Gartner: Market Guide for Small Cells- 5G, virtualization, disaggregation and Open RAN

Introduction:

Small cells are increasingly used to boost network densification and expand coverage for both private and public networks. They will be increasingly important in the deployment of 5G mmWave networks because of the very short propagation distances which require many small cells for adequate coverage in a given geographical area.

5G small cell market is gaining momentum due to the higher bands like mmWave limitation, in-depth in-building coverage requirement and strategic area densification. However, despite the hype surrounding 5G, 3G/4G deployments are expected to remain the dominant technology in terms of volume shipments until 2022 when 5G small cell deployment will overtake 3G/4G. Therefore, because small cell densification is moving forward, integrated small cell platforms supporting both 5G and 4G radio are essential for the next five years.

Small cells deployed in strategic areas have also accelerated the new virtualized and disaggregated architecture adoption, aiming for greater cost-efficiency and flexibility. Together with edge computing, they are enablers for enterprise digital services such as manufacturing applications, smart harbor/terminal, local contextual applications and IoT services.

Definition of Small Cells:

Small cells are radio access nodes with low radio frequency power output. They are operating in licensed and unlicensed spectrums, with a cell radius of a few tens to a couple of hundred meters. They can be deployed in a variety of places including in-building, lampposts, street furniture, walls and rooftops.
Small cells can be 2G, 3G, 4G, 5G or carrier-grade Wi-Fi access points, and they increasingly support several of these technologies in the same access points. Small cells may use frequencies licensed by the CSP, but they may also use unlicensed or shared frequency bands. Examples of such products are those supporting Long Term Evolution Advanced (LTE-A) LTE-A over unlicensed spectrum (LTE-U), Long Term Evolution Licensed-Assisted Access (LTE-LAA), Citizens Broadband Radio Service (CBRS) and MulteFire.
Small cells complement the macro network to improve coverage, add targeted capacity, and support new services and user experiences. There are various types of small cells, with varying ranges, power levels and form factors according to use case.
Traditionally, small cell infrastructure is managed by a CSP or on a CSP’s behalf by a partner, and used for public access. However, our definition includes small cells for private networking.  We include the following form factors in our traditional small cell definition:
  • Femtocells
  • Picocells
  • Carrier-grade Wi-Fi
The femtocells and carrier-grade Wi-Fi are not the focus of this Market Guide. For detailed definitions, please refer to “Market Definitions and Methodology: Communications Service Provider Operational Technology.”

Gartner’s Key Findings:

  • The small cell solution is shifting from delivering in-build coverage to enable large-scale network densification. Increasing 5G and private network deployments further accelerate the trend.
  • In the small cell market, variety and diversity are replacing uniformity. Introduction of new spectrums, types of cells and architectures, vertical industries use cases, and business models like neutral host act as accelerators in this respect.
  • In addition, diversity increases the cost and complexity of small cell deployment and management, not just access points but also potentially edge computing, localized core and distributed radio units.
  • Traditional proprietary small cell systems are challenged by disaggregated, virtualized architecture. Communications service providers (CSPs) are looking for a more flexible, multivendor, cost-effective solution through breaking apart basebands and radio heads, and virtualizing some or all of the baseband functions in software.

Gartner’s Recommendations for Small Cell Deployment:

  • Build your small cell deployment strategy beyond coverage through prioritized investment in network densification and related digital services. Include 5G small cell and private networking requirements in your product plans.
  • Address diversity challenges through a multivendor approach. There is no one size fits all in the future small cell market, and a scenario-oriented product evaluations process needs to be implemented.
  • Reduce complexity and improve cost-efficiency through prioritizing the deployment feasibility as well as operation intelligence and automation.
  • Work closely with emerging suppliers and establish an objective and structured process to thoroughly evaluate and develop quick prototypes using disaggregated and virtualized architectures.

Small Cells Will Be at the Forefront of Virtualization and Open RAN:

The economic success of 5G is reliant on interoperable multi-vendor networks, which require open interfaces at both the silicon and network levels. Therefore, many CSPs are continually exploring the possibility of moving away from the proprietary hardware to more modern open and interoperable systems.

To support these, CSPs will need to adopt new network topologies such as cloud-RAN, virtualized RAN (vRAN) or open RAN (ORAN), together with integrated edge compute.The key to the open network lies in disaggregation — separating the key elements such as centralized units (CUs) and distributed units (DUs) — and the open reconfiguration — combining components from any suppliers because they are all interconnected in the same way.

For 5G, those central processes will usually be virtualized (run as software on off-the-shelf servers).The move to open network has been more advanced in small cell layer than macro network, and several suppliers already offer architectures in which a number of small cells are clustered around a centralized, virtualized controller. But there are two potential barriers to achieving a real multivendor environment: the need to be in agreement on where the network should be split between the central and the local elements and the need to be a single common interface between the elements in each preferred split.

Split RAN/SC architectures have multiple options, as identified by 3GPP. Of these, 3GPP has focused on Option-2 (RLC-PDCP), ORAN on Option-7.2 (PHY-PHY) and Small Cell Forum (SCF) on Option-6 (PHY-MAC). SCF will develop a 5G version of its networked FAPI spec, which will enable a split MAC and PHY in a disaggregated small cell network, supporting the 3GPP Option-6 split over Ethernet fronthaul and targeting, in particular, cost-effective indoor scenarios. SCF’s work on open interfaces such as nFAPI will play an important role in the market, alongside the work of partners such as O-RAN Alliance and Telecom Infra Project.

Many CSPs expect to take their first steps in their small cell layer, providing valuable experience of how to manage and orchestrate a network in which multiple radio units share common baseband functions, some of them deployed on cloud infrastructure. While there are still challenges in this domain, the disaggregation and virtualized architecture reduce the technology barrier to market and introduce new players into the market including software players as well as OEMs and ODMs.

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Small Cell Hardware and Software Vendors:

The table below may be used as a quick reference guide to representative vendors and their 5G small cell solutions. It includes the major vendors who have a long history providing small cell, DAS solutions and also some new emerging vendors who are providing software-based small cell solutions.

Table of Small Cell Vendors:

Small Cell Software
Air5G
Virtualized RAN Software
M-RAN Virtual Small Cell
5G Open Platform Small Cell
ONECELL
Enterprise Radio Access Network (E-RAN)
Radio Dot System, Micro Radio, Lightpole Site
LampSite Family, BookRRU, Easy Macro
 Viper Platform
 NEC
Massive MIMO AAS Radio Unit
Flexi Zone, AirScale Indoor Radio system (ASiR), AirScale Micro Remote Radio Head (mRRH), AirScale mmWave Radio (ASMR), Smart Node Femtocells
CellEngine
Samsung 5G Small Cell
 ZTE
Qcell, 5G iMicro, 5G Pad RRU

Gartner: 4 “Cool Vendors” for Communications Service Provider Network Operations

Communications service providers’ (CSPs) network virtualization, programmability and automation will demand innovation and a broader spectrum of suppliers. CSPs must select suppliers that offer such solutions to improve network agility, performance and efficiency.  What are cool vendors?
  • Cool Vendors for communications service provider (CSP) operational technology (OT)create new value by developing faster and more cost-effective solutions, as well as embedding open and API-driven architecture to accelerate ecosystem creation.
  • These vendors provide network- and vendor-agnostic solutions that CSPs can use to gain network-related insights, modernize their operations and automate to enhance operations efficiency.
  • Cool Vendors tend to be more aligned to CSPs’ transformation objectives as compared with many established vendors, because Cool Vendors are not guided by any legacy business.
The vendors differ from their competitors in that they create new value, solve difficult problems and provide cost-efficiencies as shown in Table 1. for four cool vendors profiled.

