IEEE ComSoc Technology Blog

Infonetics Research, now part of IHS Inc. (NYSE: IHS), forecasts that bare metal switches (which decouple hardware from software and offer greater agility and cost savings over traditional data center switches) will make up just under a quarter of all data center ports shipped worldwide in 2019, up from 11 percent in 2014.  

Infonetics’ fourth quarter 2014 (4Q14) and year-end Data Center Network Equipment vendor market share, size and forecast report tracks data center Ethernet switches, bare metal Ethernet switches, Ethernet switches sold in bundles, application delivery controllers (ADCs) and wide area network (WAN) optimization products.

DATA CENTER MARKET HIGHLIGHTS:
.    Global data center network equipment revenue-including data center Ethernet switches, Application Delivery Controllers (ADCs) and WAN optimization appliances (WOAs)-grew 8 percent in 2014 from 2013, to $11.2 billion
.    In the fourth quarter of 2014 (4Q14), the data center Ethernet switch market was up 5 percent sequentially, affected positively by Cloud Service Providers and financial institution spending
.    The ADC segment has grown consistently on a year-over-year basis for the last 7 quarters
.    Interest in optimizing the WAN via software-defined WAN (SD-WAN) is strong, but the WAN optimization segment has yet to return to long-term growth
.    25GE ports will begin shipping in 4Q15, representing a new 25/100GE architecture for data center fabrics targeted at large CSPs, a key high-end market segment
.    Following double-digit increases in 2011 through 2014, long-term growth in the data center market is expected to slow down by 2019, braked by the migration to software-defined networking (SDN) and the shift to the cloud

Author’s Note:  ADCs are one of many network box functions which are “virtual appliance” candidates via NFV.

“Up till now, bare metal switching has been attractive mainly to the large cloud service providers (CSPs) like Google and Amazon who provide their own switch software integrated into data center orchestration and management platforms. But with vendors such as Dell and HP jumping into the mix with branded bare metal switches, adoption of bare metal switching is going to accelerate as tier 2 CSPs and large enterprises endeavor to achieve the nimbleness demonstrated by Google,” said Cliff Grossner, Ph.D., directing analyst for data center, cloud and SDN at Infonetics Research,

DATA CENTER REPORT SYNOPSIS:

 Infonetics’ quarterly data center equipment report provides worldwide and regional market size, vendor market share, forecasts through 2019, analysis and trends for data center network equipment, including data center Ethernet switches, ADCs, WOAs and Ethernet switches sold in bundles. Vendors tracked: A10, Alcatel Lucent Enterprise, Arista, Array Networks, Aryaka, Barracuda, Blue Coat, Brocade, CloudGenix, Cisco, Citrix, Dell, Exinda, F5, HP, Huawei, IBM, Ipanema, Juniper, Kemp, NEC, Radware, Riverbed, Siaras, Silver Peak, Talari, VeloCloud, Viptela and others.

To purchase the report, contact Infonetics: www.infonetics.com/contact.asp

RELATED RESEARCH (http://www.infonetics.com/market-research-report-highlights.asp?cvg=DataCenterandStorageNetworking)
.    New Era of Data Centers Coming via 25GE; Intel’s Grantley Chip Driving Growth
.    Data Center SDN Market Share Up for Grabs
.    Cloud-as-a-Service (CaaS) Is on Fire, Shows Infonetics Cloud Survey

Closing Comments:

We see three different types of Data Center Switches:

1.  Conventional vendor specific designs with some provision for open networking, e.g. Cisco, Juniper, HP, Dell, Arista.

2.  Bare metal switches using commodity hardware like Broadcom switch silicon and standard/semi-custom microprocessors from Intel.

3.  A new breed of “open hardware” switches is coming from the Open Compute Project (OCP).

[IMHO, this hasn’t gotten enough publicity/press coverage]

Facebook’s Wedge, a 10-Gigabit switch to link all the servers in a rack, which the company recently proposed as a contribution to OCP.  Late last year, OCP accepted its first open switch design, a 10-Gigabit Ethernet switch from Taiwan-based Accton Technology.   “This is an industry first. Nowhere else can you go and just get the design package for a switch,” Facebook’s Omar Baldonado said. “Anybody can build this.”

Accton announced it plans to start selling Wedge-based switches this quarter, and other vendors plan to use the design, too.  Broadcom, Mellanox and Alpha Networks have also contributed hardware designs that are being reviewed by OCP.

If the new designs become popular, it could mean huge competition for the large incumbent computer/switch makers, like Cisco, HP, and Dell, which for several years have faced inroads from open-source software. The Facebook products involve both hardware and software.

 In addition, two other companies making switching software, Cumulus Networks and Big Switch Networks, are donating software to the project. Facebook is donating switch management software that it has developed.

The other Facebook donation to OCP is a new version of a low-power server that uses a semi-custom processor from Intel. Up to 192 of the chips can be fit into a single rack of servers at relatively low power consumption but high performance.

Also at the last Open Compute meeting, Hewlett-Packard announced a new server it is producing in conjunction with Foxconn, the Taiwanese manufacturer that also builds products for Apple. HP and Foxconn entered a joint venture last year, aiming to sell low-priced servers to providers of telecommunications and Internet services. The design appears to use many Open Compute features.

