AT&T May Buildout U-Verse to Remote/Underserved Areas; 7M U-Verse subscribers to get OTT content & Second Screen Apps!

Contrary to a missive by DSL Reports last year (http://www.dslreports.com/shownews/ATTs-Stankey-Uverse-Build-Virtually-Over-114279), AT&T is not cutting back it’s U-Verse deployments.  This summer, U-Verse was installed throughout Santa Clara, Fremont, CA and most of the SF Bay Area.   Today, Jefferies & Company analyst George Notter came out with a report stating that AT&T is considering expanding its U-verse buildout by offering high-speed broadband to some of the 18 million copper access lines in the U.S. that don’t yet have high speed broadband yet.  Mr. Notter points out that the remaining 18 million access lines are “scattered over 80 percent of AT&T’s geographic footprint.”

Notter writes that  AT&T is discussing this internally and should make a decision within weeks.  The venerable carrier has an analyst day scheduled for Nov. 7, so it’s possible the U-Verse expansion news will be announced during that event.  It would probably take 12 to 18 months, equipment-vendor sources told Notter.

In this potential U-Verse builout, approximately 3 million to 5 million households would get FTTN (Fiber to the Node with short VDSL copper loops) in a U-verse expansion, Notter estimates.  While the first 30 million-line U-Verse deployment concentrated on fairly densely populated metro and urban areas, a further buildout would be to more remote (unserved or underserved) geographical areas.

Alcatel-Lucent (ALU) provided the fiber-to-the-node gear for the original U-verse deployment and would be the likely choice for this rumored expansion, Notter writes. The FTTN business wouldn’t be huge for ALU — about $110 million to $190 million in DSLAM equipment, Notter estimates.

http://www.lightreading.com/document.asp?doc_id=226139&f_src=lrweeklynewsletter

In its latest earnings report (2Q-2012), AT&T said it had 6.8 million total U-verse® subscribers (TV and high speed Internet) in service.  U-verse TV subscribers grew 22 percent year over year, according to the company.

U-verse Revenues Up 38 Percent. Revenues from residential customers totaled $5.5 billion, an increase of 1.7 percent versus the second quarter a year ago — their strongest growth in more than four years. Continued strong growth in consumer IP data services in the second quarter more than offset lower revenues from voice and legacy products. The second quarter marked the eighth consecutive quarter of year-over-year growth in wireline consumer revenues. U-verse continues to drive a transformation in wireline consumer, reflected by the fact that consumer broadband, video and voice over IP revenues now represent 57 percent of wireline consumer revenues, up from 50 percent in the year-earlier quarter. Increased AT&T U-verse penetration and a significant number of subscribers on triple- or quad-play options drove 18.2 percent year-over-year growth in IP revenues from residential customers (broadband, U-verse TV and U-verse Voice) and 6.2 percent sequential growth. U-verse revenues grew 38.3 percent compared with the year-ago second quarter and were up 10.2 percent versus the first quarter of 2012.

U-verse Subscribers Near 7 Million Mark. Total AT&T U-verse subscribers (TV and high speed Internet) reached 6.8 million in the second quarter. AT&T U-verse TV added 155,000 subscribers to reach 4.1 million in service. AT&T U-verse High Speed Internet delivered a second-quarter net gain of 553,000 subscribers to reach a total of 6.5 million, helping offset losses from DSL. Overall, AT&T wireline broadband connections decreased 96,000, partly due to seasonality. More than 50 percent of U-verse broadband subscribers have a plan delivering speeds up to 12 Mbps or higher, up from 39 percent in the year-ago quarter. About 90 percent of new U-verse TV customers took AT&T U-verse High Speed Internet in the second quarter and about half of new subscribers took AT&T U-verse Voice. About three-fourths of AT&T U-verse TV subscribers have a triple- or quad-play option from AT&T. ARPU for U-verse triple-play customers was about $170, up slightly year over year. U-verse TV penetration of eligible living units continues to grow and was at 17.3 percent in the second quarter.”

http://www.att.com/gen/press-room?pid=23091&cdvn=news&newsarticleid=34898

In the last week, AT&T announced two new ways it is augmenting its U-Verse offerings via “TV Everywhere” (e.g. on mobile devices) and Second Screen apps (using the screen of a mobile device for various applications that enhance the TV viewing experience).

1.  In its first “TV Everywhere” offering, AT&T has partnered with Viacom to add several Viacom channels to its U-verse TV online offerings on selected websites.   With the AT&T U-verse ID, AT&T customers will now get to view the full-length episodes from BET, Comedy Central, MTV, Nickelodeon, Spike and VH1 on demand through Viacom’s network-based websites like www.mtv.tve. Also, customers will soon get the access to these services on their mobile devices including smartphones and tablets.

http://www.zacks.com/stock/news/84880/att-bolsters-u-verse-offerings

2.  In a presentation at last Thursday’s TVNEXT Conference in Santa Clara, CA, AT&T’s Lee Culver said that AT&T is working with third parties and also developing its own “second screen” mobile apps for iOS compatible devices (Apple iPhones and iPADs). Article covering that topic is at:

http://viodi.com/2012/10/16/second-screen-apps-enhance-viewing-experience-offer-additional-capabilities-tvnext-2012-conference-highlights/


Stay Tuned:  We are synthesizing the results of a comprehensive market survey of AT&T U-Verse subscribers and will be summarizing those plus providing selected anonymous quotes in a forthcoming article!