Table 1: Cool Vendors in CSP Operational Technology

Vendor
Approach to Create New Value
Solve a Difficult Problem
Provide Cost-Efficiency
Actility
Provides tools, platforms and an ecosystem for monetization of IoT beyond just connectivity
Enables scaling up of IoT deployments up to national level networks
Reduces M2M application development overhead with ThingPark IoT management platform and LoRaWAN IoT support
DriveNets
Provides disaggregated, cloud-native software that runs the routing on white boxes using merchant silicon chipsets
Provides economics and flexible scale. Simplifies network operations, and reduces time to market of services.
Reduces TCO for router capacity scale
Federated Wireless
Provides novel shared-spectrum ecosystem by harnessing cloud-native software solution
Provides reliable connectivity without expertise and resources
Reduces spectrum acquisition costs
Sensat
Creates 3D map and digital twin of physical environment for infrastructure planning
Applies ML to physical network design to achieve spatial optimization and network efficiency
Reduces network design costs
IoT = Internet of Things; LoRaWAN = long-range wide-area network; M2M = machine-to-machine; ML = machine learning; TCO = total cost of ownership
Source: Gartner (May 2020)
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These vendors are cool because they enable CSPs with futuristic network infrastructure elements and operations solutions for digital transformation. As shown in Table 1, the featured vendors enable CSPs to develop:
  • Innovation in infrastructure by disaggregation, virtualization and cloud native:
    • Actility, DriveNets and Federated Wireless
  • Innovation in operations by resource optimization, platform operations and network automation:
    • Sensat
Each of these two elements by the Cool Vendors mentioned in this research is important for CSPs’ future operations and business models. See Predicts 2020: 5 Key Trends for CSPs’ Digital Growth for more on scaling transformation needs (available by subscription only).
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Gartner: Top 10 Trends for Communications Service Providers (CSPs) in 2020

Key Findings:

  • Compared with previous cellular generations, the multilayered architecture of 5G creates opportunities for CSPs to expand beyond connectivity-centric solutions. However, disaggregation also allows new entrants to join incumbent CSPs in the 5G ecosystem.
  • Increasingly, network-based CSPs are exploring options to spin off network-related infrastructure into a separate entity, thereby unlocking funds needed for network upgrades and expansion while still meeting shareholder dividend commitments.
  • As live streaming of TV, games and e-sports enters the mainstream, the need to reduce latency and lower cost is driving hyperscale cloud providers, device manufacturers and developers to expand their influence out to the edge of CSPs’ networks.
  • Data, analytics and artificial intelligence (AI) now play an expansive and critical role in generating new business value, lowering costs and improving customer advocacy.
  • Cloud-native CSPs are emerging as aggressive challengers, and leading incumbent CSPs are expanding on efforts to virtualize their networks and adopt cloud-native capabilities.

Recommendations:

CIOs involved with CSP digital transformation and innovation should:
  • Pursue new capabilities and partnerships for 5G and streaming content by investigating how ecosystem approaches could be employed to meet business strategy goals.
  • Accelerate migration to cloud-native capabilities by appointing leaders who understand the business and technical implications that will arise.
  • Facilitate organizational alignment to become data-driven by establishing executive-level accountability and cross-functional oversight for data intelligence activities.
  • Maintain free cash flow from traditional telecommunications services by adopting automation, analytics and AI to improve operational efficiency and drive down costs.

Discussion:

Among the topics Gartner has observed as top of mind for CSPs include network virtualization and artificial intelligence. These are embellished in sections Becoming Data-Driven Becomes Critical and Cloud-Native as a Network Foundation, which explain the imperative needed to address what are becoming foundational capabilities. AI Enters the Workforce addresses the people context of AI, and how the move to automated provisioning and operations can, in the midterm, lead to augmentation, rather than wholesale replacement.

In the consumer market, digital content is well and truly dominating the strategy agenda. Livestreaming of TV, games, e-sports and other digital content is now mainstream. The need to improve performance and lower cost is driving the ecosystem of hyper-scale cloud providers, device manufacturers and developers to expand its influence into what was previously the exclusive domain of network-based CSPs.

Consumption of user-created content, augmented reality (AR)/VR, gaming, call center interaction via digital channels (chatbots, voice assistance, virtual robots and so on) is changing the way CSPs interact with customers. Multiple forms of interaction are becoming more common. This might include an experience on a mobile phone in which the customer dials, speaks to an AI agent in natural language and uses web apps inside of text messaging, all at the same time.
The everything consumer will put tremendous pressure on CSPs to keep pace with customer experience. CSPs will increasingly be expected to deliver excellence in experiences for a wide range of direct and indirect services related to self-driving cars; content creation, sharing and consumption; VR/AR; streaming gaming; healthcare; and others.

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5G Assessment:

5G is viewed by mobile-network-based CSPs as a significant opportunity for growth, particularly in B2B. It also presents a challenge in terms of the level of investment required for coverage and capacity demands. At the same time, digital ecosystems are increasingly dominating the way industries function and, subsequently, how technology solutions are defined. This presents compelling opportunities for competitive market entrants looking to exploit opportunities to reinvent processes and define new operating models for industries.

  • Compared with previous cellular generations, the multilayered architecture of 5G (network plus software and services) creates opportunities for CSPs to expand beyond connectivity-centric solutions. However, disaggregation also allows new entrants to join incumbents in the 5G ecosystem.
  • CSPs aspire to derive value from 5G through enterprise solutions that expand the mobile ecosystem to new industries, enabling opportunities to participate in concepts such as factory of the future, autonomous transportation, remote healthcare, agriculture, digitized logistics and retail.
  • CSPs have found it difficult to identify strong monetization and operation efficiency opportunities for enterprise 5G, partly because of a lack of insight into key vertical markets.

5G improves drastically on previous generations of mobile cellular connectivity (3G and 4G), with peak data speeds of up to 20 Gbps, much higher network capacity and significantly lower latency. As such, 5G-capable handsets and smart devices will give rise to new experiences for consumers, such as gaming, esports, content streaming and virtual reality (VR), to name a few.

However, for CSPs, the enterprise segment will be key to monetizing higher-margin opportunities. To be successful, it will require a significant shift from 3G or 4G, where the focus was on delivering horizontal product and service offerings related to connectivity. By taking a platform approach to 5G, CSPs can potentially unlock new value through delivering industry-specific solutions.

The software-centric approach of disaggregating hardware and software (e.g. Open RAN) creates opportunities for new providers to offer solutions or services in the 5G ecosystem. It will enable enterprises to procure services from multiple providers in the ecosystem, enabling service flexibility and diversity, rather than being locked in with a single CSP.

The concept of 5G as a platform leverages a broad range of capabilities (beyond those related to connectivity, such as edge computing and network slicing). It also encompasses the use of data analytics, AI and machine learning, data aggregation, and service orchestration. Security will play an important role. Thus, the concept of 5G as a platform includes horizontal capabilities (common across industries) and vertical capabilities (specific to industries) that can enable CSPs to participate in emerging digital ecosystems.

