Point Topic: Global Broadband Tariff Benchmark Report- 2Q-2022
In the twelve months to the close of Q2 2022, global residential fixed line broadband subscribers saw their average monthly charges decrease by 4% on copper, cable and fiber-based tariffs. Across the three technologies the average bandwidth increased by 22% year-on-year (y-o-y), due to the increased innovation and proliferation of fiber-based networks globally. Business subscribers continued to struggle with rising monthly charges, with the average monthly charge increasing by 12% and the average downstream speed standing at 426 Mbps compared to residential tariff averages of 464 Mbps.
The Asia-Pacific region retained its dominant bandwidth position with average speeds of 1,146 Mbps, up from 1,355 Mbps in Q4 2021 and 1,135 Mbps y-o-y, followed by North America, Western Europe, and Southeast Asia with the three regions reaching a combined average of around 465 Mbps.
Qatar, Switzerland and Southeast Asian countries still remain at the top of the league by average bandwidth along Italy, France and Bulgaria; these countries all rank in the top ten cheapest for residential broadband in terms of average cost per Mbps being less than $0.10 PPP.
In Q2 2022, the combined average download bandwidth grew by 20% compared to Q2 2021 and stood at 426 Mbps. This was caused by the boost in the average speed over cable and especially fibre, 14% and 22% respectively. Copper maintained largely the same average download speed compared to the previous quarter. However, the overall global average monthly cost across the three technologies has increased by just over 12% from $217 PPP to $244 PPP at the close of Q2 2022
References:
Global Broadband Tariff Benchmark Report, Q2 2022 (point-topic.com)
Synergy & IDC: Hosted and Cloud Services are driving the Unified Communications & Collaboration Markets
In a new report, Synergy Research Group states that spending on premises and cloud collaboration grew 8% from 2021 and is now approaching $15 billion per quarter. The on-premise portion of the market continues to decline steadily and now accounts for only 20% of the total, down from 30% two years ago.
The transition from enterprise use of on-premise products to cloud and hosted services has also been a boon for the collaboration market, which has benefitted in a big way from increased demand due to the rise of hybrid working during the pandemic. It includes as-a-service (aaS) software such as UCaaS (unified communications), CCaaS (contact center) and CPaaS (communications platform). These three services together grew 17% from last year and now account for more than $7 billion in quarterly spending.
Based on worldwide Q2 revenues Microsoft is the overall leader in total collaboration and continues to hold a steady market share, thanks to a broad portfolio of collaboration products and services. Cisco is the overall number two ranked vendor but is seeing its market share under pressure from Microsoft and companies propelled by the Covid pandemic. The biggest challenger is Zoom, which is now the number three ranked vendor driven by extraordinary growth rates over the last four years. Twilio is the fourth biggest vendor and now has a growth rate far in excess of the other three, as it dominates the rapidly emerging CPaaS market. Twilio’s CPaaS revenue run rate has now reached $2.5 billion per year. Other major vendors with particularly high growth rates include RingCentral, NICE, Five9 and Sinch.
“The impacts of the pandemic opened a tremendous new market opportunity within collaboration, especially in video conferencing services and devices, rapidly driving change that would otherwise have taken a decade to achieve,” said Jeremy Duke, Synergy Research Group’s founder and Chief Analyst “The collaboration market continues to evolve rapidly, as new technologies and services emerge that increase both management capabilities and productivity of in-office, remote and hybrid workers.”
IDC released a similar analysis of the global Unified Communications & Collaboration (UC&C) market, stating that it grew 11.4% YoY for Q2, reaching $14.8 billion. The market was up about 3% compared to Q1. IDC researchers noted that UC&C growth will continue as a result of increased interest in video conferencing, collaboration and UCaaS technologies.
“We’re seeing more strategic buying decisions by organizations versus fewer short-term reactive decisions in the recent past,” said Rich Costello, senior research analyst for Unified Communications and Collaboration at IDC, in a statement. “While the overall market remains a growth story, providers are starting to see some sales cycles return to the pre-covid pace.”
Some UC&C market specifics include the following:
- Hosted Voice/UC Public Cloud (UCaaS) revenue grew 17.0% year over year and 4.3% sequentially to almost $5.2 billion in 2Q22.
- UC Collaboration (including video conferencing software and cloud services) increased 10.2% annually and 1.3% sequentially to $7.2 billion in revenue in the quarter.
- IP Phone revenue increased 7.9% year over year and 13.9% quarter over quarter to $525 million in 2Q22.
- IP Phone shipments increased 2.8% year over year and 11.6% compared to 1Q22 to 4.5 million units shipped in the quarter.
- Enterprise Videoconferencing Room Endpoints (i.e., large video room endpoints) revenue increased 15.6% annually and 27.4% sequentially to more than $525.6 million in the quarter.
- Videoconferencing Huddle Room Endpoints revenue increased 24.7% year over year and 22.4% quarter over quarter to $263 million in 2Q22.
“We’re seeing more strategic buying decisions by organizations versus fewer short-term reactive decisions in the recent past,” said Rich Costello, senior research analyst, Unified Communications and Collaboration at IDC. “While the overall market remains a growth story, providers are starting to see some sales cycles return to the pre-covid pace.”