Related article on Verizon’s FiOS streaming video plans is at:  

http://viodi.com/2012/10/19/verizon-close-to-launching-a-video-streaming-service-with-redbox-more-than-250m-covered-by-lte-network/

More articles at:  http://viodi.com/author/alanweissberger

ComSocSCV Oct meeting on Mobile Backhaul: Significance of LTE, Small Cells, Macro Cells and Market Forecasts!

Meeting Summary:
IEEE ComSocSCV had a very informative meeting this past Wed Oct 10th on Mobile Backhaul (MBH), with two very knowledgable speakers providing status reports, industry trends, and forecasts.  Paul Kennard, CTO of Aviat and Michael Howard, Co-Founder & Principle Analyst at Infonetics Research
Paul Kennard stated that increased deployment of LTE in the mobile access network will force LTE mobile operators to upgrade their backhaul technology.  Aviat Networks is a leading provider of microwave transmission technology used to meet the backhaul infrastructure needs of those mobile networks.
Mobile operators are moving to 3G/HSPA+ and LTE in order to keep up with subscribers’ escalating bandwidth demands, while offsetting declining traditional voice revenues.  Aviat thinks that many mobile operators lack the ability to add more capacity to their network without the risk of disrupting existing services. They may also struggle with inconsistent network performance due to capacity limits, limited backhaul spectrum availability and the need to maintain high-quality legacy TDM voice services. At the same time, operators must also prepare their network for the introduction of new high-speed Ethernet/IP-based services in an environment of constrained CAPEX and downward pressure on OPEX.

Despite all the hype and hoola, small cells are not yet widely deployed, according to Michael Howard.  When small cells are installed (likely in 2013-2014), they will be mounted on light poles and street lights in downtown metro areas.  They’ll use microwave backhaul to reach a macro aggregation cell, which will most likely be located in a cell tower with fiber connectivity and backhaul to the ISP or other carrier’s point of presence. 
Looks like forthcoming small cell MBH will mostly use microwave & mm transmission systems, while MBH for macro cells will be a mix of millimeter wave and fiber.   
Meeting presentations are available for free download at:  http://www.ewh.ieee.org/r6/scv/comsoc/ComSoc_2012_Presentations.php

Post meeting information provided by Michael Howard of Infonetics:
Here are % breakdowns of different types of MBH used in North America and Worldwide for end of calender year(CY) 2012:
North America   – Technology CY12
PDH                                                          32.80%
ATM over PDH                                            0.45%
SONET/SDH and WDM                               1.29%
Ethernet copper                                           6.02%
Ethernet fiber                                              44.13%
DSL                                                               0.84%
PON                                                              0.52%
Coax cable                                                    0.03%
WiMAX                                                          0.02%
Satellite                                                          0.03%
Microwave–TDM                                           3.05%
Microwave–Dual Ethernet/TDM Microwave Equipment

                                                                       4.48%
Microwave–Ethernet only                               6.35%

Grand Total                                                  100.00%

Worldwide  – Technology CY12
PDH                                                                 8.52%
ATM over PDH                                                 2.93%
SONET/SDH and WDM                                   11.99%
Ethernet copper                                                2.05%
Ethernet fiber                                                   16.67%
DSL                                                                    0.81%
PON                                                                   1.54%
Microwave–TDM                                              21.53%
Microwave–Dual Ethernet/TDM Microwave Equipment
                                                                          27.69%
Microwave–Ethernet only                                   6.14%
Grand Total                                                      100.00%
After tje ComSocSCV meeting, Michael Howard wrote in an email, “Over 90% of urban core cell sites are fiber-fed–and the remaining on Microwave. These are mostly on rooftops and a few on towers.”
And in another email, “All of the data above and below are for macrocell site backhaul.  Infonetics is in the process of developing their outdoor small cells backhaul forecast now.   The vast majority >99% of MBH  interfaces are millimeter wave (MWV) in North America, with just a very small number of satellites in use. Worldwide it’s still under 1%, even with Africa, India and other non-electified/non-networked areas.”
Infonetics MBH Market Forecasts for Calender Year 2012 and 2016:
Worldwide   – MacroCellsite Connections by physical medium
Medium       CY12                                      CY16
Copper        11.76%                                   4.14%
Fiber            32.75%                                  41.75%
Air: MWV + Satellite (but mostly MWV)
                    55.48%                                  54.10%
Grand Total 100.00%                               100.00%
North America   –  MacroCellsite Connections by physical medium
Medium      CY12                                        CY16
Copper       30.30%                                    10.07%
Fiber           55.78%                                    74.76%
Air: MWV + Satellite (but mostly MWV)
                   13.93%                                    15.18%
Grand Total 100.00%                                100.00%

For more information on Infonetics Millimeter & Microwave forecasts:
Millimeter wave gear forecast to grow at 63% CAGR; Ethernet microwave growing 5-fold by 2016
“Although the microwave equipment market ended down a bit in 2011 compared to the previous year, the market is poised to return to growth as LTE backhaul needs accelerate, particularly Ethernet microwave gear,” expects Richard Webb, directing analyst for microwave at Infonetics Research.