For more information: 

http://bits.blogs.nytimes.com/2015/03/10/facebooks-status-update-for-com…

Introduction:

Most of the wireless connectivity options for IoT are for personal or local area communications.  Those that require longer distances will use some combination of 2G/3G/4G cellular service, with a data plan optimized for machine to machine communications.  Last Thursday at Arrow’s IoT Immersions sponsored conference in Santa Clara, CA, module maker Telit and wireless telco giant AT&T provided details on their respective IoT technologies, markets and applications.

Telit’s LTE- only Module:

Telit Wireless Solutions is an enabler of the global machine-to-machine (m2m) movement. The company talked about long range cellular communications for the IoT and its LTE single mode module for IoT endpoint devices.  

Telit says there are over 7 billion devices connected to cellular networks world-wide. Over 10 billion cellular connected devices was forecast by 2020.  There were 25 million worldwide cellular proucts shipped in 2014.

“Anything that has a battery and electricity could have low cost cellular access with a Telit module.  You don’t need to tether an endpoint to a smartphone to get cellular connectivity.”  

Examples of cellular IoT applications cited were: defibulators to treat patients suffering from cardiac arrest, industrial smart grid, HVAC (heating, ventilating, and air conditioning), Point of Sale (PoS).   Cellular includes 2G, two different versions of 3G (UMTS/HSPA and CDMA/EVDO) and 4G-LTE.  Verizon was forecast to have 110% U.S. nationwide LTE coverage by the end of this year (2015).

Telit’s LE910-V2 – LTE-only module is an addition to the firm’s xE910 family.  It’s designed to optimize bandwidth and performance, while limiting the cost of transitioning from 2G to 4G. The single-mode LTE module, with no fallback in 3G and 2G networks: it is the perfect optimized solution for regions where the 4G technology already has penetration rates above the 90% level. The LTE 3GPP Release 9 module delivers data rates of 150 Mbps downlink and 50 Mbps uplink.  With no fallback to other cellular modes, this LTE module was said to be less expensive and less power hungry than multi-mode cellular modules.  An example application for this single mode LTE module was said to be a parking meter (although this author doesn’t know why LTE’s speed/low latency would be required in this case).

AT&T’s GSM SIM IoT Management System and IoT Applications:

Randy Amerine of AT&T talked about cellular applications for the Industrial IoT (IIoT) and discussed the carrier’s GSM SIM Management platform that’s use for provisiioning and configuration of IoT endpoints. The telco’s IIoT solutions were said to be scalable, secure and capable of cloud based big data analytics.

IoT applications the telco is interested in include:  home automation (including security systems), connected car, medical electronics, energy industry, manufacturing, heavy industrial equipment, transportation (e.g. fleet management) & logistics, field services and sales force automation.

AT&T claims to have the largest share of the connected device market with 19.8M IoT devices or 47% of the U.S. total IoT market in 2013. There are GSM location tracking capabilities in over 100 countries with roaming access in more than 200 countries.  

AT&T is a founding member of the Industrial Internet Consortium where over 100 companies are now involved. As part of that effort:

• IBM and AT&T are collorating on IoT solutions for cities, institutions, and enterprises.  
• GE and AT&T are working on remotely controlled industrial machines.

The ability to sense, respond and analyze are critically important IoT capabilities.  Connect, manage and innovate are also important attributes.   Four “quadrants” for IoT adoption were said to be based on individual business case and risk management analysis.  They are:

1. Prove business case and technology chosen
2. Production Beta test
3. Production Phase 1
4. Full Production

AT&T’s Foundry in Plano, TX was identified as the place to engage and partner with AT&T to progress a company’s IoT application(s) using their 3G/4G cellular network.  AT&T is phasing out 2G and converting existing users to 3G.. The AT&T contact there is Aaron Hoffmeister who provided the following links which have “Contact Us” functionality:

AT&T Innovation: http://about.att.com/innovation

AT&T Foundry: http://about.att.com/innovation/foundry

AT&T has provided cellular IIoT solutions for:

• Global container monitoring
• Security monitoring and alerting
• Tractors and other heavy equipment
• Refrigerators and cooling equipment
• Cargo tracking and monitoring

Industrial shredding/ trash collection was cited as a specific example.  Trash bins are monitored for consistent levels so that pickups/hauling occur as needed.  That improves efficiency and reduces dispatch costs up to 50%.  It took only three weeks for this application to become profitable for the vendor (their cost savings surpassed the IoT capital expense in that short time).

Randy said something most of us are quite familiar with- as 3G/4G wireless capacity grows, so does that aggregate data that actually uses that cellular network.  We thought that was mostly due to consumer video streaming.  But Randy observed that wireless data consumed by IoT devices continues to increase geometrically.  That was a surprise as we thought most IoT applications would be low duty cycle and low bandwidth.

AT&T’s fully integrated IoT solution platform includes:  IoT application services, business rules engine, data model, agents/device protocol adapters, connected products, and management applications.

Mr. Amerine provided the following links via email that may be of interest to readers:

M2M 360  www.att.com/m2m360 

M2M 360 Video http://www.youtube.com/watch?v=PSoGAqTn_Fk&feature=related 

AT&T Control Center http://www.jasper.com/iot-service-platform/connected-devices 

Approved Modules www.att.com/modules

NY Times Interview with Ralph de la Vega, the head of AT&T’s mobile and business solutions:

In this interview, Mr. de la Vega said:

“When we say Internet of Things we say everything from wearables to light bulbs, but it includes locomotives, jet engines, cargo containers, cars, trucks, trains, automobiles.  I don’t think you’ll see too many things in the future that are not connected. Once you connect those things then it adds huge value for tracking where different pieces of equipment are and their status, so businesses can run more effectively.”