Since the technology specifics of 5G are still a work in progress, there will be shifts in product or service offerings. Technology alliances and partnerships between diverse stakeholders are likely to arise. Such a nebulous market can be confusing for enterprises and participants, especially in the context of evolving standards.

An industry-platform-centric approach to 5G has the potential to enhance a CSP’s ability to deliver better business outcomes to their enterprise customers. However, new operating practices are required. The isolationist nature of processes, systems and methodologies within the network and IT will also need to be addressed (see “Unlocking the Value of Network and IT Fusion in CSPs”).

Most CSPs have begun implementing some of the foundational capabilities for treating 5G as a platform, such as software-defined networking and network function virtualization (NFV). These provide for the ability to divide services into smaller, software-driven functions, which allows businesses, operators and cloud providers to deploy and configure these services in a more-flexible manner. But again, these solutions and networks often lack interoperability.

Although it’s still early days for the 5G private network opportunity, regulators and standards bodies are beginning to put initiatives in place targeting this opportunity. CSPs have the potential to deliver turnkey network solutions into the industrial space. Equipment vendors would also have the option to do this directly.

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Reference:

Gartner: Enterprise Data Network Services Market Moves to Transformational Technologies

Market Overview

Gartner forecasts that the market for enterprise data networking services in 2020 will be $157.5 billion, broadly unchanged from 2019 (see “Forecast: Enterprise Communications Services, Worldwide, 2017-2023, 4Q19 Update”).

 

The number of global NSPs included in this Gartner research has increased as more providers have met our revised inclusion criteria. In addition to large global providers, enterprises are increasingly willing to consider smaller providers, including managed service providers with little or no network infrastructure of their own (such as those featured in the “Market Guide for Managed SD-WAN Services”). Alternatively, enterprises may choose a combination of multiple regional providers.

Sourcing Trends

Providers are increasingly focused on providing the managed service platform (e.g., managed SD-WAN and NFV/vCPE); however, they are also more open to “bring your own access” and other flexible sourcing approaches for the network transport components.

The global network service market continues to move toward a more software-driven, as-a-service model, with increasing levels of visibility and self-service via portals and APIs available to enterprise customers.

However, this means providers are reluctant to allow deviations from their standard offerings, because that will require deployment of a custom solution at a higher cost that could rapidly become obsolete in this fast-moving market.

Operational Trends

The network buying discussion is gradually moving away from technologies toward outcomes and service levels. Providers continue to improve their SLAs with more-realistic objectives and more-meaningful penalties for failing to meet those objectives, increasingly including the right to cancel the service in the event of chronic breach. Installation lead times — a pain point for many enterprises with global networks — are starting to be covered by standard SLAs, and providers are striving to improve delivery times, although they remain frustrated by third-party/local access providers. The increasing speeds of cellular services are making this technology more useful as a rapid deployment (interim) solution. In addition, it provides a truly diverse backup option. However, the hype around 5G cellular replacing fixed connectivity should be treated with caution, due to maturity issues — especially coverage limitations.

Electronic quoting and ordering are increasingly widespread, with electronic bonding between the global providers and their local access providers. Self-service ordaining and/or provisioning, as well as the increased visibility of the service being delivered via portals continue to gain momentum. This is blurring the lines between managed services and self-management, to create a spectrum of co-management possibilities.

However, global networks are also becoming more complex, because transport becomes a hybrid of MPLS, internet and Ethernet; cloud endpoints are added; and SD-WAN and NFV technology are added. In addition, the internet, especially using broadband or cellular access, is an inherently less predictable service than MPLS. Visibility capabilities, sometimes referred to as performance analytics, can help by enabling enterprises see the actual performance of their applications.

Thanks to the continual investment in enhancing the customer experience, customer satisfaction with global NSPs is improving.

Network Architectures

New global network proposals are predominantly for managed SD-WAN services based on a hybrid mix of MPLS and internet transport, with different applications using the most appropriate link type. Most providers support a small portfolio of SD-WAN vendors, because the market is more fragmented and differentiated than the router market it is replacing. Some providers offer network-based SD-WAN gateways, allowing traffic to use the internet for access, but use the providers’ higher-quality, long-haul backbones.

Enterprises’ adoption of cloud IT service delivery remains key to transforming their WAN architectures. Fortunately for enterprises, global NSPs have deployed a range of capabilities to address enterprises’ cloud connectivity needs (see “Five Key Factors to Prepare Your WAN for Multicloud Connectivity”).

The providers in this research offer carrier-based cloud interconnect from their MPLS and Ethernet networks to leading CSPs, such as Amazon, Microsoft and Google. Most offer connection to additional cloud providers as well. The key differentiators are the specific cloud providers and the cities connected, and the ability to add virtualized services (e.g., security) into the cloud connection points.

Managed SD-WAN services typically offer the option of local internet access (split tunneling) from every site, which is especially useful for access to SaaS applications, such as Microsoft Office 365. Perimeter security can be provided on-site or as a cloud-based service. An option for managed SD-WAN services is for the provider to deploy network-based SD-WAN gateways to facilitate interconnection between SD-WAN and non-SD-WAN networks, improve scalability and avoid the need for traffic to traverse long distances over the internet. Alternatively enhanced internet backbone services may be available to improve the performance of cloud service access over the internet and to improve end-to-end performance, when using the internet as a transport link.

An increasing number of global WANs incorporate managed application visibility and/or WAN optimization, with some providers now offering application-level visibility by default. SD-WAN services, which operate based on application-level policies, also typically offer inherently higher levels of application visibility.

Network functions, such as edge routing, SD-WAN, security, WAN optimization and visibility, can be delivered as on-site appliances. However, many providers prefer to offer these as VNFs, running in NFV service nodes in their POPs or in uCPEs, which are essentially industry-standard servers, deployed at the customers locations, supporting one or more virtual functions. This makes it easy to rapidly change the functions deployed in the network and is also usually consumed on an “as a service” basis with a monthly subscription fee for each function.

Ethernet WAN services (virtual private line and virtual private LAN services) remain more niche. They are principally used for data center interconnection; high-performance connections, including extranets (such as trading networks); or for sites that are geographically close (i.e., Metro Ethernet). Different combinations of these services can be used to obtain different service levels appropriate to each enterprise location.

Providers are starting to offer NoD services, where bandwidth can be adjusted via a portal or APIs. Some of these services support multiple services (e.g., MPLS and internet) on a single access line, and also allow dynamic control of cloud connectivity.

Access Options

WAN access is evolving, with traditional leased-line access, such as T1 or E1 lines, no longer proposed in new deals, except when no other form of access is available, such as in rural locations or some emerging markets.

Pricing for these legacy service types is typically increasing, and, in some cases, the services are reaching the end of their life.

Traditional access lines have largely been replaced by optical Ethernet access at 10 Mbps, 100 Mbps, 1 Gbps or 10 Gbps. The scale economics of Ethernet access are very good, with each tenfold increase in speed, typically increasing cost by only two to three times. As a result, in developed markets, enterprises now tend to purchase access lines with much higher speeds than they initially require, with the port capacity limited to their current needs. This allows them to easily and quickly upgrade capacity in response to changing requirements.

