireless air interface technology (RIT) solution is based on 3GPP new air interface (NR) and narrowband Internet of Things (NB-IoT) technology. Among them, NR focuses on the technical requirements of enhanced mobile broadband (eMBB), low latency and high reliability (URLLC) scenarios, and NB-IoT meets the technical requirements of large-scale machine connection (mMTC) scenarios. China’s 5G technology program expresses China’s understanding of 5G technology, considers the integrity and advancement of 5G technology, and maintains the global unified standard with 3GPP as the core, reflecting China’s industrial interests.
According to the requirements of the ITU, the complete 5G technology submission materials include technical solution descriptive templates, link budget templates, performance indicator satisfaction templates, and self-assessment reports. China’s 5G technology solutions and technical support materials come from many research results of domestic equipment manufacturers, operators and research units, reflecting the collective efforts and collective wisdom in the domestic communications field. China’s self-assessment research results show that the NR+NB-IoT wireless air interface technology solution can fully meet the technical vision requirements of IMT-2020 and the IMT-2020 technical indicators.
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5G Subscriber Pricing:
Chinese officials said the cheapest 5G subscription would cost 128 yuan (about $18) for 30 gigabytes of data a month. To enjoy the peak speed of 1 Gbps, Unicom customers will pay about $45 a month.
According to the Wall Street research analysts at New Street Research, China Mobile is offering 5G services at a 30% discount to 4G. “A 30GB 4G customer who migrated to 5G on the same plan would see their bill reduced from RMB 188 to RMB 128. Even a 12GB 4G customer migrating to the 30GB 5G plan would save money,” the analysts wrote in a report to investors.
10 million people in China have already registered their intention to purchase 5G subscriptions as we wrote in this IEEE Techblog post.
Mike Dano of Light Reading had this assessment:
A big part of the “race to 5G” discussion centers on spectrum allocation. Operators in China and South Korea are mainly using midband spectrum like 3.5GHz for their 5G buildouts, while operators in the US are using bands ranging from 600MHz to 28GHz because there isn’t much available midband spectrum for 5G in the US. This could change in the months to come as the FCC moves to release midband C-Band spectrum for 5G in the US. Midband spectrum is useful for 5G because it toes the line between providing high-speed connections and covering large geographic areas.
However, in recent months some US policymakers have been working to move the goalposts in the “race to 5G” a bit by pointing out that China’s 5G buildout is mandated by the country’s ruling party while 5G buildouts in the US and elsewhere are driven by the economics of competition and capitalism. As FCC Commissioner Brendan Carr explained earlier this month, that means 5G networks in the US will be more directly aligned with consumer demands than 5G networks in China.
Regardless, China’s official 5G rollout is starting this week — in a country with about four times more potential customers than the US — and it’s undoubtedly going to dwarf the 5G efforts in other countries in terms of most industry metrics.
Huawei vs Apple 5G smartphones in China:
Huawei Technologies has increased its smartphone market share in China to a record 42% in the September quarter, growing shipments by 66% year over year, while Apple’s share fell by two percentage points to 5%, with its shipments falling 28% year over year, according to Canalys.
Huawei has already released 5G-enabled phones—and they’re cheaper than Apple’s high-end non-5G iPhones. More models from other Chinese competitors will likely come out in the next few quarters. Industry analysts don’t expect a 5G-enabled iPhone until late 2020.
Rosenblatt Securities analyst Jun Zhang predicts many low- to mid-end iPhone users in China could switch to a cheaper 5G Android phone in 2020. “We believe Apple still has yet to face its biggest challenge in China, which is the upcoming launch of 5G service in November as well as the coverage for 5G service expanding to 100 cities by the middle of 2020,” Zhang wrote in a Thursday research note. “We continue to expect Apple’s smartphone market share will decline once 5G service starts in more cities,” he wrote in a note to clients.