AT&T claims to be a leader in the connected car and Vega had this to say about it:

“We are pioneers in the connected-car space and are ahead of our time in spotting the trend that all cars will have connectivity in the future. Car manufacturers all want connectivity because that’s the easiest and fastest way to update the software. The days of having to take your vehicle to a dealer to update maps are long gone.

Tesla is one of the more aggressive manufacturers when it comes to updating the software in their vehicles over-the-air, which all manufacturers are moving to. When the car breaks down what happens to the car? Did the battery go dead? They can also track the history of what happens to the car for diagnostics.

From the user’s point of view, there isn’t an autonomous driving vehicle that’s not connected that I know of. How you interact with the autonomous driving vehicle is with a smartphone. All cars will have an autonomous driving feature, so you can talk to the car while using your smartphone.

We added 800,000 connected cars in the fourth quarter of 2014 alone. That is pretty significant.”

Closing Comment:

AT&T operates an extensive Wi-Fi network including more than 34,000 AT&T Wi-Fi Hot Spots at popular restaurants, hotels, bookstores and retailers, and provides access to more than 1 million Hot Spots globally through roaming agreements.   Therefore, it’s quite surprising that the telco hasn’t talked about using WiFi for any of it’s IoT network offerings.  When I asked Randy about WiFi, he said that his IoT involvement was ONLY using the company’s cellular network.

Speaking at a Morgan Stanley conference March 2nd, Verizon CFO Fran Shammo outlined that future path and gave a few hints about the OTT service, which will be launching this summer, according to a transcript from Seeking Alpha. 

Shammo said Verizon’s efforts around Internet of Things (IoT) and OTT will extend to its 100 million subscriber base. In IoT alone, he said that Verizon has seen $600 million to date in revenue for that market and is projecting growth of 45 percent year-over-year for that category.  However, no new network provisioning or management of IoT was disclosed.
Verizon introduced Verizon Vehicle earlier this year, an after-market connected car service that will add on to accounts and be available to non-subscribers for $15 to $13 per vehicle per month.

Verizon’s as-yet unnamed OTT video service is finally nearing a launch date after years of planning and development. Marni Walden, who heads Verizon’s Product and New Business Innovation, will be leading the new video operation.
Shammo reiterated the roles a number of assets like Verizon Digital Media Services, EdgeCast, upLynk and OnCue will play in the service. He also said that Verizon’s LTE multicast technology, which the carrier has demoed at live events like the Super Bowl, will be a component of the service.  That implies it will be a mobile video service that probably won’t compete with VZ’s FiOS TV service which offers both real time/linear TV and VoD to fiber to the home subscribers

Mr. Shammo has previously indicated that Verizon’s OTT service will not be a linear-TV model like DISH’s new Sling TV offering.  In terms of growing Verizon’s wireless business, Shammo said is looking at four percent top-line revenue growth and focusing less on ABPU and ARPU as service and equipment revenues continue to shift in the wake of an industry-wide move toward EIP programs.

Of course, all wireless carriers, especially AT&T and Verizon, could have good reason to be concerned about future growth given Google’s recent confirmation that it will be entering the market as an MVNO. Google’s move could potentially squeeze wireless pricing depending on what kind of offers the company puts forward.  Shammo said that he isn’t overly concerned at this point:

“One will have to see how they execute on that and see how the market responds to that and then we’ll act accordingly,” Shammo said, according to a Seeking Alpha transcript.

We wonder how AT&T, Sprint and T-Mobile will respond to the forthcoming VZ OTT service…..

Reference:

http://seekingalpha.com/article/2966366-verizon-communications-vz-presen…

Introduction:

Google’s keynote talk on this topic at last Thursday’s Light Reading New IP conference was very profound.  Google and its eight partners (identified below) in this OpenConfig initiative want to specify a vendor neutral type of provisioning & configuration system that will work with any type or brand of network equipment.  It’s called OpenConfig.  In this post, I provide a brief summary of why it’s important and to provide links to other articles about it.

Why it’s important:

Infonetics Research, now part of IHS Inc. (NYSE: IHS), conducted in-depth surveys with service providers around the world about their cloud service plans and learned that 82 percent plan to offer hybrid cloud CaaS (cloud-as-a-service) by 2016.

Infonetics interviewed pure-play cloud service providers and incumbent, competitive and mobile operators for its latest study, Cloud Service Strategies: Global Service Provider Survey, which examines all types of off-premises cloud services, including infrastructure-as-a-service (IaaS), cloud-as-a-service (CaaS), platform-as-a-service (PaaS) and software-as-a-service (SaaS).

Note: some vendors use the acronym CaaS to mean Communications as a Service

CLOUD SERVICE SURVEY HIGHLIGHTS
. A large majority of providers surveyed indicate security is a top customer concern when adopting cloud services
. Infonetics continues to see a disconnect on public cloud CaaS: Cloud service providers (CSPs) continue to invest in public cloud CaaS, while CaaS-using enterprises are signaling a shift from public cloud to private and hybrid cloud architectures
. Key go-to-market strategies for cloud service providers include offering a comprehensive range of services and bundling off-premises cloud services with network connectivity

“Cloud service providers are catching the hybrid cloud CaaS wave, an emerging market where we can expect lots of innovation as the introduction of new IaaS and SaaS off-premises cloud services begin to wane,” Cliff Grossner, Ph.D., directing analyst for data center, cloud and SDN at Infonetics Research, said.