For smaller, less critical or remote locations, broadband (increasingly, “superfast broadband,” such as very-high-speed DSL [VDSL], cable modem or passive optical network [PON]) is the access technology of choice, despite having no SLAs or poorer SLAs than Ethernet access. When enterprises require large numbers of broadband connections, they can sometimes find that they are able to get better pricing than that offered by global service providers by sourcing broadband access directly or from aggregators. Many providers now support “bring your own broadband.” This refers to the service provider delivering managed services over broadband sourced by the enterprise.

Finally, cellular connectivity (4G) and, in the future, 5G, is increasingly being used for backup, rapid deployment or temporary locations, although it does not offer SLAs. As with broadband, enterprises may be able to get attractive deals for data-only mobile services themselves, which will then be managed by their global provider.

Managed Services

Most global WANs are delivered on a managed service basis, with the on-site devices, such as routers, security appliances and WAN optimizers, provided and managed by the service provider. Transport links are usually sourced from the managed service provider, but might also be sourced by the enterprise, who would then give the managed service provider operational responsibility for them. Although more U.S.-headquartered multinationals are moving to managed network services, a significant number still manage their networks in-house and only source transport links from their global providers.

As more network functions, such as SD-WAN application policies or NoD bandwidth, are controllable via the providers’ portals and APIs, networks are moving more to a co-managed reality. In this case, responsibilities for various network management functions are divided between the provider and the enterprise.

Pricing Trends

Downward pressure on global network service prices is relentless (e.g., global MPLS services are undergoing unit price declines averaging 10% per year, although with strong regional variance). Gartner has produced research summarizing and predicting pricing trends for different services and geographies (see “Network Service Price Trends: What You Need to Know to Save Money on Your Next Contract Negotiation”). The response from providers varies, with some focusing on extending their own networks, while others are relying heavily on network-to-network interface (NNI) connections to partners to improve their regional coverage. Most providers are increasingly using carrier-neutral communications hubs, such as those operated by Equinix, to allow them to cost-effectively interconnect with multiple access, backbone and cloud providers.

These hubs, particularly when combined with NFV and/or SD-WAN, have dramatically reduced the level of investment required to be competitive in the global network service market. This has allowed smaller providers, including some of the more recent entrants to this Magic Quadrant, to offer solutions competitive with those of the largest providers. However, maintaining a consistent set of service features and user experiences across these different elements remains a challenge.

Change Underway:

The network service market is undergoing a major transformation, with new generations of software-based network technologies enabling new services and new business models that are less focused on large-scale infrastructure. To reflect these trends, this Magic Quadrant focuses on transformational technologies and/or approaches that address the future needs of end users, as well as today’s market.

Gartner defines the global network service market as the provision of fixed corporate networking services with worldwide coverage.

Current global network services evaluated in this Magic Quadrant include:

  • WAN Transport Services — These include Multiprotocol Label Switching (MPLS) service, Ethernet services and internet services, such as dedicated internet access (DIA), broadband and cellular.
  • Carrier-Based Cloud Interconnect (CBCI) — This is a direct connection between a service provider’s enterprise network services, such as MPLS and/or Ethernet services, and the private connection option of one or more cloud service providers (CSPs). CBCI can be established directly between the network service provider (NSP) and the cloud provider or via a cloud exchange, such as Equinix Cloud Exchange.
  • Managed WAN Services — These include managed software-defined WAN (SD-WAN). Although a minority of enterprises are renewing their managed router networks, most new managed global network deployments in 2019 were managed SD-WAN networks using a mix of MPLS and internet transport. This is a trend Gartner expects to continue. An option for managed SD-WAN services is for the provider to deploy network-based SD-WAN gateways to facilitate interconnection between SD-WAN and non-SD-WAN networks, improve scalability and avoid the need for traffic to traverse long distances over the internet.

Emerging global network services that will be evaluated include:

  • Network On Demand (NoD) — NoD services from NSPs enable enterprises to make real-time changes to access/port bandwidth, change the WAN service types delivered over a network port and, in some cases, add and remove endpoints (e.g., connections to cloud providers). This occurs under software control, via the provider’s web portal or APIs.
  • Network Function Virtualization (NFV) — NFV is an architecture to deliver multiple network functions, including routing, firewall, SD-WAN, WAN optimization, visibility and voice as software, termed virtual network functions (VNFs). NFV enables enterprises to rapidly (in minutes) deploy network functionality to locations where it is required. This functionality is the replacement for purpose-built hardware devices, such as routers, security devices or WAN optimizers. NFV can be implemented on universal customer premises equipment (uCPE; see below) or in NFV service nodes, located in the provider’s network, or in colocation facilities. NFV enables network functions to be activated on demand (and deactivated when no longer required) and consumed on an “as a service” basis. This can improve the agility and cost-effectiveness of the enterprise WAN.
  • Virtual Customer Premises Equipment (vCPE) — This is the use of industry-standard x86 devices (uCPE), rather than function-specific appliances, to deliver enterprise network edge functions, including WAN edge routing, SD-WAN, WAN optimization, visibility and security functions (e.g., firewalls).

In addition, it is highly desirable for providers to offer related network services, including managed WAN optimization, managed application visibility, and managed, network-related security services. Integrators, virtual operators and carriers may be included, but only if they will bid for stand-alone WAN deals and provide and manage offerings that include the WAN connectivity.

During the past 12 months, Gartner has seen continued changes in enterprise requirements and buying criteria for global networks. Enterprises are placing an ever-growing emphasis on their need for greater agility and especially enabling their organization’s adoption of cloud services and the Internet of Things (IoT). They are increasingly willing to consider smaller providers and innovative services, particularly those that can be consumed on an as-a-service basis. Therefore, they are placing less emphasis on supplier size, network scale and the availability of large numbers of provider staff to deliver customized capabilities.

NSPs are taking advantage of the marketplaces created by carrier hubs, such as those provided by Equinix and Digital Reality. This enables them to source access that’s distance-insensitive, at the national or even regional level, reducing the need to deploy large numbers of network points of presence (POPs). POPs are increasingly acting as gateways between access and backbone network services of various types, and cloud providers. In addition, they are serving as locations where virtualized network services, such as security, can be applied.

Internet services, including broadband, DIA and cellular, are growing in importance as transport options, alongside the continued use of MPLS and Ethernet services. New services such as managed SD-WAN, NoD services, NFV and vCPE, which transform the enterprise networking market, are being deployed to improve the agility of providers’ network solutions. Many of these services require a platform-based approach to delivering services, increasing the trend to move away from customized solutions, toward standard, off-the-shelf managed services, consumed on an as-a-service basis.

We are seeing a distinct split in providers’ attitudes toward NFV and vCPE. Some providers are “doubling down” on the technology, making it their default edge device offering. Others are still focusing on appliances at the network edge, frequently accompanied by network-based NFV, especially for services such as security.

 

Although delivering against a strong technological roadmap is important, it is equally important that services be delivered with good operational performance to implement and sustain them.

The inclusion and exclusion criteria for this year’s Magic Quadrant (see Figure 1), although similar to prior years, have been adjusted to reflect these trends.

Figure 1. Magic Quadrant for Network Services

Magic Quadrant for Network Services, Global

Source: Gartner (February 2020)

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Digital business initiatives are placing increasing demands on the enterprise network, increasing the needs for bandwidth (between 20% and 30% annually), reliability and performance. Video, live and stored, is driving significant increases in bandwidth, whereas IoT typically requires greater reliability.