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References:
Zayo’s largest capacity wavelengths deal likely for cloud data center interconnection (DCI)
Zayo Group Holdings announced it has signed a deal for the largest amount of capacity sold on any fiber route in the company’s history. The deal with the unnamed customer will provide approximately 5 terabits of capacity that can be used to connect mega scale data centers. While Zayo didn’t disclose the customer, large hyperscale cloud providers, such as Amazon Web Services, Microsoft Azure and Google Cloud Project, and webscale companies such as Facebook, seem to be likely candidates.
Zayo provides a 133,000-mile fiber network in the U.S., Canada and Europe. Earlier this year it agreed to be acquired by affiliates of Digital Colony Partners and the EQT Infrastructure IV fund. That deal is slated to close in the first half of next year.
“Our customers [1] are no longer talking gigabits — they’re talking terabits on multiple diverse routes,” said Julia Robin, senior vice president of Transport at Zayo. “Zayo’s owned infrastructure, scalable capacity on unique routes and ability to turn up services quickly positions us to be the provider of choice for high-capacity infrastructure.”
Note 1. Zayo’s primary customer segments include data centers, wireless carriers, national carriers, ISPs, enterprises and government agencies.
Zayo to extend fiber-optic network in central Florida: The new fiber network infrastructure, comprising more than 2300 route miles, will open Tampa and Orlando as new markets for the fiber-optic network services company.
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Zayo’s extensive wavelength network provides dedicated bandwidth to major data centers, carrier hotels, cable landing stations and enterprise locations across our long-haul and metro networks. Zayo continues to invest in the network, adding new routes and optronics to eliminate local stops, reduce the distance between essential markets and minimize regeneration points. Options include express, ultra-low and low-latency routes and private dedicated networks.
Zayo says it “leverages its deep, dense fiber assets in almost all North American and Western European metro markets to deliver a premier metro wavelength offering. Increasingly, enterprises across multiple sectors including finance, retail, pharma and others, are leveraging this network for dedicated connectivity as they seek ways to have more control over their growing bandwidth needs.”
According to a report by market research firm IDC, data created, captured and replicated worldwide will be 175 zettabytes by 2025 and 30% of it will be in real time. A large chunk of that amount will be driven by webscale, content and cloud providers that require diverse, high capacity connections between their data centers. In order to provision high bandwidth amounts, service providers and webscale companies are turning to dedicated wavelength solutions.
Zayo’s wavelength network provides dedicated bandwidth to major data centers, carrier hotels, cable landing stations and enterprise locations across its long-haul and metro networks. Its communications infrastructure offerings include dark fiber, private data networks, wavelengths, Ethernet, dedicated internet access and data center co-location services. Zayo also owns and operates a Tier 1 IP backbone and 51 carrier-neutral data centers.
References:
For more information on Zayo, please visit zayo.com
https://www.fiercetelecom.com/telecom/zayo-lands-largest-wavelengths-deal-its-history-at-5-terabits
AT&T $3B+ Earnings Miss; Truce with Elliott Management; HBO Max Announcement
Overview:
AT&T earned $3.7 billion on $44.6 billion in revenue for the July-September 2019 (3Q19) period, when Wall Street had expected about $6.8 billion in adjusted profit, $5.3 billion in net earnings and $45 billion in sales. The company added 255,000 wireless customers and now has more than 79 million total phone customers. AT&T suffered a steep drop at its DirecTV business, losing more than 1.1 million customers, which cut into profits.
In recent years, AT&T has transformed itself from a telecom/network operator into a major media player, selling satellite TV service to millions of people (via its DirecTV acquisition) and owning a large chunk of Hollywood (via its Time Warner acquisition). That business strategy hasn’t gone over well with investors as AT&T shares have declined over the past several years, despite this year’s gains in a bull market where the S&P 500 is up 21% year to date.
In September 2019, hedge fund Elliott Management asked the company to stop striking new acquisitions, to increase dividends and share buybacks and to improve its efficiency by cutting workers and selling off under-performing divisions like DirecTV. The fund also said it was seeking seats on AT&T’s board. The two sides have been in talks over the last few weeks to broker an agreement.
Yesterday, a truce was reached as AT&T announced changes to its corporate governance and pledged to increase revenue and profit each year for the next three years.