“Cloud providers’ top challenges are non-technical: Meeting customer concerns about loss of control over private data, and helping customers overcome resistance to procedural change or understand how to take advantage of off-premises cloud services,” Grossner said.

CLOUD SURVEY SYNOPSIS:
For its 32-page cloud service strategies survey, Infonetics interviewed operators in North America, EMEA and Asia Pacific about their deployment of off-premises cloud services and plans for evolving their cloud services offerings over the next two years. The study provides insights into operators’ target market segments and verticals, go-to-market strategies, challenges, and cloud service offerings by type (IaaS, CaaS, PaaS, SaaS).

To purchase the report, contact Infonetics: www.infonetics.com/contact.asp

RELATED RESEARCH (http://www.infonetics.com/market-research-report-highlights.asp)
. Cloud services to top $200 billion by 2018; Google, IBM, Amazon lead market
. Growth spike expected in virtual security appliances market, driven by SDN and NFV
. Survey respondents rate Microsoft, IBM, Amazon, Google, Cisco top cloud providers

KPMG Survey Report:  

The Cloud Takes Shapereport is based on the responses of more than 650 senior executives in some 16 countries representing multiple industries, and provides a valuable perspective on the challenges and complexities of cloud adoption facing today’s organizations. As clients move more of their core business processes to the Cloud, they’re finding it challenging to connect their legacy applications and new Cloud solutions – data integration and data management are key potential trouble spots that must be managed closely.

In its 2015 Broadband Progress report, released January 29th, the FCC states that U.S. broadband deployment, especially in rural areas, is failing to keep pace with today’s advanced, high-quality voice, data, graphics and video offerings.

http://transition.fcc.gov/Daily_Releases/Daily_Business/2015/db0129/DOC-331760A1.pdf

In an effort to stimulate deployment, the FCC voted 3-2 to change the definition of “broadband” for wireline networks in Section 706 of the Telecommunications Act of 1996 .  The redefinition is from 4 Mbps downstream and 1 Mbps upstream (set in 2010) to 25 Mbps downstream and 3 Mbps upstream.   The 2010 broadband hurdle rates were said to be “inadequate for evaluating whether advanced broadband is being deployed to all Americans in a timely way,” the FCC found. 

“Using the new higher broadband rate benchmark, the 2015 Broadband Progress report finds that 55 million Americans – 17%  of the population – lack access to advanced broadband.  Moreover, a significant digital divide remains between urban and rural America. Over half of all rural Americans lack access to 25 Mbps/3 Mbps service.  The divide is still greater on Tribal lands and in U.S. territories, where nearly 2/3 of residents lack access to today’s speeds. And 35% of schools across the nation still lack access to fiber networks capable of delivering the advanced broadband required to support today’s digital-learning tools.”

Using the new broadband definition, approximately 20% of U.S. wired Internet connections today do not qualify as broadband, including many (mostly DSL connections) that formerly did qualify.  For example, this author and many others have AT&T U-Verse Internet, which typically provides downstream rates of either 11Mb/sec or 22Mb/sec (the Uverse Upstream rate is not stated by AT&T).  Others have 4Mb/sec and higher ADSL based Internet access.  As of yesterday, we don’t have broadband anymore!

The change is designed to protect consumers by ensuring that cablecos (MSOs), telcos, and other Internet access providers don’t offer subpar download speeds as call them “broadband.” It’s also meant to stimulate the telecom/cableco industry into offering higher-quality services to the one-fifth of the population that has little or no Internet access, according to FCC Chairman Tom Wheeler.  “We have a problem” when 20 percent of the U.S. doesn’t have access to the new speed. And we have a responsibility to that 20 percent,” Wheeler said.

It appears the FCC is paying more attention on cable’s growing broadband monopoly, as AT&T and Verizon back away from unwanted ADSL Internet access markets to focus on their triple play offerings (U-verse and FiOS, respectively) and 4G-LTE nationwide wireless access. Not only do those telcos not want to upgrade their DSL lines, they’re paying for state laws that ensure nobody else can either. It’s a paradigm that’s needed changing for most of the last decade, and few thought that Wheeler would try to do that.  It remains to be seen if AT&T will upgrade U-verse Internet customer speeds as they are almost always served by DSL (only some greenfield U-verse deployments get fiber to the building).  Verizon FiOS uses fiber access, which already provides higher speeds than 25M/3M to all its customers.

The redefinition also creates a huge problem for Comcast. Suddenly, the company’s share of the broadband market becomes a lot larger — and that gives regulators and politicians concerned about market concentration/monopoly power more cause to closely scrutinize Comcast’s plans to merge with Time Warner Cable.  If that merger closes, approximately 63% of U.S. households would have only one choice for a broadband provider at the new faster speeds, according to a December 2014 memo from the FCC. 

Time Warner Cable CEO Rob Marcus said he didn’t think the commission’s “somewhat arbitrary” definition would affect the deal with Comcast. “I don’t anticipate that that has any practical implications for life going forward or for the (the Department of Justice) analysis of the deal,” Marcus said in an earnings call Thursday, January 29th.  