The UC&C market saw the following overall positive results in 2Q22 from a regional perspective:
- In North America (U.S. and Canada), UC&C revenue was up 10.1% year over year and 3.6% sequentially to just over $7.0 billion in 2Q 2022.
- Asia/Pacific (including Japan) revenue was up 16.8% year over year and 4.1% compared to 1Q22 to almost $3.0 billion in the quarter.
- EMEA revenue growth was up 8.9% year over year but just 1.0% sequentially to $4.2 billion in the quarter.
- Latin America revenue increased 20.9% year over year and 3.8% sequentially to $551.5 million in 2Q22.
UC&C Vendor Highlights
- Microsoft’s total worldwide UC&C revenue was $5.7 billion in 2Q22, up 22.7% year over year and 4.9% sequentially, representing a 38.3% share of the worldwide UC&C market for the quarter.
- Cisco’s total worldwide UC&C revenue was almost $1.2 billion, up 1.0% year over year and 8.6% sequentially, representing an 8.0% share of the worldwide UC&C market in 2Q22.
- Zoom’s total worldwide UC&C revenue increased 7.2% annually and 2.1% sequentially to more than $1.0 billion in the quarter, representing a 7.0% share of the worldwide UC&C market for 2Q22.
- RingCentral’s total worldwide UC&C revenue grew 29.8% year over year and 5.1% quarter over quarter to $424 million, representing a 2.9% share of the worldwide UC&C market for 2Q 2022.
References:
CEA-Leti RF Chip Enables Ultralow-Power IoT Connectivity For Remote Devices Via Astrocast’s Nanosatellite Network
CEA, a technology-research organization, and Astrocast, a leading global satellite Internet of Things network operator, have announced their successful collaboration on a low-cost, bidirectional communication module that enables corporations to communicate with their remote assets in areas not covered by terrestrial networks.
The module’s L-band chip, based on a new architecture developed by CEA-Leti, is a key hardware component that enables Astrocast customers to cost-efficiently communicate with their assets in the field via its network. It was completed earlier this year in an expedited project between the research institute and Astrocast, and is embedded in Astrocast’s RF module, called Astronode S.
The chip’s architecture is split over the RF core and digital processing and control units. It is fully optimized to support Astrocast’s dedicated bidirectional ground-to-satellite protocol and provides an optimal trade-off between link budget and low-power and low-cost constraints. The chip also embeds all low-earth orbit (LEO), satellite-specific features such as satellite detection and robustness to Doppler shift.
The miniaturized, surface-mount module communicates with terrestrial devices via Astrocast’s constellation of LEO satellites. Using the L-band spectrum, the network primarily targets maritime, oil & gas, agriculture, land transport and environmental applications in which ubiquitous coverage is required.
“Terrestrial IoT networks cover only about 15 percent of the planet, which leaves vast remote and rural areas where our global satellite network provides coverage that is crucial for our target markets,” said Laurent Vieira de Mello, Astrocast’s COO. “Leveraging its expertise embedded in a preliminary version of the RF chip, CEA-Leti developed its chip and delivered the final prototype to meet our requirements and time-to-market goals. They managed the chip technology transfer to our industrialization, qualification and production partner.”
The project’s critical time-to-market window was managed through a flexible collaboration model covering both prototype and industrialization phases.
“An accelerated time-to-market goal drove this project from the outset,” said Michel Durr, business development manager at CEA-Leti. “We pioneered this RF technology in 2019, and our team customized it for Astrocast up to production in only three years.”
CEA-Leti’s industrial tester used for characterization was key to accelerating from prototype to production, which enabled prototype characterization in parallel on the tester and in the lab, Durr explained.
“This process provided a short-loop debug capability with all skills available at CEA-Leti, and enabled us to deliver fully validated inputs to Astrocast’s industrialization partner for an easier industrial test-program development,” he said.
The low-energy, compact, surface-mount Astronode S module for highly integrated, battery-powered IoT systems offers a total cost of ownership up to three times lower than traditional satellite IoT alternatives.
References:
Juniper Research: 5G Fixed Wireless Access (FWA) to Generate $2.5 Billion in Global Network Operator Revenue by 2023
According to Juniper Research, the revenue generated by telecom operators from 5G fixed wireless access (FWA) services is expected to increase by 480 percent between 2022 and 2023, from $515 million to $2.5 billion. Broadband and Internet of Things (IoT) networks are just two examples of the usage of FWA services, which offer high-speed Internet connectivity using cellular-enabled CP (Customer Premises Equipment).
According to the research company, 5G FWA revenue for telecom operators will total $24 billion globally by 2027. This increase is attributed to 5G’s advanced capabilities, such as ultra-low latency and increased data processing, which enables it to offer connectivity services that were previously impossible with 4G technology. The company predicted that, with 96% of total sales coming from the consumer market, operators would earn the most money.
A compelling user proposition for FWA solutions must be provided by telcos through the bundling of extra services like video streaming, gaming, and smart home security, according to Juniper Research. This will enhance user experience and give telcos a competitive edge over technologies like FTTP (fiber to the property).