Market research firm Infonetics Research released excerpts from its latest Macrocell Mobile Backhaul Equipment and Services market share and forecast report, which ranks mobile backhaul equipment vendors, identifies market growth
areas, and provides analysis of equipment, connections, cell sites, and service charges.

ANALYST NOTES
“Steady, albeit slow, growth is in store for the macrocell mobile backhaul equipment market,” notes Michael Howard, principal analyst and co-founder of Infonetics Research. “While Verizon Wireless and  AT&T are winding down their first big wave of LTE deployments and their spending is slowing, this is a large market and there’s still room for growth.
We’re expecting a cumulative $43.6 billion to be spent on macrocell mobile backhaul equipment over the 5 years from 2012 to 2016, as operators outside of North America buy up microwave gear to support rising capacity requirements.”

“Well over half of all spending in the mobile backhaul market is on microwave equipment,” adds Richard Webb, directing analyst for microwave and mobile offload at Infonetics.

MACROCELL MOBILE BACKHAUL MARKET HIGHLIGHTS
.    Globally, the macrocell mobile backhaul equipment market is forecast by Infonetics to grow to $9.7 billion by 2016
.    94% of all macrocell mobile backhaul equipment spending is on IP/Ethernet gear, with 54% of this on packet-capable microwave .   

–     Infonetics expects Ethernet mobile backhaul router revenue to peak in 2015, as the buildout of macrocell mobile
backhaul subsides and the focus shifts to small cells.
To buy the report, contact Infonetics: http://www.infonetics.com/contact.asp

Decline in ROADMs unit shipments & price reductions cause huge drop in component revenue, but growth seen in 2014

Introduction:

Market research firm Infonetics Research has just released excerpts from its latest ROADM Components report, which tracks the reconfigurable optical add/drop multiplexer (ROADM) network equipment market and the wavelength selective switch (WSS) components within it (the latter is measured by spacing technology and degree count). 

The firm’s biannual ROADM Components report provides market size, ROADM vendor market share, forecasts, analysis, and trends for ROADM optical network hardware and ROADM WSS components (1×4 or less 50GHz/100GHz and 1×5 or larger 50GHz/100GHz). Companies tracked include ADVA, Alcatel-Lucent, Capella, CoAdna, Ciena (Nortel), Cisco, ECI Telecom, Ericsson, Finisar, Fujitsu, Huawei, Infinera, JDSU, NEC, Nistica, Nokia Siemens Networks, Oclaro/Xtellus, Tellabs, Transmode, and others.

To buy this or other Infonetics research reports, contact Infonetics sales: http://www.infonetics.com/contact.asp.

ROADM/ WSS COMPONENT MARKET HIGHLIGHTS:

  • Unit shipment declines coupled with price reductions caused ROADM/WSS component revenue to fall 34% in the 1st half of 2012 (1H12) from the 1st half of 2011 (1H11)
  • ROADM /WSS component revenue as a share of WDM ROADM equipment has fallen to a 5 year low of 6%
  • No single vendor controls the WDM ROADM optical network equipment market
  • Infonetics forecasts the ROADM WSS component market to grow at a 9.5% compound annual growth rate (CAGR) from 2011 to 2016
  • Component growth will benefit from the rollout of new greenfield coherent 100G networks in 2014, particularly gridless ROADMs designed to support colorless, directionless, contentionless (CDC) architectures

“Growth in the overall WDM ROADM equipment market hasn’t been stellar, but it has far outstripped the declines seen in ROADM WSS units and revenue,” explains Andrew Schmitt, principal analyst for optical at Infonetics Research. “I think we have learned that the WSS market is more cyclical and tied to the ebb and flow of common equipment deployments.”

Infonetics had previously forecast a mixed market for optical network equipment, with OTN on the upswing and SONET/SDH declining sharply. 

Optical network spending up 15% in 2Q12; road ahead diverges sharply by segment and region

http://www.infonetics.com/pr/2012/2Q12-Optical-Network-Hardware-Market-Highlights.asp

Also see this article:  https://techblog.comsoc.org/2012/09/27/new-infonetics-survey-ranks-optical-network-vendors-alcatel-lucent-ciena-huawei-infinera-get-top-marks

IEEE ComSoc Dedicated Volunteer Yigang Cai wins Alcatel Lucent Distinguished Inventor Award