 

A growing proportion of enterprise applications are being delivered as cloud services — infrastructure as a service (IaaS), platform as a service (PaaS) and SaaS. This requires incorporation of cloud endpoints into the network and a burgeoning need for data center-to-cloud and cloud-to-cloud connectivity.

Above all, digital business requires that enterprise networks become significantly more agile, to allow the rapid accommodation of new endpoints, new applications and new network capabilities. However, enterprises continually need to do all of this, while optimizing their WAN expenditure.

To address these requirements service providers are deploying a range of new networking technologies. SD-WAN is now the default offering for new network deployments and major refreshes, while the virtualization of network edge functions, using NFV and vCPE, is gradually becoming more common. CBCI is also mainstream, complemented by emerging NoD services.

Growing use of the internet as a network transport option, together with cloud endpoints, is resulting in performance uncertainty, and is driving significant demand for application visibility services.

Fortunately, enterprises can choose from a wide selection of solution providers, most operating across multiple geographies. This breadth is allowing enterprises to choose between one, two or many providers to find the best solution for their specific needs. These decisions will be based on geographic requirements, the specific service required and the preferred sourcing approach (i.e., the enterprise’s desire to manage multiple networks from multiple providers). Competition continues to drive down unit prices for global networking services. However, in a market in which there are no meaningful price lists, enterprises still need to use competitive procurement practices and strong negotiations to obtain the best prices.

 

Gartner: Telco Pricing Options for 5G Services (before 5G is standardized)

by Stephanie Baghdassarian with Comments by Alan J Weissberger

Introduction:

The advent of 5G will bring opportunities for Communications Service Providers (CSPs) to renew their commercial approach to end users. Whether they propose new services or repackage existing ones, CSPs should focus on simplicity and flexibility to make the most of their offerings.

CSPs should differentiate their 5G services by selecting and combining pricing approaches that fit with their customer base but not limit themselves to pricing as a tool to promote 5G.

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AJW Comment:  This Gartner report is only available by subscription.  However, we think it is very premature as “5G” networks continue to be deployed well before the IMT 2020 set of standards is completed (  IMT 2020.specs for RIT/SRIT won’t be completed till end of Nov 2020 at the earliest).   Hence, CSPs really don’t have any foundation to charge for 5G services till at least 2021.

From the ITU 5G Backgrounder webpage:

IMT-2020, the name used in ITU for the standards of 5G, is expected to continue to be developed from 2020 onwards, with 5G trials and pre-commercial activities already underway to assist in evaluating the candidate technologies and frequency bands that may be used for this purpose. The first full-scale commercial deployments for 5G are expected sometime after IMT-2020 specifications are finalized.

Furthermore, spectrum is a scarce and very valuable resource, and there is intense – and intensifying – competition for spectrum at the national, regional and international levels. As the radio spectrum is divided into frequency bands allocated to different radiocommunication services, each band may be used only by services that can coexist with each other without creating harmful interference to adjacent services.

ITU-R studies examine the sharing and compatibility of mobile services with a number of other existing radiocommunication services, notably for satellite communications, weather forecasting, monitoring of Earth resources and climate change and radio astronomy.

National and international regulations need to be adopted and applied globally to avoid interference between 5G and these services and to create a viable mobile ecosystem for the future — while reducing prices through the global market’s economies of scale and enabling interoperability and roaming.

That’s why it was important for the additional spectrum to be used by 5G to be identified and harmonized at global and regional levels. For similar reasons, the radio technologies used in 5G devices need to be supported by globally harmonized standards.

https://www.itu.int/en/mediacentre/backgrounders/Pages/5G-fifth-generation-of-mobile-technologies.aspx

 

 

 

Gartner: Market Guide for 3GPP “5G New Radio (NR)” Infrastructure

Editor’s Note:

Most mobile 5G deployments to date are based on 3GPP Release 15 “5G NR” or “NR”in the data plane and Non Stand Alone (NSA), with LTE for everything else (i.e. control plane/signalling, mobile packet core, network management, etc).  3GPP Release 16 will hopefully add ultra low latency, ultra high reliability to the 5G NR data plane.  Equally important will be the 5G systems architecture-phase 2 that will be specified in Release 16. That spec includes a 5G mobile packet core (5GC) which is a forklift upgrade from the 4G-LTE Evolved Packet Core (EPC).  It remains to be seen which ITU study group will standardized 5GC when 3GPP Release 16 is completed in late June 2020.

From the paper titled Narrowband Internet of Things 5G Performance published in 2019 IEEE 90th Vehicular Technology Conference (VTC2019-Fall):

5G NR supports new frequency bands ranging all the way up to 52.6 GHz. These new frequency bands make large system bandwidths available that are needed to improve the mobile broadband data rates beyond what LTE can offer.

NR also supports a reduced latency by means of reduced transmission time intervals and shortened device processing times compared to LTE. To provide high reliability, NR supports low code rates and a high level of redundancy.

In the initial phase of the transition from 4G to 5G, NR is expected to be a complement to both LTE and NB-IoT, providing enhanced Mobile Broadband (eMBB) and critical IoT services. The past industrial practice suggests that the mobile network operators will stepwise re-farm parts of its LTE spectrum for enabling NR. Since NR supports a new range of frequency bands, an attractive alternative approach is to deploy NR in a set of new rather than existing bands. 3GPP Release 15 allows NR to connect to the EPC to support a seamless transition from LTE to NR.

The NR traffic volumes will eventually motivate a full refarming of the LTE MBB spectrum to NR. The longevity of NB-IoT devices is however expected to make NB-IoT a natural component within the 5G echo-system. For this reason, NR supports reservation of radio resources to enable LTE operation including NB-IoT, within an NR carrier. This allows NB-IoT to add NR in-band operation to its list of supported deployment options. Since both NR and NB-IoT employ an OFDM based modulation with support for 15-kHz subcarrier numerology, in the downlink (DL) true interference-free orthogonality can be achieved without configuration of guard-bands between the two systems.

 

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From Gartner report published Dec 16, 2019:

By Peter LiuSylvain FabreKosei Takiishi

Introduction:

As communications service providers move forward with 5G commercialization, New Radio infrastructure investment is prioritized and crucial for 5G rollout success. We analyze the market direction and the product strategies of equipment vendors to help guide product managers in CSPs.

By 2021, investments in 5G NR network infrastructure will account for 19% of the total wireless infrastructure revenue of communications service providers (CSPs), elevated from 6% in 2019.