Comcast has said its market share would grow by less than 1% because Time Warner Cable has virtually no broadband customers at speeds above 25 Mbps. No customer will have fewer choices after the merger because Comcast and Time Warner Cable serve different areas, Comcast has repeatedly stated.

There’s still the chance that regulators could block the transaction or seek specific concessions before approving it.  The reviews by the FCC and Justice Department, which is evaluating the merger’s impact on competition, have already been delayed several times as the anniversary of the deal’s announcement nears. 

“The market suggests that odds of the deal closing are no higher than 50-50,” Craig Moffett, an analyst at Moffett Nathanson, said in a note to clients Thursday.  The merger “has lost its air of inevitability,” he said.  Earlier this month, Moffett had said he expected regulators to sign off on the deal. “But if it is rejected, combined Comcast’s share of the broadband market would be the reason,” he wrote in Jan. 8th note to clients.

Comcast says it’s better to measure broadband by including slower speeds, giving it about 35.5% market share in the U.S.

Meanwhile, the debate over a new downstream/upstream rate definition for broadband service mirrors the battle lines over network neutrality. The big Internet content companies including Google, Facebook, Yahoo and Netflix favor strong net neutrality action by the FCC, while the cable and telecommunications companies want the FCC to refrain from reclassifying broadband as a regulated service under Title II of the Communications Act.  Earlier this month, Wheeler strongly hinted that Title II will be the basis for new net neutrality rules governing the broadband industry. Title II lets the FCC regulate telecommunications providers as common carriers.  President Obama urged the commission to use Title II to impose net neutrality rules that ban blocking, throttling, and paid prioritization (AKA “paid peering).

In a filing with the FCC last week, Matthew Brill, counsel for the National Cable and Telecommunications Association, called the proposed broadband reclassification as “arbitrary and capricious.” He termed the assumptions behind  it “hypothetical” that “dramatically exaggerate the amount of bandwidth needed by the typical broadband user.”

AT&T announced its 4thQ2014 earnings yesterday which slightly topped estimates.  

• AT&T’s Wireless segment reported operating revenues of $19.9 billion, up 7.7% from the fourth quarter of the previous year. The Wireline segment had revenues of $14.6 billion which was down 1.0% year-over-year.
• In the fourth quarter, AT&T had 405,000 U-verse high speed Internet subscriber net adds, which would make a grand total of over 12 million U-verse high speed Internet subscribers.  73,000 U-verse TV subscribers were added.
• Total revenue at of AT&T’s wireline segment was $14,572 million, down 1% year over year (yoY). Also, Service revenues were down 1.3% to $14,240 million. Equipment revenues grossed $332 million, up 17.7%. Operating expenses increased 1.2% to $13,107 million. Meanwhile, the operating income increased 0.8% to $1,465 million. Quarterly operating margin stood at 10.1% against 9.9% in the year-ago quarter.
• At the end of fourth-quarter 2014, AT&T had 24.778 million voice connections, down 13% year over year. In the reported quarter, the company lost 1.442 million voice connections, down 78.7%. At the end of the preceding quarter, AT&T had 16.028 million high-speed broadband connections, down 2.4% year over year. The company also lost 0.458 million broadband connections compared with a loss of 0.002 million connections in the prior-year quarter.
• Similarly, at the end of 4Q-2014, AT&T had 5.943 million video connections, up 8.8%. However, the company lost 0.124 million video connections in the said quarter.

• Highlights of 4Q-2014 Earnings: http://www.att.com/gen/landing-pages?pid=5718   http://www.att.com/Investor/Earnings/4q14/ib_4q14.pdf
• Earnings Conference Call:                     

http://phx.corporate-ir.net/phoenix.zhtml?c=113088&p=irol-EventDetails&EventId=5178862 

• The company expects continued consolidated revenue growth and  earnings growth should be in the low-single digit range. Margins are expected to expand across all of AT&T’s segments.
• For fiscal 2015, AT&T expects adjusted earnings per share to grow in the range of low single digit. Capital expenditures are expected at around $18 billion.

Randall Stephenson, AT&T chairman and CEO, commented about AT&T’s future during a fourth quarter earnings call that was broadcast online:

“Our transactions with DIRECTV and Mexican wireless companies Iusacell and Nextel Mexico will make us a very different company. We’ll be unique in the industry because we’ll be able to offer integrated capabilities across a diversified base of services, customers, geographies and technology platforms. After we close DIRECTV, our largest revenue stream will come from business-related accounts, followed by U.S. TV and broadband, U.S. consumer mobility and then international mobility and TV.”

“We will be the only company with mobile Internet spanning both countries,” Stephenson said of the company expanding into Mexico. “We have the makings for strong and very viable Mexico strategy. We like these assets. We think these assets are sufficient to go in there and compete and take share.“

Stephenson was talking about the diversification of AT&T’s revenue stream through it’s pickup of DirectTV, as well as recent acquisitions of wireless players in Mexico. When asked whether AT&T might be considering moving into the Canadian wireless market, Stephenson said he had enough on his plate. “On Canada, I think right now we have about as much as a company can handle,” he said.

Aside from moving into different geographies, Stephenson stressed that AT&T’s DirecTV acquisition will allow it to deliver video content across devices. 

“We’re looking at multiple channels and channel lineups that we’ll be able to deliver to our wireless subscribers,” Stephenson said. “Stay tuned…this is of high priority to us.” 