While greatly diminished from its days of glory, Bell Labs still exists but with no connection to AT&T.  IEEE ComSoc NA Director and former Distinguished Lecture Tour Manager has distinguished himself through many inventive accomplishments and patent contributions throughout his career with Alcatel Lucent.  He has been honored to have received the Bell Labs Inventors Award three times as we’ve previously reported: 

https://techblog.comsoc.org/2012/08/08/profile-of-prolific-inventor-comsoc-na-director-yigang-cai 

http://www.comsoc.org/blog/ieee-comsoc-member-yigang-cai-receives-2011-bell-labs-inventors-award

Mr. Cai is truly a patent generating machine.  His latest patent is:

METHOD AND DEVICE FOR PROVIDING USER EQUIPMENT WITH VOICE MESSAGES
Inventors:  Yigang Cai (Naperville, IL, US)  Xiangyang Li (Shanghai China, CN)
IPC8 Class: AH04W412FI
USPC Class: 455413
Class name: Radiotelephone system message storage or retrieval voice mail
Publication date: 2012-10-04
Patent application number: 20120252417

Read more: http://www.faqs.org/patents/app/20120252417#ixzz28rWLJSWg

Yigang’s consistently outstanding performance, exemplary innovative potential and extraordinary contributions to a strong Alcatel Lucent patent portfolio warrant a different and higher level of recognition.  And to that end, Yigang has been selected to receive the company’s first “Distinguished Inventor” Award.   What an honor!  Heary congrats Yigang!

Author’s Note:  As a volunteer for IEEE for almost 40 years (and an IEEE member for 44 years), I’ve seldom seen such a hard working, dedicated volunteer like Yigang.  He came to U.S. from China in the 1990’s and made a whole new life for himself.  He is greatly admired by his IEEE and Alcatel-Lucent colleagues.

Analysis of Telco M&A talks: T-Mobile/Sprint with MetroPCS & Century Link with TW Telecom?

Overview:

Is carrier consolidation good for the telecom industry?  Yes, if you are the acquiring telco because you gain new customers, a larger service area, potential entry into new markets, better equipment pricing due to higher volumes. and less competition.  No, if you are a consumer or any other player in the telecom eco-system (with possible exception of the vendors of the acquiring company).

In the past week, T-Mobile made an offer for wireless pre-paid carrier MetroPCS, while Sprint’s Board was to meet to decide whether or not to do likewise.  Meanwhile, Century Link was reported to be in buy-out talks with TW Telecom. 

http://www.denverpost.com/business/ci_21657009/tw-telecom-reportedly-sale-centurylink-possible-buyer#ixzz286O9oNVp

DealReporter (owned by the Financial Times/ Pearson Group) wrote that network operator Level 3 Communications also had interest in acquiring TW Telecom, but balked at the high price tag.

Analysis:

1.  Metro PCS is being courted due to its very successful pre-paid business and it’s LTE network and smart phones.  T-Mobile and MetroPCS have stated their commitment to a merger, but with the union far from finalized, Sprint is reconsidering whether to make another bid after it’s failed attempt to acquire T-Mobile earlier this year.  

Bloomberg earlier this month reported that Sprint’s stock was trading at twice the value it was at in February, putting Sprint in a nice position for an acquisition. Piper Jaffray analyst Chris Larsen, telling Bloomberg Oct. 5 that a deal between MetroPCS and Sprint would “just make sense.”  Data from Kantar Media suggests T-Mobile and MetroPCS could be a strong pairing—and a problem for Sprint—since T-Mobile has been successful at attracting away customers from Verizon and Sprint while MetroPS has been attracting away AT&T subscribers,  There also seems to be very little potential overlap of the two carriers subscriber bases.

2.  TW Telecom is one of the three largest providers of Business Ethernet (AKA Carrier Ethernet or Metro Ethernet) in the nation, with fiber to more commercial buildings than any other competitive carrier.  TW Telecom operates a nationwide fiber-optic network and provides high-speed Internet connections for business. 

TW Telecom’s equity is more attractive than CenturyLink’s, and the rural telecom operator would likely have to pay a steep premium to acquire the fiber-optic network operator, the second industry source continued. A TW Telecom acquisition, however, would bolster CenturyLink’s enterprise and small business services and support its past acquisition of Savvis, the two industry sources said.”

http://www.ft.com/intl/cms/s/2/927a80c0-0bfe-11e2-8032-00144feabdc0.html

There are at least three reasons CenturyLink might be interested in acquiring TW Telecom:

1.  A large installed base of business customers (mostly SMBs, but a few large accounts). The company has a broad market reach into 75 markets and  

2.  A  huge nationwide fiber optic network with over 28,000 fiber route miles–75 percent of which are in metro areas.  TW Telecom has 16,000 on-net buildings connected to its fiber network.  That would enable CenturyLink to expand the reach of its own growing Business/Carrier Ethernet footprint and connect many more customers to cloud services offered by its Savvis unit.  Savvis is one of the few cloud service providers that is actually leveraging its managed IP VPN to deliver cloud services.  They presented at the 12 Oct 2011 IEEE ComSocSCV meeting with ppt presentation available for fee download at:  http://www.ewh.ieee.org/r6/scv/comsoc/ComSoc_2011_Presentations.php  (scroll down to Oct 2011 meeting and you will find Savvis as well as other presentations there).