5G NR is a new  Radio Access Technology (RAT) developed by 3GPP. There are two key components that are included physically — Next Generation Node B (gNB) and antennas. The Next Generation Node B (gNB) can be further split into two main functional modules — the centralized unit (CU), the distributed unit (DU) which can be deployed in multiple combinations.
There are several key features related to 5G New Radio, which include, but are not limited to:
  • Support for new subcarrier spacing
  • Massive multiple input/multiple output (MIMO)/beamforming
  • Enhanced scheduling by hybrid automatic repeat request (HARQ)
  • Cyclic-prefix orthogonal frequency-division multiplexing (CP-OFDM) and discrete fourier transform spread orthogonal frequency-division multiple access (DFTS-OFDM)
  • Bandwidth part (BWP) and carrier aggregation (CA)
The form of 5G NR infrastructure can be microcell, small cell (indoor/outdoor) and macrocell.
Gartner defines 5G using the 3GPP standard body definition. 5G New Radio (NR) is a new Radio Access Technology (RAT) developed by 3GPP for the  fifth generation (5G) mobile network. It was designed to be the global standard for the air interface of 5G networks. 5G New Radio infrastructure in this Market Guide refers to the 3GPP 5G RAN architecture — specified in Release 15 and known as NG-RAN. There are two key components included physically — 5G radio base station (gNBs) and antennas. The 5G radio base stations (gNBs) can be further split into three main functional modules — the centralized unit (CU), the distributed unit (DU) and the radio unit (RU) — which can be deployed in multiple combinations.
There are several key features related to 5G New Radio, which include but are not limited to:
  • New Radio spectrum
  • Optimized orthogonal frequency-division multiplexing (OFDM)
  • Adaptive beamforming
  • Massive MIMO
  • Spectrum sharing
  • Unified design across frequencies
The form of 5G NR infrastructure can be microcell, small cell (indoor/ outdoor) and macrocell.

Key Findings:

  • The deployment of 5G New Radio (NR) products will accelerate in 2020, through high total cost of ownership (TCO), absence of “killer application,” unmatured millimeter wave ecosystem and inexpensive device availability that prevent rapid growth in capital investment.
  • Most of current commercial 5G sub-6 gigahertz (GHz) communications service providers (CSPs) also start building their multiband strategy which is in line with their business strategy; for example, sub-1GHz for coverage enhancement and millimeter wave for capacity.
  • Initial 5G deployment was based on non-stand-alone (NSA) architecture which couples the Long Term Evolution (LTE) with 5G NR radio layers to accelerate time to market and reduce cost. This coexistence will last for many years, though specific CSPs may move toward stand-alone (SA) deployment as early as 2020.
  • Open radio access network (RAN) and virtualized RAN (vRAN) have seen an increase in attention after Rakuten Mobile announced its commercial adoption in LTE. However, fragmented standards, incumbent vendor support, technology immaturity and poor fiber availability continue to hamper its success.

Market Description

Global 5G infrastructure market is expected to witness significant growth over the coming years. 5G technology has the potential to support capabilities such as artificial intelligence (AI), robotic process automation and the Internet of Things (IoT), apart from the high-speed network performance. Thus, with growing internet penetration and rapidly increasing mobile users, healthy growth would be seen in the years to come in the global 5G infrastructure market.
However, although the pace of 5G is significantly more accelerated than 4G, we all acknowledge it will be a marathon. CSPs are still very cautious and fast adoption today does not necessarily equal fast deployment in scale. While CSPs are still seeking killer applications and are under increasing financial pressures due to the expensive spectrum, they also recognize that 5G deployment is more challenging than before. Higher frequencies, combining LTE and 5G together, as well as NSA and SA cores, is proving to be a complex undertaking.
Despite some uncertainty brought about by geopolitical challenges, overall, current NSA setup largely benefits the existing dominant LTE vendors such as Ericsson, Huawei, Nokia, Samsung and ZTE — since it is the most cost-effective way to deliver 5G on board. Other key criteria important to CSPs include:
  • Baseband unit capacity
  • Portfolio broadness
  • Deployment feasibility
  • Technology evolution
This provides less opportunities for niche vendors promoting their open RAN concept in the short term. The situation will be improved when SA and small cell have been deployed. From a spectrum perspective, for the higher bands (particularly mmWave), the main issue is the ability to acquire large numbers of suitable sites and deliver the coverage people expect. For midband (sub-6Ghz) deployments, this issue is not as significant due to the ability to reuse sites, for the most part. For frequency division duplex (FDD) bands, complete reuse is, of course, possible.
5G is already available in many major cities, with more coverage expected in 2020. Given the momentum for 5G, Gartner forecast calls for growth in carrier infrastructure spending in 2019 and faster growth in 2020. Considering majority deployment will be based on non-stand-alone architecture, 5G NR infrastructure will represent the biggest portion of the 5G investment.
Despite the hype around 5G, CSPs are looking for a practical 5G implementation strategy that allows them to quickly launch Phase 1 5G services (enhanced mobile broadband [eMBB], fixed wireless access [FWA]) in a cost-efficient way. Decisions on where, when and which vendors to work with are driven by commercial considerations and are also related to spectrum availability, deployment feasibility as well as ecosystem maturity.
5G Application Has Different Time Scales

Recommendations for 5G Communications Service Providers (CSPs):

To better enable infrastructure delivery strategies, product managers should:
  • Build a step-wise 5G NR implementation strategy by initially focusing on best use of existing infrastructure investment, then simplifying the deployment in order to reduce the time to market and minimize risk.
  • Develop spectrum strategies based on business focus, frequencies available as well as ecosystem maturity. Choose the vendors that have preferred radio spectrum support with combinations of spectrum reframing and sharing.
  • Select the 5G NR solution by accessing a vendor’s capabilities of interworking with existing 4G/LTE networks and its ability to provide a high degree of continuity and seamless experience for users. In addition, explore a seamless software upgrade path to enable 5G SA evolution.
  • Build an end-to-end understanding of the Open Radio Access Network (O-RAN) impact on network, operations, performance and procurement by conducting a proof of concept (POC)/pilot.

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Acronym Key and Glossary Terms

2G
second generation
3G
third generation
3GPP
Third Generation Partnership Project
4G
fourth generation
5G
fifth generation
AAU
Active Antenna Unit
AI
artificial intelligence
AR
augmented reality
ASIC
application-specific integrated circuit
BBU
baseband unit
BWP
bandwidth part
C-RAN
cloud radio access network
CA
carrier aggregation
capex
capital expenditure
CBRS
Citizens Broadband Radio Service
CoMP
coordinated multipoint
CP-OFDM
cyclic-prefix orthogonal frequency-division multiplexing
CPE
customer premises equipment
CSP
communications service provider
CU
centralized unit
DAFE
Digital/Analog Front End
DFTS-OFDM
discrete fourier transform spread orthogonal frequency-division multiple access
DIS
digital indoor system
DL
downlink
DU
distributed unit
eCPRI
enhanced Common Public Radio Interface
eMBB
enhanced mobile broadband
EPC
Evolved Packet Core
FDD
frequency division duplex
FH
fronthaul
FWA
fixed wireless access
Gbps
gigabits per second
GHz
gigahertz
gNB
Next Generation Node B
HARQ
hybrid automatic repeat request
I&O
infrastructure and operations
IBW
instantaneous bandwidth (ZTE)
IC
integrated circuit
ICT
information and communication technology
IMT-2020
International Mobile Telecommunications-2020
IoT
Internet of Things
ITU-R
International Telecommunication Union Radiocommunication Sector
LAA
Licensed Assisted Access
LTE
Long Term Evolution
LTE-V
LTE Vehicle
MAA
Multiple Input/Multiple Output Adaptive Antenna
MHz
megahertz
ML
machine learning
MIMO
multiple input/multiple output
mMTC
Massive Machine Type Communications
mmWave
millimeter wave (frequencies above 24GHz)
MOCN
multioperator core network
MORAN
multicarrier radio access network
MOS
Multi-Operator Servers (Mavenir)
NFV
network function virtualization
NR
New Radio
NSA
non-stand-alone
O-RAN
Open Radio Access Network
OBW
occupied bandwidth
OEM
original equipment manufacturer
OFDM
orthogonal frequency-division multiplexing
opex
operating expenditure
POC
proof of concept
PRB
physical resource blocks
QAM
quadrature amplitude modulation
R&D
research and development
RAN
radio access network
RAT
Radio Access Technology
RIC
RAN Intelligent Controller (Nokia)
RF
radio frequency
RFIC
Radio Frequency Integrated Circuit
RRU
remote radio unit
RU
radio unit
SA
stand-alone
SDN
software-defined network
SDR
software-defined radio
SON
self-organizing network
Sub-1GHz
Low-band frequencies are those at 600MHz, 800MHz, and 900MHz.
Sub-6GHz
Frequencies under 6GHz but above the low-band frequencies (2.5GHz, 3.5GHz, and 3.7GHz to 4.2GHz).
SUL
Supplementary Uplink
TCO
total cost of ownership
TD-LTE
Time Division-Long Term Evolution
TDD
time division duplex
TRX
Transceiver/Receiver
UBR
Ultra Broadband RRU (ZTE)
UL
uplink
URLLC
ultrareliable and low-latency communications
VR
virtual reality
vRAN
virtualized radio access network
WG2
Work Group 2
WG3
Work Group 3
Evidence has been collected from:
  • Gartner surveys
  • CSP and vendor briefings, plus discussions
  • Associated Gartner research
  • Gartner market forecasts
  • Gartner client discussions