The advantages of FWA are now on par with those of services provided by fiber-based networks. By offering last-mile solutions supported by their current 5G infrastructure, operators have an immediate chance to make income from internet subscriptions directly to end customers, according to research author Elisha Sudlow-Poole.
The Juniper Research survey also recognized private 5G networks as a significant monetization prospect, giving superior network capabilities to 4G. According to the research company, smart manufacturing, shipping ports, and airports are the most likely sectors where telcos would implement 5G FWA. In order to maximize return on investment, it also advises operators to collaborate with fiber optic networks in conjunction with 5G FWA to facilitate the last mile solution.
Juniper Research asserted operators should bundle services including video streaming, gaming and smart home security into their FWA offerings to better compete with FTTP. The company cited private networks as a key revenue opportunity for operators due to the superior network capabilities compared with 4G. Smart manufacturing, shipping and airports are also key use cases.
Juniper Research also indicated operators should use 5G FWA to provide last mile connectivity, by treating it as a collaborative effort with fibre networks to maximize performance and return on investment. Recent GSMA Intelligence research showed 83 operators across 29 countries have launched FWA.
Juniper Research author Elisha Sudlow-Poole concluded by saying:
“The benefits of FWA are now comparable with services using fiber-based networks. Operators have an immediate opportunity to generate revenue from broadband subscriptions directly to end users by providing last-mile solutions underpinned by their existing 5G infrastructure.”
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References:
5G Fixed Wireless Access Forecasts Report 2022-27: Share, Size (juniperresearch.com)
https://www.juniperresearch.com/whitepapers/how-operators-will-capitalise-on-5g-fixed-wireless
Juniper Research backs 5G FWA for growth spurt – Mobile World Live
Advocates of 12 GHz for 5G and Broadcasters surprised by FCC notice of inquiry on 12.7-13.25 GHz
FCC Chairwoman Jessica Rosenworcel’s announcement on Monday that the FCC will launch a notice of inquiry on 12.7-13.25 GHz was a surprise to advocates of using 12.2-12.7 for 5G, but doesn’t necessarily have negative implications for a long-awaited order on the lower part of the spectrum range. Supporters of 5G in 12-2-12.7 GHz see it as a positive that Rosenworcel acknowledged that 12 GHz is mid-band spectrum, which the administration identified as critical to 5G. Some refer to the upper section as 13 GHz to avoid confusion with work on the ongoing 12 GHz band.
Rosenworcel said the country needs more mid-band spectrum in the pipeline. “We need to keep up our efforts to find more airwaves to fuel the mid-band spectrum pipeline, following our successful auctions of the 3.45 and 2.5 GHz bands … these are the airwaves that are essential for 5G services to reach everyone, everywhere.”
The most substantial objections are likely to come from broadcasters, though fixed service, satellite and other links are in the band.
NAB (National Association of Broadcasters) was surprised by Rosenworcel’s announcement and hadn’t received any indications from the agency before the speech that it was looking to the 13GHz band, said Robert Weller, Vice President-Spectrum Policy in an interview.
“We’re awaiting the NOI,” he said. TV stations use the band for fixed length transmissions from studio to transmitter, and for relays and electronic newsgathering, he said. “Records at the @FCC show 1,989 broadcast auxiliary authorizations in this band, including 400 ENG authorizations,” Weller tweeted Tuesday.
“The NOI (Notice of Inquiry), if adopted, would provide an opportunity for all stakeholders to provide information and views well in advance of any policy proposal,” said an FCC spokesperson.
“The FCC, on a bipartisan basis, recognizes we need more mid-band spectrum freed up for 5G,” said an industry expert active in the proceeding.
A top DOD official noted the difficulty of clearing the 3.1-3.45 GHz band, the top candidate band for 5G, experts said. They predicted analysis of the 13 GHz band would likely take several years.
“While certainly giving credit for recognizing the need to act on new commercial mid-band spectrum, the focus on the upper 12 GHz is a bit puzzling because an NOI could take years and lower 12 GHz is essentially ready to go,” former Commissioner Mike O’Rielly told us. “I have to hope yesterday’s announcement is part of a multipronged band identification and reallocation effort to be released soon, coupled with definitive action on lower 12 and lower 3 GHz,” he said. “The only mid-band spectrum that is available to be put to use quickly is 12.2 to 12.7,” said Jeff Blum, Dish Network executive vice president-external and legislative affairs. “We continue to urge the FCC to unleash that band for 5G to help Dish compete in the wireless market while protecting incumbent operations from harmful interference,” he told us. “It’s very encouraging for us in the 12 GHz band to see the commission recognizing the value of bringing mid-band spectrum in the 7-16 GHz range to the U.S.’s spectrum pipeline,” said RS Access CEO Noah Campbell. The lower 12 GHz band “is very unique, and it’s very important for continued U.S. 5G leadership,” he said. “The opportunity to create a 1,000 MHz block between 12.2 and 13.2 is extremely compelling,” he said.