3.  Profitability–unlike a number of other CLECs, TW  Telecom is actually profitable.  Driven by sales of Business Ethernet and IP/VPN services, TW Telecom reported that total revenues in Q2 2012 grew 1.6 percent sequentially over Q1 2012 and 7.7 percent year over year. The company had $1.4 billion in revenue in 2011.


What do you think of these two potential telco M & Adeals and about carrier consolidation in general?  

For more information about the two targeted companies, please contact this author.

[email protected]


Addendum: On October 6th, it was announced that:

 tw telecom inc.has been awarded two contracts with the U.S. Department of Health and Human Services for secure Internet connectivity worth approximately $11.67 million over five years, the company announced.

Under the terms of the competitive awards, tw telecom will deliver Ethernet Internet Services and 10 Gig wavelength services for mission-critical and health-related data connectivity to the National Institutes of Health, Centers for Disease Control, Food and Drug Administration and Indian Health Services in Washington, D.C., Atlanta and Albuquerque.

Both contract awards require tw telecom to deliver private, secure and scalable network connectivity transmitting mission-critical medical data and communications traffic, the company said.

http://innovationews.com/innovation-news-releases/tw-telecom-awarded-11-67-million-in-u-s-health-and-human-services-contracts/

Mobile Backaul Market Forecast and Challenges to be Presented at IEEE ComSocSCV Oct 10, 2012 Meeting in Santa Clara

Mobile subscribers’ increased use of smartphones and tablets has caused exponential growth of data and video traffic, which has caused a huge capacity problem for wireless network operators.  Small cells (for spectrum re-use) and heterogeneous networks is one way they are coping capacity constraints on access networks.  WiFi offload is another.  But independent of the mobile access network, there’s an ever increased demand on wireless backhaul networks to handle more data traffic, while also carrying cellular voice calls.

In order to be able to handle this explosive growth in mobile data traffic, operators are quickly upgrading their networks to expand their mobile backhaul capabilities.

  • What will those look like with more capacity in the access network (e.g. via LTE and HSPA+) placing greater demands on backhaul?  
  • Will bonded copper transport become obsolete due to insufficient aggregate bandwidth? 
  • What will be the role of microwave transmission and what different versions of microwave be preferred?
  • What about fiber to cell towers, which was promised a long time ago by AT&T but hasn’t happened in a big way yet? 
  • And what’s the impact of small cells on backhaul topology and transport?  In particular, will there be more backhaul nodes or will a backhaul aggregator super node be required for cost effective transport?

 

Mobile backhaul will certainly be a growth market.  A recent Dell’Oro market research report forecasts the mobile bachaul market (including transport equipment, routers & switches) to reach $9 billion by 2016.  The firm predicts that the traditional wireline transport segment of wireless backhaul will grow at a 2 percent compounded annual growth rate to $6 billion by 2016. Routers and switches, which are expected to represent 30 percent of the mobile backhaul market by 2016, should grow at a 9 percent compounded annual growth rate to nearly $3 billion.

The October 10th meeting of IEEE ComSocSCV will address all these backhaul issues and more.  This session will feature two distinguished speakers- Michael Howard of Infonetics Research, a very well respected telecom market research firm, and Paul Kennard, CTO of Aviat Networks, which designs and builds microwave networks for mobile backhaul. We will begin with talks from each of the speakers, followed by a lively panel/Q&A session with audience participation.

Audience members are encouraged to submit questions for the panel session- either in writing (submit to the session chair) or during the open mic Q and A.

The meeting description and logistics are at:  http://www.ewh.ieee.org/r6/scv/comsoc/index.php


Postscript:  Hugely succesful!  Highlights of IEEE ComSocSCV October 2012 meeting on Mobile Backhaul including market forecasts:   https://techblog.comsoc.org/2012/10/14/comsocscv-oct-meeting-on-mobile-backhaul-significance-of-lte-small-cells-macro-cells-and-market-forecasts

OVUM: VCs may renew investments in Network infrastructure companies which have been off their radar screens!

Network Equipment accounted for only 1% of all VC investments for the past four quarters, according to Ovum.  They see the sector being ripe for a rebound in VC investments.

“Since the financial crisis, venture capital (VC) firms have been giving much of their tech cash to mobile, social, and OTT start-ups, showing little interest in telecom. VC support for telecom infrastructure start-ups has dropped from US$796m in 2009 to just US$270m in the 3Q11–2Q12 period. In a new report,* though, global analyst firm Ovum finds reason for optimism, concluding that “recent IPO and M&A transactions point to a rebound in VC interest in network infrastructure.”

While VC support for network infrastructure has declined, overall VC investments have recovered, growing from US$20.1bn in 2009 to US$27.8bn in the four quarters ended 2Q12. Some of the beneficiaries of this modest surge include Facebook, Groupon, Twitter, LivingSocial, Square, Lashou, Kabam, WhatsApp, and Spotify.