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References- related Gartner posts:

Gartner: Telecom at the Edge + Distributed Cloud in 3 Stages

Gartner Group Innovation & Insight: Cutting Through the 5G Hype

Gartner: Telecom at the Edge + Distributed Cloud in 3 Stages

Source: Gartner report on Top 10 Strategic Technology Trends for 2020

Communicating to the Edge — The Role of 5G
Connecting edge devices with one another and with back-end services is a fundamental aspect of IoT and an enabler of smart spaces. 5G is the next-generation cellular standard after 4G Long Term Evolution (LTE; LTE Advanced [LTE-A] and LTE Advanced Pro [LTE-A Pro]).

Several global standards bodies have defined it — International Telecommunication Union (ITU), 3rd Generation Partnership Project (3GPP) [NOT A STANDARDS BODY] and ETSI [Has submitted their IMT 2020 RIT to ITU-R WP5D jointly with DECT Forum].

Successive iterations of the 5G standard also will incorporate support for NarrowBand Internet of Things (NB-IoT) aimed at devices with low-power and low-throughput requirements. New system architectures include core network slicing as well as edge computing.
5G addresses three key technology communication aspects, each of which supports distinct new services, and possibly new business models (such as latency as a service):

■ Enhanced mobile broadband (eMBB), which most providers will probably implement first.
■ Ultra-reliable and low-latency communications (URLLC), which addresses many existing industrial, medical, drone and transportation requirements where reliability and latency requirements surpass bandwidth needs.
■ Massive machine-type communications (mMTC), which addresses the scale requirements of IoT edge computing.

Use of higher cellular frequencies and massive capacity will require very dense deployments with higher frequency reuse. As a result, we expect that most public 5G deployments will initially focus on islands of deployment, without continuous national coverage. We expect that, by 2020, 4% of network-based mobile communications service providers globally will launch the 5G network commercially. Many CSPs are uncertain about the nature of the use cases and business models that may drive 5G. We expect that, through 2022, organizations will use 5G mainly to support IoT communications, high-definition video and fixed wireless access. The release of unlicensed radio spectrum (Citizens Broadband Radio Service [CBRS] in the U.S., and similar initiatives in the U.K. and Germany) will facilitate the deployment of private 5G (and LTE) networks.

This will enable enterprises to exploit the advantages of 5G technology without waiting for public networks to build out coverage. Identify use cases that definitely require the high-end performance, low latency or higher densities of 5G for edge computing needs.

Map the organization’s planned exploitation of such use cases against the expected rollout by providers through 2023. Evaluate the available alternatives that may prove adequate and more cost-effective than 5G for particular IoT use cases. Examples include low-power wide-area (LPWA), such as 4G LTE-based NB-IoT or LTE Cat M1, LoRa, Sigfox and Wireless Smart Ubiquitous Networks (Wi-SUN).
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Distributed Cloud examines a major evolution in cloud computing where the applications, platforms, tools, security, management and other services are physically shifting from a centralized data center model to one in which the services are distributed and delivered at the point of need. The point of need can extend into customer data centers or all the way to the edge devices.

A distributed cloud refers to the distribution of public cloud services to different locations outside the cloud providers’ data centers, while the originating public cloud provider assumes responsibility for the operation, governance, maintenance and updates. This represents a significant shift from the centralized model of most public cloud services and will lead to a new era in cloud computing.

Concept of Distributed Cloud:

Concept of distributed cloud. 

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Gartner expects distributed cloud computing will happen in three phases:

■ Phase 1: A like-for-like hybrid mode in which the cloud provider delivers services in a distributed fashion that mirror a subset of services in its centralized cloud for delivery in the enterprise.
■ Phase 2: An extension of the like-for-like model in which the cloud provider teams with third parties to deliver a subset of its centralized cloud services to target communities through the third-party provider. An example is the delivery of services through a telecommunications
provider to support data sovereignty requirements in smaller countries where the provider does not have data centers.
■ Phase 3: Communities of organizations share distributed cloud substations. We use the term“substations” to evoke the image of subsidiary stations (like branch post offices) where people gather to use services.

Cloud customers can gather at a given distributed cloud substation to
consume cloud services for common or varied reasons if it is open for community or public use.  This improves the economics associated with paying for the installation and operation of a distributed cloud substation. As other companies use the substation, they can share the cost of
the installation.

We expect that third parties such as telecommunications service providers will explore the creation of substations in locations where the public cloud provider does not have a presence. If the substation is not open for use by others outside the organization that paid for its installation, then the substation represents a private cloud instance in a hybrid relationship with the public cloud. The distributed cloud supports continuously connected and intermittently connected operation of like-for-like cloud services from the public cloud “distributed” to specific and varied locations. This enables low-latency service execution where the cloud services are closer to the point of need in remote data centers or all the way to the edge device itself.

This can deliver major improvements in performance and reduce the risk of global network-related outages, as well as support occasionally connected scenarios. By 2024, most cloud service platforms will provide at least some services that execute at the point of need.

References:

https://emtemp.gcom.cloud/ngw/globalassets/en/doc/documents/432920-top-10-strategic-technology-trends-for-2020.pdf

https://emtemp.gcom.cloud/ngw/globalassets/en/doc/documents/450595-top-strategic-predictions-for-2020-and-beyond.pdf

Gartner Group Innovation & Insight: Cutting Through the 5G Hype

Gartner Analysis & Predictions: Enterprise Network Infrastructure and Services

by Bjarne Munch | To Chee Eng | Greg Young | Danellie Young | Vivek Bhalla | Andrew Lerner |Danilo Ciscato of Gartner Group

Overview:

This new Gartner Group report is on the key impacts of digital business, cloud and orchestration strategies. In particular, IT leaders must continue to focus on meeting enterprise needs for expanded WAN connectivity, application performance and improved network agility, without compromising performance.