The Rosenworcel comments show the FCC won’t act before it’s ready on 12 GHz, said Digital Progress Institute President Joel Thayer. “The chairwoman is standing with the FCC’s engineers and not bending to political pressure,” he said. “This proceeding has been unnecessarily politicized and this move sends a clear message that the engineering and FCC procedure will be the determining factor here, not corporate lobbying.” In a white paper last year, IEEE said the 13 GHz band “could be considered as a future candidate for unlicensed use due to its allocation to the same types of incumbents as the recently opened 6 GHz band.” IEEE found little interference risk. “The demand for unlicensed spectrum will continue to increase in the next years, it is necessary to study potential new bands to accommodate new technologies and services in the mid-band spectrum,” the report said.
Author’s Comment:
We’ve posted two articles on the battle for 12 GHz spectrum policy (see References below). It’s important that the FCC is proposing 12GHz for 5G despite that frequency band NOT included in revision 6 of ITU M.1036 Frequency Arrangements for IMT (and in particular for 5G).
References:
https://www.law360.com/media/articles/1531929/fcc-chair-plans-to-explore-revamp-of-12-7-ghz-band
Bloomberg: U.S. Billionaire’s Battle Over FCC’s 12 GHz Spectrum Policy
Huawei Connect 2022: It’s Cloud Native everything!
Huawei’s annual flagship event, Huawei Connect 2022 –“Unleash Digital” opened in Bangkok, Thailand today.
- Ken Hu, the Rotating Chairman of Huawei, spoke about the importance of cloud adoption for enterprises to achieve leap-forward development.
- Zhang Ping’an, CEO of Huawei Cloud, announced the launch of two new Huawei Cloud regions in Indonesia and Ireland, as well as the “Go Cloud, Go Global” program for enterprises to access expertise and experience from Huawei Cloud’s global ecosystem partners.
- By the end of this year, Zhang said that Huawei Cloud will be deployed in 29 regions and 75 availability zones, covering 170 countries and regions worldwide. At the core of its offering is Everything as a Service built on a cloud-native foundation to enable enterprises to innovate faster and accelerate digital transformation.
Zhang Ping’an, CEO of Huawei Cloud
Editor’s Note: The top four Cloud service providers in China are Alibaba Cloud, Huawei Cloud, Tencent Cloud and Baidu. That’s very different from the U.S. where the leaders are Amazon AWS, Microsoft Azure, and Google Cloud.
Huawei Cloud has already set up 13 localized service centers in the Asia Pacific, with more than 1,000 certified engineers to provide tailored services. In addition, ecosystem development has been fruitful, with more than 2,500 local partners generating more than 50% of the revenue of Huawei Cloud. Huawei Cloud is also forging ahead with industry-government-academia collaboration in the Asia Pacific. Investment in the Huawei ASEAN Academy and the Seeds for the Future Program will be used to cultivate more than 1 million digital experts over the next five years.
Huawei Cloud serves 80% of the 50 biggest Internet companies in China and more than 200 major Internet companies in the Asia Pacific. In Sarawak, Malaysia, Huawei Cloud, together with its partners, has built cloud native infrastructure to support the collaboration of more than 30 government departments in five fields, and provided more than 80 digital government and smart city services to ensure more efficient and better-informed decision-making. In Indonesia, Huawei Cloud has provided a unified data foundation to help CT Corp migrate its media, retail, and finance services to the cloud, enabling precise recommendations for 200 million Internet users. The cloud native technologies of Huawei Cloud have helped Siam Commercial Bank (SCB) in Thailand quickly roll out its digital loan service. Loan approval and issuance, which used to take one month of work, is now fully automated and can be completed in just five minutes.
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To address this pain point and unleash digital productivity for thousands of industries, Zeng Xingyun, President of Huawei Cloud, APAC, shared a three-pronged approach: to act with strategic resolve, embrace cloud-native and cultivate digital talent.
Zeng Xingyun, President of Huawei Cloud, APAC
Zeng emphasized long-term planning and a top-down approach to drive collaboration between IT and business departments to modernize blueprints and architecture based on cloud-native technologies. With 90% of enterprises in developed countries already using cloud technologies and 80% of all applications to be cloud-native by 2023, Zeng noted that cloud-native delivers efficient use of resources, agile applications, intelligent services and a secured system that helps government and enterprises stay compliant and grow sustainably.
In his speech, Zeng noted that Huawei Cloud has served more than 200 top Internet enterprises in Asia Pacific and 80% of the top 50 Internet enterprises in China. Huawei Cloud has 13 service centers in Asia Pacific, but more notably, Huawei Cloud is the first public cloud vendor to build local nodes in Thailand, with three availability zone data centers serving the local market.
He spoke about how cloud-native drives digital transformation in public and private sector, elaborating on how Huawei Cloud supports Siam Commercial Bank’s (SCB) automated processes to approve large volumes of loan requests within minutes, helping SCB attract 45,000 digital users and a credit limit worth THB 204 million within a quarter.