Matt Walker, Ovum Principal Analyst and author of the report, explains:  “A funding disconnect has thereby emerged between network builders and network users. Lots of innovation and venture capital is targeting the network users, such as mobile apps and OTT platforms. However, little of it is directly helping the network builders. With a weak start-up pipeline, the industry relies more on incumbent vendors to generate new ideas and products. Their budgets are bigger, but VCs are often better at funding ‘game changing’ ideas ignored by established vendors.

“Incumbent vendors’ internal R&D budgets are now nearly 90 times larger than VC investments in the sector, up from 30 times two years ago. This narrows options for service providers, who rely on both large and small vendors for innovation. The big vendors also need access to the start-up pipeline, to fill in gaps in their own portfolios through partnership and M&A.”

In response, service providers are getting more actively involved in funding and working with start-ups. Telefonica, Vodafone, Verizon, AT&T, KDDI, China Mobile and many others are now funding start-ups directly, often deploying products in the network or lab ahead of commercial availability. Earlier this month, Deutsche Telekom (DT) was the latest carrier to announce a new push on the venture side, revamping its T-Venture unit to foster purchase of majority stakes and accelerated disbursement of funds.

Walker adds: “Carriers really need help from suppliers, yet what they face is a vendor market in confusion. Most large vendors are now shrinking and reorganizing, even the Chinese suppliers. Several vendors are modifying business plans and selling assets in order to stay solvent. With the recent VC drought in networking, it’s not surprising that big telcos have become more directly involved in funding start-ups.”

Walker points out that, based on data from the PWC/NVCA MoneyTree Report, the “Networking & Equipment” share of total VC investments shrank to just 1.0 percent for the past four quarters (3Q11–2Q12), down from about 10 percent in 2003.

The good news is recent IPO and M&A deals do suggest that VCs are looking favourably on the telecom sector again, when telecom is defined broadly. For instance, VC-funded start-up Nicira Networks was recently acquired by VMware for US$1.26bn. “The tide seems to be shifting. With heightened investor interest and carrier need for solutions in such areas as small cells, network virtualization, and network optimization, telecom network infrastructure VC seems ripe for a rebound,” concludes Walker.”


If you check the graph in the PWC Money Tree summary report (url below), you will see almost no VC investments in network equipment or electronics/instrumentation:


AJW Comment:  With the exception of the largest telcos, the carriers have essentially outsourced R&D to improve/enhance their networks to the huge vendors (Ericsson, Alcatel-Lucent, Huawei, NSN, ZTE, Samsung) they do business with.  The smaller vendors (Ciena, Telllabs, Adtran, Motorola Mobility, etc) develop specialized equipment for carriers, but don’t do much research. 

One would think that would present a great opportunity for network equipment start-ups.  However, without VC or Angel investments, they can’t obtain the funds to develop innovative products.  In some cases, the start-ups can make deals with incumbent network vendors, but most of them are in financial difficulty (e.g. NSN, Alcatel-Lucent, and even ZTE) so many not be able to invest.   Let’s hope Ovum is correct and VCs start to once again invest in network equipment start- up companies with innovative new technologies!

References:

http://ovum.com/press_releases/ovum-finds-networking-start-ups-overdue-for-vc-rebound/

Also see: 

http://viodi.com/2012/08/23/zte-reports-huge-drop-in-profits-telecom-death-spiral-continues/

http://viodi.com/2012/09/24/summary-of-telecom-council-tc3-part-1-service-provider-investment-forum/

http://viodi.com/2012/09/25/entrepreneur-forum-carrier-perspectives-summary-of-telecom-council-tc3-part-2/

New Infonetics Survey Ranks Optical Network Vendors: Alcatel-Lucent, Ciena, Huawei & Infinera get top marks!

Introduction:

Market research firm Infonetics Research released excerpts from its 2012 Optical Equipment Vendor Leadership: Global Service Provider Survey, which explores service providers’ perceptions of optical equipment suppliers and criteria for choosing vendors.

 Alcatel-Lucent receives the best overall marks from service providers, particularly for its technology, management, product reliability, and service and support.

OPTICAL VENDOR LEADERSHIP SURVEY HIGHLIGHTS:

  • Ciena is cited by service providers as a top vendor nearly as often as Alcatel-Lucent in the areas of 40G/100G+ coherent technology and OTN switching, and ties for optical control plane technology (Ciena ranked highest overall in previous surveys)
  • Huawei climbed from 3rd place in 2011 to 1st this year among vendors being evaluated for future optical purchases
  • Despite its smaller size, Infinera continues a trend of ranking relatively high in most optical leadership categories and has the best ratio of ‘evaluating’ versus ‘installed.’

 

SURVEY SYNOPSIS:

For its 21-page Optical Vendor Leadership Survey, Infonetics interviewed 10G/40G/100G optical transmission and switching equipment purchase-decision makers at 20 incumbent, competitive and mobile operators from Europe, the Middle East and Africa (EMEA), North America, Asia Pacific, and the Caribbean and Latin America. Together, the operators represent 28% of global telecom revenue and capex. The survey covers service providers’ familiarity with optical equipment vendors, vendors installed and under evaluation, selection criteria, and their rankings of vendors’ technology, pricing, service and support, product reliability, financial stability, management tools, R&D investment, and total cost of ownership (TCO).