Stephenson made the comments as both AT&T and Verizon are under pressure to find new revenue streams. AT&T’s fourth quarter subscriber numbers leaned heavily on tablets, which have picked up the slack as smartphones reach saturation. AT&T added 854,000 net postpaid subscribers, a 51 percent increase over the same quarter last year. AT&T added just 148,000 net postpaid smartphones and 969,000 postpaid tablets in the quarter.

For reference, Verizon added about 600,000 smartphones and 1.4 million tablets in the fourth quarter.  Stephenson said AT&T would update more specific guidance once the DirecTV purchase is approved. 

FBR’s David Dixon wrote in a note to clients (and this author):

 AT&T reported 4Q14 mixed results as it continues to face stiff competition from Verizon and its smaller rivals – Sprint and T-Mobile.  While the company was able to achieve 3.8% YoY revenue growth in 4Q2015, adjusted wireless service EBITDA (Earnings before Interest, Taxes and Amortization) margins declined by approximately  60 bps YoY, driven by a higher number of smartphone upgrades and gross subscriber adds. Although AT&T was able to deliver net adds of 854,000, surpassing consensus expectations of 793,000, much of the growth was driven by lower-ARPU tablet net adds of 969,000. Postpaid churn increased by 11 bps YoY to 1.22%.

During the fourth quarter, AT&T increased LTE network coverage to over 300 million PoPs. Despite improvement in network quality and root metric ranking results, AT&T still faces the challenge of being a premium-priced provider amid customer perception of an inferior network to that of Verizon (this takes time to change), which will likely continue to affect churn. Diversification into DTV, the growing Mexican market, and mobile video delivery will likely alleviate some churn pressure.  AT&T management expects to close the DTV transaction in 1H15.

    * Diversification is key to growth. AT&T has embarked on diversification into the Mexican wireless carrier market in the face of domestic competitive pressures that are unlikely to abate.  We see a favorable Mexican regulatory environment and view AT&T’s desire to mitigate churn risk in the U.S. market positively.  AT&T management believes DTV and Mexican acquisition will achieve adjusted EPS in the single-digit range and deliver multi-year synergies that are higher than previously announced.

    * Project VIP (Velocity IP) completion drives capex reduction. With the majority of Project VIP milestones complete, management expects FY15 capex to be around $18 billion, a decline of approximately $3.2 billion compared with FY14. The company will shift focus to free cash flow generation to help pay down debt (from DTV acquisition).

Our strategic concerns for AT&T in 2015 and beyond include:

   (1) Apple eSIM impact should Apple be successful striking wholesale agreements;

  (2) Google MVNO impact, which could strip the company of the last bastion of connectivity revenue; and

  (3) a WiFi first network from Comcast, coupled with a wholesale agreement with a carrier, which
  would enable a competitor and increase pricing pressure. 

Author’s Note: Cablevision has already announce a VoIP/WiFi network in New York. Called Freewheel, the service will offer unlimited data, talking and texting worldwide for $29.95 a month, or $9.95 a month for Cablevision’s Optimum Online customers — a steep discount compared with standard offerings from traditional cellular carriers. Freewheel customers initially must use a specific Motorola Moto G smartphone, which is being sold for $99.95. The service goes on sale next month, and no annual contract is required.

http://www.nytimes.com/2015/01/26/business/media/cablevision-to-introduce-wi-fi-based-phone-plan.html?_r=0

ETSI’s recently announced Industry Specification Group on millimetre Wave Transmission (ISG mWT) held its first meeting at ETSI on 14-15 January 2015 and immediately commenced work developing a set of five specifications.

At this meeting Mr. Renato Lombardi of Huawei Technologies was elected as the chairman of the Industry Specification Group while Mr. Nader Zei of NEC Europe was elected as the vice chairman.

“ISG mWT was conceived as an industry wide platform to prepare for large scale usage of millimetre wave spectrum in current and future transmission networks by improving the conditions to make millimetre wave spectrum a suitable and convenient choice for all stakeholders. The ISG aims to be a worldwide initiative with global reach and to address the whole industry: national regulators, standards organizations, telecom operators, product vendors and key component vendors.” said Mr. Lombardi, newly elected chairman of ETSI’s ISG mWT.

During the meeting, a plan was agreed to develop five new specifications. These cover:

•         An analysis of the maturity and field proven experience of millimetre wave transmission
•         Potential applications and use cases of millimetre wave transmission
•         An overview of V-band and E-band worldwide regulations
•         An analysis of V-band street level interference
•         Analysis of the millimetre wave semiconductor Industry technology status and evolution. 

Millimetre wave spectrum, in the 30GHz to 300GHz range, offers more available spectrum than in lower bands with larger channel bandwidths granting a fibre like capacity. The spectrum can be made available readily and can be reused easily, and lower licensing costs lead to lower total cost of ownership and lower cost per bit of radio systems.

Participation in the millimetre Wave Transmission Industry Specification Group is open to all ETSI members as well as organizations who are not members, subject to signing ISG Agreements. A complete list of ISG mWT members is published on the ETSI Portal pages for mWT. 