He also highlighted the importance of a talent ecosystem to address a digital talent shortage amounting to 47 million by 2030 in Asia Pacific. Through industry-academia cooperation such as the ASEAN Academy and the Seeds for the Future Program, more than 1 million digital talents will be cultivated in the next five years. Meanwhile, the Huawei Cloud Startup Program, aimed to help regional startups adopt cloud agilely, has already attracted more than 120 Asian enterprises since its recent launch. One such enterprise is ReverseAds, a Phuket-founded startup that has successfully secured US$24 million in funding to expand beyond Thailand.
The summit also saw the joint launch of Cloud Native Elite Club (CNEC) APAC by Huawei Cloud and Cloud Native Computing Foundation (CNCF). First established in China two years ago, CNEC gathers over 200 members working collaboratively to develop industry standards and promote cloud-native technologies in China. Likewise, the APAC branch will look to further cloud-native technologies.
Cloud-Native 2.0 for Industry Enablement:
An important driving force for service innovation, cloud-native technologies such as container, microservice, and dynamic orchestration empower enterprises to build and run scalable applications in modern, dynamic environments.
As cloud-native enters a new developmental stage, Fang Guowei, Chief Product Officer of Huawei Cloud, shared that Cloud Native 2.0 is a new phase for the intelligent upgrade of enterprises, focused on delivering Everything as a Service incorporating Infrastructure as a Service, Technology as a Service and Expertise as a Service to yield breakthroughs in digital transformation for government and enterprises.
An advocate of cloud-native innovations with open source, Huawei Cloud has contributed to the CNCF with open source projects including KubeEdge, Volcano and Karmada, hence growing the CNCF community from 1 Kubernetes project in 2015 to more than 20 categories and over 1,100 projects today.
Huawei Cloud delivers cost-effective cloud services with the innovative full-stack QingTian Architecture, featuring ultra-fast I/O engine, end-to-end security and enhanced operations and maintenance.
Adding to its offerings are more than 15 cloud-native products and services introduced to the global market for the first time. Elaborating on two core cloud-native innovations, Fang introduced the Cloud Container Engine (CCE) Turbo as a new cloud-contained engine that yields increased resource utilization, reduced access latency by up to 40%, and scale out 3,000 pods per minute to cope with traffic surges.
He also featured the Ubiquitous Cloud-Native Service (UCS), a distributed cloud-native service that allows enterprises to connect thousands of Kubernetes clusters to deliver a consistent experience through multi-cloud, cross-region applications.
Introductions were made to new services based on four pipelines: ModelArts to help AI developers effectively achieve one-stop data-tagging/model training; DataArts for an efficient and intelligent data governance pipeline; DevCloud for a secure and productive software development pipeline; and MetaStudio to provide better media experience. Other upcoming offerings include MacroVerse aPaaS such as KooMessage, KooSearch and KooGallery.
Fang also took the opportunity to release the Cloud-Native 2.0 Architecture White Paper to help enterprises embark on digital transformation.
Articulating the impact of Huawei Cloud’s innovations on industries, Hu cited AI adoption in the Pangu Drug Molecule Model to yield faster drug discovery for the First Affiliated Hospital of Xi’an Jiaotong University – successfully reducing R&D costs by 70% and development to approval time from a decade to a month for the world’s first broad-spectrum antimicrobial drug.
As one global network, Huawei Cloud has launched more than 240 cloud services, aggregating more than 38,000 partners and 3 million developers to release more than 7,400 applications in the cloud market.
With cloud-native technologies becoming a key engine to unleash digital productivity, Huawei Cloud demonstrates a commitment to harness cloud-native, Everything as a Service to spur economies.
References:
Telegeography: Global internet bandwidth rose by 28% in 2022
According to Telegeography, Global internet bandwidth rose by 28% in 2022, continuing the return to “normal” from the pandemic-generated bump of 2020.
Total international bandwidth now stands at 997 Tbps, representing a 4-year CAGR of 29%. COVID bump aside, the pace of growth has been slowing. Still, we do see a near tripling of bandwidth since 2018.
Strong capacity growth is visible across regions. Africa experienced the most rapid growth of international internet bandwidth, growing at a compound annual rate of 44% between 2018 and 2022. Asia is behind Africa, rising at a 35% compound annual rate during the same period.
Source: Telegeography
Both average and peak international internet traffic increased at a compound annual rate of 30% between 2018 and 2022—slightly above the 29% compounded annual growth rate in bandwidth over the same period. All the stay-at-home activity associated with COVID-19 resulted in a spike in traffic from 2019 to 2020. Average traffic growth dropped from 47% between 2019-2020 to 29% between 2021-2022, while peak traffic growth dropped from 46% to 28% over the same time period.
Prices for Internet Service:
ISPs shift to predominantly 100 Gbps internet backbones continues to reduce the average cost of carrying traffic and enables profitability at lower prices. As a result, price erosion remains the universal norm. It reflects the introduction of competition into new markets and the response of more expensive carriers to lower prices. Trends in the IP transit market generally follow regional trends of the transport market. And while some have suggested that price erosion may slow as a result of recent inflation and supply chain constraints (as it has in the wavelength market), we have not seen this trend make its way into the IP transit market.