Key Findings:

  • As enterprises increasingly rely on the internet for WAN connectivity, they are challenged by the unpredictable nature of internet services.
  • Enterprises seeking more agile WAN services continue to be blocked by network service providers’ terms and conditions.
  • Enterprises seeking more agile network solutions continue to be hampered by manual processes and cultural resistance.
  • Enterprise’s moving applications to public cloud services frequently struggle with application performance issues.

Recommendations:

IT leaders responsible for infrastructure agility should:

  • Reduce the business impact of internet downtime by deploying redundant WAN connectivity such as hybrid WAN for business-critical activities.
  • Improve WAN service agility by negotiating total contractual spend instead of monthly or annual spend.
  • Improve agility of internal network solutions by introducing automation of all operations using a step-wise approach.
  • Ensure the performance of cloud-based applications by using carriers’ cloud connect services instead of unpredictable internet services.
  • Improve alignment between business objectives and network solutions by selectively deploying intent-based network solutions.

Strategic Planning Assumptions:

Within the next five years, there will be a major internet outage that impacts more than 100 million users for longer than 24 hours.

  • By 2021, 25% of enterprise telecom contracts will evolve to allow for greater flexibility such as canceling services or introducing new services within the contract period, up from less than 5% today.
  • By 2021, productized network automation (NA) tools will be utilized by 55% of organizations, up from less than 15% today.
  • By YE20, more than 30% of organizations will connect to cloud providers using alternatives to the public internet, which is a major increase from 5% in 3Q17.
  • By 2020, more than 1,000 large enterprises will use intent-based networking systems in production, up from less than 15 today.

Analysis:

Gartner Group has five predictions that represent fundamental changes that are emerging in key network domains, from internal networking to cloud services and WAN services.

two key aspects that the majority of Gartner clients struggle with:

  1. The increased interest in utilizing the internet for WAN connectivity continues to raise concerns about the performance of public internet services and performance of applications deployed in public cloud services. We discuss the risk that enterprises encounter due to the unpredictable nature of the internet, and we discuss how an enterprise can use MPLS to connect directly to public cloud services instead of using the internet.
  2. Enterprises continue to need new business solutions deployed faster, but remain hampered by the inability of network solutions and network services to respond fast enough and rectify performance issues fast enough. We discuss three options to improve network operations as well as network services.
Figure 1. Five Predicts to Create a Better Enterprise Network

Enlarge Image

Source: Gartner (December 2017)

Strategic Planning Assumptions

Strategic Planning Assumption: Within the next five years, there will be a major internet outage that impacts more than 100 million users for longer than 24 hours.

Analysis by: Andrew Lerner, Greg Young

Key Findings:

  • We are increasingly seeing organizations use the internet as a WAN, and estimate that approximately 20% of Gartner clients in many geographic regions have at least some critical branch locations entirely connected via the internet.
  • Most IT teams don’t have a detailed understanding of the multitude of applications and services that are being used on the public internet and/or their criticality. This is because of years of line of business (LOB)-centric buying and the proliferation of SaaS.
  • While the internet is highly resilient, there are specific infrastructure and technology hot spots that, if compromised, could threaten the internet as a whole or large portions of it. This could be the result of natural disasters, man-made accidents or intentional acts.
  • Natural disasters and man-made acts that could impact large portions of the internet include earthquakes, solar flares, electronic pulses, meteors, tsunamis, hurricanes, major cable cuts and network operator errors.
  • Intentional acts include hacktivism, terrorism toward critical infrastructure, and/or coordinated distributed denial of service (DDoS) attacks, attacks against carrier- and ISP-specific components, and protocols (e.g., SS7).

While the probability of each of these events individually is small, the likelihood that at least some of them will occur over an extended period of time is actually surprisingly high. For example, even if there is only a 1% chance that any of the 11 examples identified above results in an outage within a year, there is a statistical likelihood of over 45% that at least one of them will occur over a five-year period. Further, to date, there have been indications that the internet is vulnerable to sizable outages:

  • In 2008, millions of users and large portions of the Middle East and India were impacted by a cable cut. 1
  • In 2016, a large DDOS attack resulted in many large e-commerce sites going down, including Twitter, Netflix, Reddit and CNN. 2
  • In 2015, Telekom Malaysia created a routing problem that rendered much of the Level 3 network unavailable. 3
  • It has been widely reported that 70% of all internet traffic goes thru Northern Virginia 4 and, while this might be an overstated, there’s no doubt that there are several major chokepoints in the internet infrastructure.

Market Implications:

At a minimum, an extended and widespread internet outage would cause dramatic revenue loss for enterprises, and could even create life-threating situations depending on what business the organizations is in. Initially, many organizations often brush this off by saying, “Well there’s not much we can do about it anyway” or “If there is a large internet outage due to a natural disaster, then personal safety is the priority and the enterprise connectivity is the least of our concerns.” However, there are very specific and actionable items that infrastructure and operations (I&O) leaders should take to mitigate the impact of a large outage.

Strategic Planning Assumption: By 2021, 25% of enterprise telecom contracts will evolve to allow for greater flexibility such as canceling services or introducing new services within the contract period, up from less than 5% today.

Analysis by: Danellie Young

Key Findings:

  • Enterprise telecom contracts are typically fixed in both term duration and for the services required for procurement.
  • Most larger revenue contracts ($1 million annually) require the enterprise to agree to minimum revenue commitments on an annual basis.
  • Major WAN decisions are made by 31% to 47% of enterprises each year, including equipment refresh or carrier renegotiations (assuming the refresh cycle on routers is six years, and the average enterprise WAN service contract is three years).
  • A large majority of enterprises are struggling with the cost, performance and flexibility of their traditional WAN contracts, further exacerbated by the proliferation of public cloud applications.

Market Implications:

Enterprise telecom contracts remain rigid and fixed, with specified services required to ensure compliance. Typically such contracts penalize customers when services are disconnected midterm. Enterprise telecom contracts are typically negotiated on 36-month cycles, based on either full-term or revenue commitments. Revenue commitments are set based on monthly spend, annual spend or total contract spending. Upon meeting the contract’s revenue commitment, the enterprise can then renegotiate or consider alternative services or providers since their financial obligation has been met. Terminating contracts early for convenience will typically levy penalties on the enterprise. These penalties range from 100% of the monthly recurring charges (MRCs) to a percentage of the MRCs to a declining portion through the remainder of the term (i.e., 100% in the first 12 months, 75% in months 13 to 24 and 50% through the end of the term).

Currently, contracts are split between term and revenue commit contracts, whereby most of the revenue commitments are made on an annualized basis. Alternatively, a small number (5%) are offered or negotiated with total contract values tied to them. Total contract revenue commitments enable the enterprise to meet the obligation earlier in their contract and provide the opportunity to negotiate new lower rates and a new contract, and to solicit competitive proposals before the full 36-month cycle terminates.

In addition to traditional voice and data services, many networking vendors now offer SD-WAN functionality products, while carriers and managed service providers (MSPs) are beginning to launch and roll out managed SD-WAN services as an alternative to managed routers. Contract flexibility will be needed to allow the enterprise the flexibility to migrate to new solutions, without financial risk or paying early termination fees on services. Thus, while we anticipate rapid adoption of SD-WAN and virtualized customer premises equipment (vCPE) solutions in the enterprise, SD-WAN by itself will not improve contractual conditions.

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