Related Report:

In its  2nd quarter (2Q12) Optical Network Hardware vendor market share report, published August 24, 2012, Infonetics provided these key data points:

  • The global optical network equipment market—WDM and SONET/SDH—grew 15% in 2Q12 from the previous quarter, but is down 10% from the year-ago 2nd quarter
  • Huawei expanded its lead in the global optical network hardware market in 2Q12; Alcatel-Lucent held onto the #2 spot (optical revenue up 5%); and Ciena posted its strongest quarter on record, easily maintaining 3rd overall and edging into 2nd in the WDM segment
  • North American SONET/SDH spending is down 45% year-over-year, negatively impacting vendors with legacy revenue streams; AT&T, in particular, has cut aggressively
    • WDM now accounts for 80% of all optical spending in North America
  • Optical equipment revenue in Europe, the Middle East, and Africa (EMEA) was up sharply in 2Q12, but still down year-over-year; spending growth on WDM equipment outpaced SDH, a positive indicator for the region


ANALYST NOTES:

“As much as equipment vendors talk about the importance of vendor financial stability, when we talk to optical buyers at network operators around the world, price and total cost of ownership (TCO) come up as the factors they care most about overall,” asserts Andrew Schmitt, principal analyst for optical at Infonetics Research.

“The optical hardware market outlook looks decidedly different depending on which market you sell into,” notes Mr. Schmitt. “While spending on WDM is reasonably healthy, SONET/SDH is sailing off a cliff. Vendors who have good WDM products but large exposure to SONET/SDH are struggling to replace lost revenue fast enough to show growth.”

Schmitt adds: “Asia Pacific notched a big increase in the second quarter, with large seasonal gains by Huawei and ZTE. Despite tepid growth in the first half of 2012, we expect significant growth in optical spending in China, where ZTE continues to take market share from Huawei.”

To purchase this survey or other Infonetics Research reports, contact Infonetics at:

http://www.infonetics.com/contact.asp.

IEEE 802.16 (WiMAX) Session #81 Meeting Report: September 17-20, 2012 in Indian Wells, CA

Overview:

The IEEE 802.16 Working Group’s Session #81 took place on 17-20 September 2012 in Indian Wells, CA, USA in conjunction with the IEEE 802 Wireless Interim meeting. 

IEEE Std 802.16-2012, the new revision of the base IEEE 802.16 standard, was pubished on 2012-08-17. IEEE Std 802.16.1-2012, which specifies the IMT-Advanced air interface known as “WirelessMAN-Advanced,” was published on 2012-09-07. Per the current IEEE-SA offer on IEEE 802 standards, both are available for $5 (what a deal!).

IEEE Std 802.16p-2012 and IEEE Std 802.16.1b-2012 was approved by the IEEE-SA Standards Board on 2012-08-30. These amendments add machine-to-machine specifications to the two newly-published base standards. Publication of the amendments is expected in October 2012.

The IEEE-SA Standards Board authorized initiation of two new 802.16 projects:

  • IEEE Project PAR P802.16q, on a Multi-Tier amendment to IEEE Std 802.16, was initiated and temporarily assigned to the HetNet Study Group.
  • IEEE Project PAR P802.16.3, to develop a new standalone standard on Mobile Broadband Network Performance Measurements, was initiated and temporarily assigned to the Metrology Study Group.

HetNet Study Group:

The IEEE 802.16 WG Study Group (SG) on the WirelessMAN Radio Interface in Heterogeneous Networks (HetNet Study Group) met for the third time. It addressed three separate topics:

  • The SG completed a new Project Authorization Request (PAR) for a project on Small-Cell Backhaul (SCB) Enhancements to WirelessMAN-OFDMA. The WG agreed to submit the draft (PAR P802.16r) to the IEEE 802.16 Executive Committee for action in conjunction with Session #82. A followup Call for Contributions was issued. The WG issued a liaison statement to several external organizations (Metro Ethernet Forum, NGMN Alliance, Small Cell Forum, and WiMAX Forum) requesting views and input regarding technical requirements.
  • Work on developing IEEE Project PAR P802.16q began with the consideration of various inputs toward a system requirements document. A followup Call for Contributions was issued toward Session #82.
  • The Study Group prepared a presentation on the “OmniRAN” Open Mobile Network Interface concept in relation to cellular offload. The presentation was given to the IEEE 802.11 “Wireless Next Generation” meeting on the evening of 18 September, in a meeting focused on cellular offload.

The Study Group issued a closing report and minutes .   

Metrology Study Group:

Following 30 August approval of the new Project P802.16.3, to develop a new standalone standard (independent of air interface technology) on Mobile Broadband Network Performance Measurements, the Applications and Requirements draft was updated and a Call for Contributions was issued. The WG responded to a statement from the Broadband Forum with a reply soliciting views on applications and requirements. The WG also requested comments from the IETF. The WG developed a statement to be delivered to the FCC regarding the FCC’s new program on the measurement of mobile broadband service performance. Per IEEE 802 procedures, the draft statement is under review by the IEEE 802 Executive Committee prior to distribution. The Metrology Study Group issued a closing report and minutes.   