Across the cities included in the figure below, 10 GigE prices fell 16% compounded annually from Q2 2019 to Q2 2022. Over the same period 100 GigE port prices fell 25%. In Q2 2022, the lowest 10 GigE prices on offer were at the brink of $0.09 per Mbps per month. The lowest for 100 GigE were $0.06 per Mbps per month.
The sharper decline in 100 GigE reflects the advanced maturity of 10 GigE, as well as more carriers offering it and more competition. While 10 GigE remains a relevant increment of IP transit, particularly in more emerging markets, its share of the transaction mix continues to yield to 100 GigE. In 2022, providers indicated that a majority of their sales mix in key U.S. and European hubs was now 100 GigE. On average, across the cities noted, the Monthly Recurring Charge (MRC) for a 100 GigE port was 6.7 times the MRC for a 10 GigE port. Operators are poised to adopt 400 GigE IP transit ports as the next fundamental upgrade from multiple 100 GigE ports.
Outlook:
The combined effects of new internet-enabled devices, growing broadband penetration in developing markets, higher broadband access rates, and bandwidth-intensive applications will continue to fuel strong internet traffic growth. While end-user traffic requirements will continue to rise, not all of this demand will translate directly into the need for new long-haul capacity.
A variety of factors shape how the global internet will develop in coming years:
• Post-COVID-19 growth trajectory. Initial evidence suggests that the spike in the rate of bandwidth and traffic growth in 2020 from the pandemic was a one-time event and we have largely returned to more traditional rates of growth. Operators we spoke to indicated they no longer see the pandemic leading to upward adjustments to their demand forecasts.
• IP Transit Price Erosion. International transport unit costs underlay IP transit pricing. As new international networks are deployed, operational and construction costs are distributed over more fiber pairs and more active capacity, making each packet less expensive to carry.
• We already see a major shift from 10 GigE requirements to 100 GigE requirements and expect that 400 GigE will emerge in two to three years as a significant part of the market.
• The introduction of new international infrastructure also creates opportunities for more regional localization of content and less dependence on distant hubs. As emerging markets grow in scale, they too will benefit from economies of scale, even if only through cheaper transport to internet hubs.
• International versus domestic. While there’s little doubt that enhanced end-user access bandwidth and new applications will create large traffic flows, the challenge for operators will be to understand how much of this growth will require the use of international links. In the near-term, the increased reliance on direct connections to content providers and the use of caching will continue to have a localizing effect on traffic patterns and dampen international internet traffic growth.
• Bypassing the public internet. The largest content providers have long operated massive networks, these companies continue to experience more rapid growth than internet backbones and they are expanding into new locations. Many other companies, such as cloud service providers, CDNs, and even some data center operators, are also building their own private backbones that bypass the public internet. As a result, a rising share of international traffic may be carried by these networks.
References:
https://blog.telegeography.com/internet-traffic-and-capacity-remain-brisk
Verizon launches 5G Ultra Wideband Innovation Hub with the University of South Carolina; Spectrum Update
Verizon and the University of South Carolina are exploring how 5G Ultra Wideband (mmWave) can transform industries including manufacturing, healthcare and civil infrastructure, among others. To do this, Verizon and the university launched the Innovation Experience Hub, powered by Verizon 5G housed in the McNair Center in Columbia, SC where students, faculty, entrepreneurs, and corporate partners can collaborate to test and create new solutions powered by Verizon 5G Ultra Wideband, which is available in select areas.
Innovators at the hub will leverage 5G connectivity and solutions to help improve manufacturing processes with quality sensing and defect detection. In healthcare, they’ll test how 5G can enhance emergency response by enabling remote health monitoring and real-time analysis of patient vitals, as well as hospital connected asset management, to streamline asset retrieval and dispatch operations. When it comes to civil infrastructure, researchers will examine how 5G communications can enhance monitoring of roads and bridges with condition analytics and reporting, as well as drone-based visual inspection of roads, bridges and buildings, using AI-driven computer vision.
- Verizon brings 5G Ultra Wideband service to Innovation Hub at University of South Carolina housed in the McNair Center.
- With Verizon 5G Ultra Wideband, innovators can develop and test real-world 5G solutions for use cases such as manufacturing, healthcare and civil infrastructure.
- Initial projects will include manufacturing quality inspection and defect detection, healthcare connected asset management, and drone-based visual inspection of roads and bridges.
“Working with the University of South Carolina, we have a great opportunity to collaborate with dozens of partners to ideate and develop new 5G-powered solutions leveraging the latest technologies, including large-scale IoT, artificial intelligence, computer vision and augmented reality,” said Jennifer Artley, Verizon Business Senior Vice President of 5G Acceleration. “Verizon is the network America relies on. Giving researchers access to Verizon 5G Ultra Wideband, with its high bandwidth and low latency, can accelerate the innovation process, leading to new solutions that will transform how enterprises operate and grow.”
“Our relationship with Verizon exemplifies the benefits of partnerships between the University of South Carolina and the business community,” university president Michael Amiridis said. “This aligns with our focus on expanding research opportunities that solve problems and accelerate discoveries.”