AT&T CEO Randall Stephenson on the earnings call:
We expect total company revenues over the 3-year period to grow by 1% to 2% per year. This will be driven by strength in Mobility, increased fiber penetration and WarnerMedia.
As mentioned earlier, our wireless business is now enjoying operating leverage from investments made over the last 5 years. Our WarnerMedia cost synergies are on target and EBITDA at AT&T Mexico is ramping, and we’re identifying significant opportunities for margin improvement through ongoing cost evaluation and operational review.
Improving margins 200 basis points will give us an EBITDA margin of 35% in 2022. And applying a 35% margin to a revenue base that’s growing 1% to 2% per year produces an EBITDA lift in the neighborhood of $6 billion in 2022, and that includes our investment in HBO Max.
AT&T’s strategy to bolster profits also includes potential job cuts, which was strongly opposed by a union that represents over 100,000 AT&T workers. The company also said it expected to pay off the debt associated with last year’s $80 billion purchase of Time Warner. It will review its sprawling set of businesses to see what could be sold or split off into a partnership with other companies.
“We commend AT&T for the positive steps announced today, which will create substantial and enduring shareholder value at one of America’s greatest companies,” Elliott Management said in a statement.
Analysis:
The graph below, on the left, clearly shows how postpaid net adds have been struggling for the past five quarters, while churn has risen to new levels.
Although the telecom carrier space is known for being highly competitive, peers Verizon and certainly T-Mobile US have done a much better job than AT&T at growing their mobility user base and keeping churn under control. Postpaid ARPU (a measure of per-unit revenue, see the chart on the right above) continues to improve YOY, which helps to explain better margins, but at a decelerating pace that reached a mere 1% in 3Q19 vs. 4% in 1Q19.
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Premium TV net user loss reached an astonishing 1.2 million in the quarter, representing roughly 5% of total video connections being dropped in only three months. Over-the-top, once considered a glimmer of hope in user base growth, lost nearly 200,000 subscribers. Cord-cutting and increased competition in streaming probably best explain the deterioration.
Analysts say it is hard to be overly excited or optimistic about AT&T’s mobility and entertainment businesses (representing about two-thirds of its revenues). The company seems to be falling behind its peers, losing market share to competitors in both wireless (T-Mobile US and Verizon) and premium TV (cable TV/MSO companies).
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Update on HBO Max:
AT&T’s WarnerMedia said on Tuesday that its HBO Max streaming service will launch in the U.S. in May of 2020, and cost $14.99 a month. At a company event in Burbank, California, WarnerMedia CEO John Stankey said that content, technology platform and marketing and distribution are the “three pillars” for a successful streaming service. He said AT&T is best positioned for all three. The company said it will spend $4 billion over the next three years building HBO Max. It expects annual incremental revenue, from subscriptions, content and ads, to hit $5 billion by 2025, which is the year it should start to positively impact earnings.
HBO Max will start with about 10,000 hours of content, including movies, original content and classic TV shows. That’s “less than some of our competitors,” said Bob Greenblatt, chairman of WarnerMedia Entertainment, at the event. HBO will launch an advertisement-based HBO Max offering in 2021, less than a year after the ad-free version hits the market. The goal is to reach 75 to 90 million subscribers by 2025, Stankey said.
AT&T said the service would be free for existing HBO customers and the company said it expects to convert the majority of them to HBO Max subscribers over time.
WarnerMedia executives announced that the new streaming service will use “human-powered discovery” in addition to smart analytics to help curate a more ideal user experience for subscribers. One of the most interesting ways HBO Max is going to differentiate itself from its competitors is by what they’re calling “co-viewing.” Basically, each member of a subscriber’s family will be able to set up their own individual profile, but when they want to watch content together, they can log in simultaneously to a new, separate profile that won’t affect the recommendations for the individual profiles. They can also create shared watch lists.
John Stankey, CEO of WarnerMedia, speaks Tuesday in Burbank, CA during Warner Media Day
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HBO Max is one of the newest additions to an extremely crowded streaming market that will soon include Disney+ and Comcast’s Peacock. They’re all taking aim at Netflix, Amazon, Hulu and Apple, which have a variety of subscription and ad-based offerings. AT&T has said HBO Max will become the “workhorse” for its video business as cord-cutting of traditional TV expands.