For information on how to participate please contact: [email protected]

References:

http://www.etsi.org/news-events/news/861-2014-new-industry-specification-group-on-millimetre-wave-transmission-at-etsi

https://portal.etsi.org/Portals/0/TBpages/mWT/Docs/Introduction%20to%20mWT%20ISG%20v1-0.pdf

http://www.etsi.org/technologies-clusters/technologies/millimetre-wave-transmission

About ETSI

ETSI produces globally-applicable standards for Information and Communications Technologies (ICT), including fixed, mobile, radio, converged, aeronautical, broadcast and internet technologies and is officially recognized by the European Union as a European Standards Organization. ETSI is an independent, not-for-profit association whose more than 700 member companies and organizations, drawn from 64 countries across five continents worldwide, determine its work programme and participate directly in its work.

For More Information on ETSI, Contact:  Claire Boyer:

Tel: +33 (0)4 92 94 43 35  Mob: +33 (0)6 87 60 84 40

Email: [email protected]

Infonetics Research, now part of IHS Inc. (NYSE: IHS), today released excerpts from its 3Q14 Data Center Network Equipment report, which tracks data center Ethernet switches, Ethernet switches sold in bundles, application delivery controllers (ADCs) and WAN optimization products.

3Q14 DATA CENTER MARKET HIGHLIGHTS:
.    The global data center Ethernet switch market put in a good showing in 3Q14, up 5 percent sequentially to $2.2 billion; positive forces include the U.S. public sector and cloud service providers
.    Though worldwide application delivery controller revenue is down 2 percent in 3Q14 from 2Q14, the ADC market has grown consistently on a year-over-year basis for the last six quarters
.   Virtual Application Delivery Controller (ADC) appliances are up 20 percent from the previous quarter 
.    Globally, WAN optimization revenue is up 9 percent sequentially in 3Q14, but down 1 percent from the year-ago third quarter
.    There are more new entrants in the WAN optimization space with Siaras and Viptela jumping in, but the market has yet to return to long-term growth

“The data center switching market is poised for another transformation with 25GE and 50GE enabling new data center network architectures targeting large cloud service providers looking to migrate from 10GE switching and server connectivity to 100GE switching and 25GE server connectivity,” said Cliff Grossner, Ph.D., directing analyst for data center, cloud and SDN at Infonetics Research. 

Grossner added: “A new generation of Broadcom switching silicon will add 25GE and 50GE to the mix of port speeds in the data center for 2015.”

References:

1. Overview of 25G & 50G Ethernet Specification, Draft 1.4 from a consortium (NOT an IEEE 802.3 standard yet)

http://25gethernet.org/sites/default/files/25G%20and%2050G%20Specificati…

DATA CENTER REPORT SYNOPSIS:
Infonetics’ quarterly data center equipment report provides worldwide and regional market size, vendor market share, forecasts, analysis and trends for data center network equipment, including data center Ethernet switches, ADCs, WAN optimization appliances, and Ethernet switches sold in bundles. Vendors tracked: A10, Alcatel Lucent, Arista, Array Networks, Aryaka, Barracuda, Blue Coat, Brocade, CloudGenix, Cisco, Citrix, Dell, Exinda, F5, HP, Huawei, IBM, Ipanema, Juniper, Kemp, NEC, Radware, Riverbed, Siaras, Silver Peak, Talari, VeloCloud, Viptela and others.

To purchase the report: www.infonetics.com/contact.asp

In a long phone conversation with Cliff, I asked him to comment on the four SDN architectural models for the data center.  There are (at least) 4 architectural models with many variations of each/different protocols used:

• Centralized SDN controller supporting many data forwarding plane (“packet engines”) distributed throughout the network. Strict separation of Control and Data planes with Open Flow v1.3 as the southbound API from Control Plane to Data Plane(s).
• Network Virtualization/overlay of a logical network over a smaller physical network.  Often, there is a L2 over L3 tunneling protocol (e.g. VxLAN) used to effectively create VLANs over a physical WAN
• Network equipment vendor, e.g. Cisco offering programmable interface for more control over its switch/router, e.g. configuration, re-routing decisions, policy, monitoring, troubleshooting,etc.  That largely replaces CLI commands.
• Network operator/provider, (e.g. AT&T Netbond) offering a SDN WAN with proprietary routing protocol and other programmable features.  Only the suppliers/vendors chosen are privy to the network operator’s spec, which when implemented in equipment, won’t work on any other provider’s network.

After considering the above, Cliff wrote in an email:  “If you relax the Openflow constraint, then I think models 1&3 are the same.  This is what I refer to as the underlay model.”   Of course, that implies that the vendor specific approach to SDN totally separates the Control and Data Planes, which are implemented in different boxes.

We didn’t discuss the role of the new speed Ethernet specs for the data center. Those were covered in this article:

Ethernet Switch Market: 40G growth; 2.5G and 25G Ethernet coming, but not IEEE 802.3 standards yet

https://techblog.comsoc.org/2014/12/11/ethernet-switch-market…

Executive Summary:

ETSI’s Network Functions Virtualisation (NFV) Industry Specification Group (ISG) has successfully completed Phase 1 of its work with the publication of 11 ETSI Group Specifications. These specifications build on the first release of ISG documents published in October 2013 and include an infrastructure overview, an updated architectural framework, and descriptions of the compute, hypervisor and network domains of the infrastructure. They also cover management and orchestration, security and trust, resilience and service quality metrics.

These documents result from 2 years of intensive work by more than 240 organizations sharing the same common goal to quickly define Network Functions Virtualization. “I’d like to thank all of the NFV ISG participants for their tremendous dedication through our numerous face-to-face meetings and conference calls to evolve the NFV vision from the original operator whitepaper and bring these documents to publication” said Steven Wright, Chair of ETSI NFV ISG. 