This engagement is part of Verizon’s broader strategy to partner with enterprises, startups, universities, national labs and government/military organizations, to explore how 5G can disrupt and transform nearly every industry. Verizon operates several 5G Labs in the U.S. that specialize in developing use cases in industries ranging from healthcare to public safety to entertainment. In addition, Verizon is collaborating with various customers to establish 5G Innovation Hubs on-premises as part of an ongoing initiative to co-innovate and create new 5G applications.
Regarding Verizon’s wireless spectrum deployments, CEO Hans Vestberg told a Goldman Sachs Investor Conference last week:
“We have US 150 million POPs (Points of Presence) with the C-band and just reminder to all, we started in the first quarter deploying the C-band. That’s the pace we have right now and we have said that we’re going to pass plus or more than 175 million POPs by year end.
So this is going faster, but as you rightfully said, we’re using — we have 161 megahertz nationwide. We’re so far using 60 megahertz. We’re getting into 100 megahertz. We’ve talked a little bit about some market have 200 megahertz. So we have so much way to go here and improving the network. And what we see so far is of course, where we launch a C-band, we have a much higher step up ratio in those markets, which is a good indicator of that the C-band is really making difference.”
References:
https://www.verizon.com/about/news/verizon-launches-5g-innovation-hub-university-south-carolina
Omdia: ARPU declining or flat for South Korean 5G network operators
A new research report from Informa owned consulting firm Omdia finds that the average revenues per user (ARPU) are now falling for the three big South Korean 5G network providers. That follows two previous years of rising ARPU.
“After two years of consistent growth, mobile ARPU is back in decline for KT Corp and LG U+ while maintaining relatively flat for SK Telecom, with 5G subscription growth and revenue growth stalled,” wrote Omdia analyst Anshika Gandotra in a recent report.
“Initially, the launch of 5G stopped the declining ARPU trend. However, mobile ARPU has been declining since 1Q21. Mobile operators made diverse efforts to meet customers’ varying needs. SK Telecom started offering new 5G price plans at a 30% cut in rates for online-only mobile plans.”
“Additionally, LG U+ reduced the cost of 5G plans. South Korea has shown early signs of 5G market maturation because the top-tier customers have now upgraded to 5G services. Other customers seem more resistant to upgrading at the moment, thereby slowing down 5G growth.”
South Korea is often viewed as a bellwether for the 5G business, largely because the country was first in widescale 5G deployment and its regulator collects detailed information about the adoption of the technology. As of August 2022, there were 24.53 million 5G subscribers in South Korea, accounting for around 33% of all mobile subscriptions in South Korea. Perhaps more importantly, 5G networks are now carrying roughly 70% of all mobile data traffic in the country. That’s mainly because the average 5G user consumes around 27GB per month, or nearly 3.1x the average 4G user.
This September, Mobile World reported that ARPU at:
- SK Telecom, with the highest 5G penetration (38.7 per cent), was flat in Q2-2022.
- LG U+, with 34 per cent on 5G plans, posted a third consecutive quarterly dip in ARPU in the quarter, falling 4.1 per cent.
- KT with 32 per cent of subscribers using 5G services bucked the downward trend. ARPU rose for the fourth straight quarter, increasing 3.2 per cent.
Loud and Clear Message:
Obviously, there is no pent up demand for faster 5G services. App makers have not brought to mass market services like autonomous driving that would require more firepower. Customers can watch Netflix and surf the net well enough with existing 5G technology. Telcos have adapted by diversifying. To make the quantum leap to the highest-speed 5G will require the roll-out of essential services that need such fast connections.
“When households begin to have robots at their homes, for instance, telcos would then start ramping up infrastructure investments, so the highest-speed 5G will be partially available around 2025,” said Kim Hyun-yong, an analyst at Hyundai Motor Securities.
The lesson for other countries racing toward 5G may be: curb your enthusiasm. The new technology holds great promise, but for now there will still be as much evolution as revolution in the high-speed internet future.
References:
https://omdia.tech.informa.com/OM025134/5G-in-South-Korea–2022
https://www.lightreading.com/5g/a-concerning-arpu-trend-shows-up-in-south-koreas-5g/d/d-id/780403?
AT&T CEO at Goldman Sachs Conference: Fiber and 5G are huge growth drivers
AT&T CEO recently spoke at the Goldman Sachs Communicopia + Technology Conference. Stankey reiterated that AT&T continues to take a disciplined and return-focused approach to growth and investment and made the following points:
- The company continues to add customers in its strategic focus areas of 5G and fiber. Stankey shared he feels comfortable with AT&T’s business trajectory and the continued customer demand it is seeing. Overall industry postpaid phone volumes remain healthy, and AT&T’s consistent go-to-market approach, along with an improved customer experience, is attracting high-value customers. That’s in sharp contrast to Verizon which is losing post paid mobile customers. “We are still going to have a negative net adds on phones in the third quarter,” Verizon CEO Hans Vestberg said Wednesday at the Goldman event.