Drew FitzGerald of the Wall Street Journal had this assessment (excerpts):
HBO Max will have to overcome several hurdles from the start. Netflix is already in 60 million homes in the U.S. and an additional 97.7 million abroad. Also, Apple Inc. and Walt Disney Co. will both launch their video services in November, giving them a head start over AT&T. What’s more, those services will cost less than HBO Max.
There is little room for error for AT&T. The company is already the country’s biggest pay-TV company with more than 21 million DirecTV and fiber-optic subscribers watching its channel bundles. But cord-cutting has ravaged that industry as viewers seek cheaper and more user-friendly entertainment. AT&T has taken the brunt of the damage, with nearly three million customers lost so far this year.
HBO Max is an expensive rescue effort. The company expects to spend $2 billion next year to launch the service and stock it with new entertainment. It will spend $1 billion for each of the following two years until costs begin to subside. That comes on top of more than $1 billion already spent on reruns like “Friends” and “The Big Bang Theory.” The five-year deal for “South Park” streaming rights, which were sought by incumbent rights holder Hulu and Comcast Corp. ’s Peacock, was around $600 million, a person familiar with the matter said.
HBO Max’s debut was delayed by an antitrust fight over AT&T’s takeover of Time Warner. The $80 billion-plus acquisition was AT&T’s biggest-ever deal, making the Dallas company the world’s second-biggest media company practically overnight. But it had to fight a federal lawsuit launched in 2017, delaying its plans by more than a year.
HBO Max won’t replace HBO Now, which will remain a stand-alone service for the foreseeable future. The company isn’t able to do away with traditional HBO packaged with cable subscriptions, either. Adding to the confusion are AT&T TV, AT&T TV Now and AT&T Watch TV, three brands the telephone company uses to market its live channel packages.
“Our future video product set will focus on two platforms: HBO Max, our subscription video on-demand service…and AT&T TV, our live-TV offering,” Mr. Stephens said Monday. He didn’t mention DirecTV, the name most AT&T customers still use today. “We’ll convert as many as we can as quickly as we can,” Mr. Stephens said, and with all the new content being added, “why wouldn’t they?”
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As an illustration of how competitive streaming TVservices have become, Sony today announced it plans to shut down its PlayStation Vue streaming service early next year due to intensifying competition, as technology and media companies inundate consumers with video options.
The service, which launched in 2015 and lets users stream and record live programming through PlayStation 4 consoles and devices from Roku Inc., Apple Inc. and others, will be discontinued in late January, the company said Tuesday. Going forward, Sony said it would focus on its core gaming business.
“Unfortunately, the highly competitive Pay TV industry, with expensive content and network deals, has been slower to change than we expected,” the company said in a statement.
When PlayStation Vue made its debut, Sony faced minimal competition in providing consumers an opportunity to view live television and cable channels without having a subscription to a cable or satellite TV provider. Sling TV, now part of Dish Network Corp., in January 2015 became the first streaming service with major live networks.
But today there are more than a dozen television-streaming services on the market such as Hulu, YouTube TV, FuboTV and others. More streaming services are also slated to run out in the months to come from the likes of Apple, Walt Disney Co. and AT&T Inc. ’s WarnerMedia. Not all offer live television, but the wider array of services has meant that consumers are faced with more options for online video entertainment than ever before.
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References:
https://seekingalpha.com/article/4299727-t-delivers-investors-want
https://www.nytimes.com/2019/10/28/business/dealbook/att-earnings-elliott-management.html
https://www.cnbc.com/2019/10/29/warnermedias-hbo-max-will-launch-in-the-us-in-may-of-2020.html
https://www.wsj.com/articles/at-t-steps-into-streaming-wars-with-hbo-max-11572368721 (on line subscription required)
https://www.wsj.com/articles/sony-to-shut-down-playstation-vue-streaming-tv-service-11572377619