GRIDMAN Task Group:

    The Working Group’s GRIDMAN Task Group resolved comments received during the IEEE-SA Sponsor Ballot of drafts P802.16n and IEEE P802.16.1a. In each case, Sponsor Ballot recirculation will be conducted, closing prior to Session #82. The TG issued a closing report and minutes.

 

ITU-R Liaison Group:

    The ITU-R Liaison Group drafted two contributions to ITU-R Working Party 5D (WP 5D), one related to sharing studies and another related to Rec. IMT-R M.2039. Once approved within the IEEE-SA process, both documents may be submitted to ITU-R Working Party 5D Meeting #14 in October. The group issued a closing report

Project Planning Committee:

    The WG’s Project Planning Committee met for two periods during Session #81. It confirmed the IEEE 802.16 Ballot Schedules. The committee reviewed input contributions on direct mobile communication for proximity-based applications. The Committee issued a closing report.

The draft Working Group Session #81 Minutes are posted, but you need Microsoft Word to open the document and there is no url.  Try to download it from  http://ieee802.org/16/meetings/mtg81/report.html

Future IEEE 802.16 Sessions:

  • Session #82 will take place on 12-15 Nov 2012 in San Antonio, TX, USA in conjunction with the IEEE 802 Plenary Session.
  • Session #83 will take place on 14-17 Jan 2013 in Vancouver, BC, Canada in conjunction with the IEEE 802 Wireless Interim.
  • Session #84 will take place on 18-21 Mar 2013 in Orlando, FL, USA in conjunction with the IEEE 802 Plenary Session.

 

About IEEE 802.16:

The IEEE 802.16 Working Group on Broadband Wireless Access Standards has developed and is enhancing the WirelessMAN® Standards for wireless metropolitan area networks. IEEE 802.16 is a unit of the IEEE 802 LAN/MAN Standards Committee, the premier transnational forum for wired and wireless networking standardization. A list of IEEE 802.16 standards and drafts is available on-line, as is an archive of previous Session Reports. The IEEE 802.16 Interactive Calendar includes sessions and deadlines. 

http://ieee802.org/16/meetings/mtg81/report.html

Infonetics: SAN market hits $1.5 billion on increased FCoE and 16G Fibre Channel switch sales

Market research firm Infonetics Research released excerpts from its 2nd quarter 2012 (2Q12) SAN Equipment market size, market share, and forecast report, which tracks storage area network (SAN) switches and adapters.

The global SAN equipment market, including switches and adapters, grew 15% sequentially in 2Q12

SAN EQUIPMENT MARKET HIGHLIGHTS:

  • SAN adapter revenue fell 2% in 2Q12, due to weakness in the FCoE converged network adapter (CNA) segment, a bright spot just a quarter ago
  • Cisco leads the overall SAN equipment market for the 5th consecutive quarter after posting a 31% increase in SAN revenue in 2Q12
  • Brocade essentially owns the 16G Fibre Channel segment, with an astounding 99% of global revenue market share
  • While sales of FCoE-capable switches are strong overall, adoption lags for FCoE for storage transport.

 

Author’s Note on FCoE:

FCoE is a transmission method used to connect storage servers in a data center.  The Fibre Channel frame is encapsulated into an Ethernet MAC frame at the server before sending them over the 10 Gigabit Ethernet LAN and de-encapsulates them when FCoE frames are received.  The Ethernet MAC frame is removed at the Ethernet edge switch to access the Fibre Channel frame, which is then transported to the SAN. Fibre Channel encapsulation requires use of 10 Gigabit Ethernet transmission electronics as well as provides for increased server to SAN connectivity.

FCoE encapsulation standards activity took place in the Fibre Channel T11.3 committee (not in IEEE 802.3).

 

 

“Skyrocketing shipments of Fibre Channel over Ethernet (FCoE)–capable switches and 16G Fibre Channel products pushed the storage networking equipment market to new heights in the 2nd quarter, passing $1.5 billion,” notes Sam Barnett, directing analyst for data center and cloud at Infonetics Research. “And there’s no end in sight. Thanks to the popularity of social networking and video sharing, as well as advances in cloud computing and the data center, we expect a cumulative $41.7 billion to be spent on SAN switches and adapters in the 5 years from 2012 to 2016.”

REPORT SYNOPSIS:

Infonetics’ quarterly SAN Equipment report provides worldwide and regional market size, vendor market share, forecasts, trends and analysis for Fibre Channel host bus adapters (HBAs), iSCSI HBAs, FCoE CNAs, and chassis and fixed Fibre Channel and all FCoE-capable switches that are purpose-built for the data center (10G FCoE, FC 2G, FC 4G, FC 8G, FC 16G, iSCSI). Companies tracked include Brocade, Chelsio, Cisco, Dell, Emulex, IBM (BNT), Juniper, Mellanox, QLogic, others.  

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

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