This second release of NFV documents (see below) is important to industry because it lays the foundation for this technology. It provides common and agreed definitions of the key concepts of NFV and allows the many players involved to speak a common language and collaborate with each other. This collaboration is evident in the success of the NFV Proof of Concept programme (also part of the first phase of NFV work), which has already produced over 30 multi-company demonstrations of the capabilities of NFV.

All published NFV documents are freely downloadable at:http://docbox.etsi.org/ISG/NFV/Open/Published/

ISG NFV Continues:

NFV Phase 2 is now well underway. Work started immediately after the eighth plenary meeting in November 2014 on 28 new documents and more are expected over the coming 2 years. The main objectives of this second phase of work are to encourage interoperability building upon the achievements made in the first two years of the ISG. This new phase of work will include both normative and informative content. Adding normative requirements will provide the clarity required for interoperability and formal testing. Another key element of Phase 2 will be to work more closely with other standards bodies to help focus their work and to avoid duplication, and to collaborate within open source projects developing NFV implementations.

Operators and vendors alike recognise the benefits of the ISG’s collaborative approach and its innovative standardization cooperation model, built upon assertive goals, pragmatism, lightweight process, and unprecedented degree of network operator collaboration, enabling the first phase of NFV work to be completed in record time. “Phase 1 exceeded our expectations in fostering an open NFV ecosystem and influencing standards development organizations, open source communities and vendor roadmaps; achieving and validating interoperability at critical reference points is the key focus for phase 2” said Don Clarke, Chair of NFV ISG NOC.

The ETSI NFV ISG held its first meeting in January 2013. Since then it has grown to over 240 participating organizations.

List of recently published specifications

The following is the list of the 11 NFV specifications which completes phase 1 of NFV:

• GS NFV 002 – Architectural Framework
• GS NFV 003 – Terminology for Main Concepts in NFV
• GS NFV-INF 001 – Infrastructure Overview
• GS NFV-INF 003 – Infrastructure; Compute Domain
• GS NFV-INF 004 – Infrastructure; Hypervisor Domain
• GS NFV-INF 005 – Infrastructure; Network Domain
• GS NFV-INF 010 – Service Quality Metrics
• GS NFV-MAN 001 – Management and Orchestration
• GS NFV-REL 001 – Resiliency Requirements
• GS NFV-SEC 003 – NFV Security; Security and Trust Guidance
• GS NFV-SWA 001 – Virtual Network Function Architecture

About ETSI:

ETSI produces globally-applicable standards for Information and Communications Technologies (ICT), including fixed, mobile, radio, converged, aeronautical, broadcast and internet technologies and is officially recognized by the European Union as a European Standards Organization. ETSI is an independent, not-for-profit association whose more than 700 member companies and organizations, drawn from 64 countries across five continents worldwide, determine its work programme and participate directly in its work. 

For more information please visit: www.etsi.org.

ETSI Contact:
Claire Boyer 
Tel: +33 (0)4 92 94 43 35 
Mob: +33 (0)6 87 60 84 40
Email: [email protected]

The Open NFV (OPNFV) is a new open source project focused on accelerating NFV’s evolution through an integrated, open platform.

OPNFV will establish a carrier-grade, integrated, open source reference platform that industry peers will build together to advance the evolution of NFV and to ensure consistency, performance and interoperability among multiple open source components. Because multiple open source NFV building blocks already exist, OPNFV will work with upstream projects to coordinate continuous integration and testing while filling development gaps.

The initial scope of OPNFV will be on building NFV Infrastructure (NFVI), Virtualized Infrastructure Management (VIM), and including application programmable interfaces (APIs) to other NFV elements, which together form the basic infrastructure required for Virtualized Network Functions (VNF) and Management and Network Orchestration (MANO) components. OPNFV is expected to increase performance and power efficiency; improve reliability, availability, and serviceability; and deliver comprehensive platform instrumentation.

OPNFV will work closely with ETSI’s NFV ISG, among other Standards Development Organizations (SDOs), to drive consistent implementation of standards for an open NFV reference platform. Increasingly, standards are being drafted in conjunction with major open source projects. Since feedback from open source implementations can drive the rapid evolution and adoption of standards, this tight coordination of otherwise independent processes is crucial to the establishment of an NFV ecosystem. When open source software development is aligned with standards development, it can root out issues earlier, identify resolutions, and potentially establish de facto standards, resulting in a far more economical approach to platform development.

More info at:  

 https://www.opnfv.org/

https://www.opnfv.org/software/technical-overview

In Feb 2014, the TM Forum announced its Zero-touch Orchestration, Operations and Management (ZOOM) project.  

ZOOM’s goal is to define a vision of the new virtualized operations environment, and a management architecture based on the seamless interaction between physical and virtual components that can easily and dynamically assemble personalized services.  In addition, ZOOM aims to identify and define new security approaches to protect infrastructure, functions and services across all layers of software and hardware; and complement ongoing work within the European Telecommunications Standards Institute (ETSI) and other organizations so that the Forum and its members are working together with other industry leaders to provide the management platform and transformation guidance to support successful deployment of network functions virtualization (NFV).

http://www.tmforum.org/PressReleases/TMForumBuildsBlueprint/54445/article.html