- Stankey said AT&T is developing diversified sources of growth, with wireless share gain in specific customer cohorts, such as the public sector and large and mid-sized business. He expects this momentum to continue thanks to a strong distribution ecosystem, a high-performing workforce and enhanced network quality strengthened by recent mid-band 5G spectrum deployments. He also added that recent pricing actions are performing as anticipated, supporting the company’s view that these actions will be accretive in the latter half of the year.
- Stankey shared that AT&T Fiber continues to deliver the best customer experience in the marketplace and that he’s pleased with the penetration rates for new fiber build. As AT&T expands to new markets, the company has seen first-year penetration rates about two times greater than historical norms. Stankey expects subscriber momentum and current penetration rates to continue based on the company’s improved ability to build fiber effectively and the strong customer demand for the product. Fiber ARPU continues to grow, and the company is seeing higher than anticipated uptake of its multi-gig fiber offerings.
- At the end of the last quarter, AT&T had over 6.5 million fiber customers. The company continues to expand its fiber footprint and has the ability to serve 18 million customer locations in more than 100 metro areas with AT&T Fiber. Stankey shared there may be an opportunity to expand the company’s fiber footprint based on the attractiveness of returns and that government subsidies supporting public-private partnership are expected to help drive broadband expansion.
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There are three major sensitivities in a fiber business case. One is the rate of penetration, one is the ARPU and one is the cost to build. Cost to build isn’t going to move dramatically typically speaking. Nobody is going to come out with a new way to put fiber out that takes 30% out of the cost of building fiber. It uses relatively mature technologies like digging trenches that aren’t going to see that kind of rapid change. ARPUs are not only strong. They’re stronger than what we expected. We’re seeing higher uptakes when we offer 5 gig in the market than what we would have expected when we put a 5-gig product out there. And if the rate of penetration is twice as fast as we expected, that will tell you that there are homes that in previously, two years ago when we did this, we said maybe weren’t economical that now because of our execution in the market and we sustain that become economical.
Second point, government has brought in a pretty substantial amount of public subsidy, $45 billion-ish. And remember, that’s just the public portion of the subsidy. What people miss is nobody expects that when one of those locations get built, that it’s going to be done on a 100% public financing, it’s going to be done on a public private partnership.
And right now, on public monies that are coming in, for example, when we’re participating, oftentimes, $3 of private capital come in to match $1 of public capital. I don’t expect that, that ratio will probably hold as we get to some of these more difficult areas to build. But $45 billion, if it’s 1:1, could be $90 billion, right? And when you start thinking about that dynamic of how that opens up an opportunity in the market previously uneconomic areas to build. If that starts to work its way through the process next year, I would expect that AT&T is going to be an active participant in that process. And we’re going to look at it based on what I described earlier is we’re looking at places where we’re turning down existing copper infrastructure, where we have opportunity to keep scale and go in and fill in holds, that’s going to naturally cause us to lean in to doing some of that stuff going forward. And I would expect that will probably alter the number.
And then finally, I think we’re in a place in the market right now, where I believe all the fundamentals are that customers need more skilled connectivity in their home. And if I look out over five years, and I think about building a durable and sustainable franchise at AT&T, I think fiber is a key element to that.
- Fiber is also a key element for getting the kind of dense infrastructure that’s necessary for the next generation of wireless technology for backhaul. And having that owned and operated economics where you’ve got that backhaul and that transport densely out on a network is going to be a key determiner being a successful wireless business over time. And so when I step back and I think about that opportunity right now, are there other markets maybe outside of our operating footprint, given our success and what we’re seeing in rate of penetration, receptivity of the product, our ability to cross-sell both fixed and wireless, we should understand whether or not there’s something there.
- AT&T has been deploying their mid-band spectrum. We were a little bit later to that dynamic than some in the industry because of where we were in the auction and equipment availability. It is now up and starting to make its appearance. In metropolitan areas, the performance we’re getting out of it is really, really good. I think that will be a big lift on what is already a strong network.
- The CEO says AT&T has the best performing 4G LTE network in the country now paired with what we can do in 5G mid-band spectrum, I think that’s only going to be a positive for customers as we move through this.
- AT&T remains focused on its cost transformation program and its efforts to achieve more than $4 billion of its $6 billion run-rate cost savings target by the end of the year. Stankey noted that he’s comfortable with AT&T’s cost structure, and believes the company can continue to drive out costs as it exits portions of its legacy businesses. This includes efforts to transition from its legacy copper network to fiber.
- Stankey shared that AT&T is investing at a record clip to fuel growth in core connectivity, while continuing to pay an attractive dividend, and that the company is focused on building a sustainable and durable connectivity operation with improved cash generation. AT&T is pleased with the return profile of its fiber and 5G investments and continues to expect 2022 and 2023 to be the peak of this capital investment cycle with capital intensity moderating in 2024 and beyond. Overall, the company’s long-term capital allocation priorities remain unchanged, and it expects to use cash after dividends to reduce debt with a goal of reaching a net debt-to-adjusted EBITDA range of 2.5x.
References:
AT&T CEO Updates Shareholders at Goldman Sachs Communicopia + Technology Conference | Business Wire