Ericsson gets multinational 5G core network win with Telenor

Swedish kit vendor Ericsson has got a nice lot of fresh 5G work from Swedish operator group Telenor.

The win is all about 5G core network transformation, featuring a nice lot of NFV goodness. Since the point of issuing press releases about deal wins is to generate a sense of commercial momentum, this is a pretty handy one for Ericsson as it implies an endorsement of its NFV offerings.

Since this still a relatively new, unfamiliar field, any show of commercial faith at this stage counts double. Furthermore the deal encompasses Telenor’s core networks in Sweden, Denmark and Norway, so in terms of publicity, Ericsson gets three for the price of one.

“Ericsson’s portfolio of VNF enables Telenor to become more agile while reducing costs through improved operations,” said Morten Karlsen Sørby, Telenor’s EVP and Acting Cluster Head for Scandinavia. “This transformational deal is an important step towards future-proofing our core network as we look towards 5G. It provides us with state-of-the-art virtual core applications that serve mobile and fixed access and extend the lifecycle of our legacy network.”

“Ericsson is a long-term partner to Telenor in Scandinavia, supporting the company across multiple engagements in fixed and mobile networks in the region,” said Arun Bansal, Ericsson’s Head of Europe & Latin America. “This deal strengthens that partnership by evolving Telenor’s existing network to the cloud, ensuring continued exceptional services to their customers. As we move together towards 5G it also opens up new opportunities in the IoT space.”

In other Ericsson news, the company has quietly launched a new division called Edge Gravity. As Light Reading reports, it seems to be a semi-autonomous unit within Ericsson that focuses on edge computing and “operates a global edge cloud network that links together a core network of data centers with the last-mile networks of more than 80 partners that include cable operators, telcos and mobile service providers.”

Bullish Ericsson raises its sales forecast

Ahead of its capital markets day, kit vendor Ericsson has announced it now hopes to bring in 10% more cash in 2020 than it previously did.

The company had recently set its sales target for 2020 at SEK 190-200 billion, but thanks to a more bullish outlook for its networking division, as well as the inclusion of revenue from Red Bee Media and a favourable currency adjustment, Ericsson is now aiming for SEK 210-220 billion. The overall operating margin target of 10% in the mid term and 12% in the longer term remains.

“With our focused strategy we have created a strong foundation of stability and profitability,” said Ericsson CEO Börje Ekholm (pictured). “Our strengthened portfolio and competitive cost structure have enabled us to grow in the third quarter 2018, for the first time since 2014, on a constant currency basis, despite headwind from exited contracts and businesses. As the industry moves to 5G and IoT we are now preparing to take the next step to generate profitable growth in a selective and disciplined way.”

Here are the revised sales and margin targets by business segment.

SEK b. Networks Digital Services Managed Services Emerging Business and Other Group
2020 Net sales ambition 141 – 145(128 – 134) 41 – 43 23 – 25 5 – 7 210 – 220
2020 Operating margins 15% – 17% Low single digit 5% – 8%(4% – 6%) Break-even(current business)  >10%
Operating margin by 2022, at the latest 15% – 17% 10% – 12% 8% – 10% -  >12%

The target increase for Networks is down to a more optimistic view of the underlying market, the anticipation of some market share gains and diversification into ‘adjacent markets’, which presumably means selling networking gear to industries other than telecoms. The aim for Digital Services is just to break even, while automation and AI are expected to improve the margin at Managed Services.

Qualcomm hypes 5G one more time ahead of 2019 global roll out

At a big corporate event in Hong Kong Qualcomm took the opportunity to whip up the 5G hype one more time.

While we have seen some of the first green shoots of 5G in the wild this year, 2019 will be twhen the roll out of 5G in real life will explode. Judging by the endless stream of 5G test announcements, each one claiming its own infinitesimally incremental ‘first’, 5G is ready to go. Qualcomm has spent most of this year, when not engaged in corporate warfare with the likes of Broadcom and Apple, talking up 5G and this Hong Kong event represented the culmination of that effort.

5G is a pretty big deal for a variety of tech sector stakeholders, many of which made an appearance at the event, but it’s fair to say 5G is critical to Qualcomm. The company established a dominant position for itself as a modem player during the 3G era by owning a lot of the technology from which the standard was comprised. It wasn’t possible to repeat that trick in subsequent generations, so Qualcomm diversified into other types of silicon generally found in mobile devices.

The whole point of 5G is to bring cellular connectivity to pretty much everything. While this opens up a whole bunch of new opportunities it also complicates the business of dominating it. More than any previous generation this means partnerships, both within the telecoms and tech sectors but also across other industries.

Qualcomm’s first guest speaker was Thomas Noren, Head of 5G Commercialization at Ericsson (pictured above with Cristiano Amon of Qualcomm). The highlight of his appearance was a set-piece claiming to be the first 5G NR sub-6 GHz (specifically 3.5 GHz) call to a mobile form factor device. This latest ‘first’ actually took place in an Ericsson lab, but they decided to re-enact the whole thing live at the event to ensure we could fully appreciate the sheet majesty of it.

“Today’s call marks a significant milestone as we have now successfully made 3GPP-compliant calls in the sub-6 GHz and mmWave spectrum bands, which will facilitate mobile operators’ deployment of their 5G NR networks,” said Durga Malladi, GM of 4G/5G at Qualcomm, in the accompanying press release. “Sub-6 GHz spectrum is instrumental to the global 5G NR rollout as it will provide wide area, high performance connectivity and has been allocated and auctioned in numerous regions around the world, including the US, Korea and Europe, with others to follow shortly.”

In the main opening session of the event alone, the following companies all got their moment in the Qualcomm spotlight: Samsung, OnePlus, Tencent, NextVR, Microsoft, Geely, Honeywell, AWS and Xiaomi. Other announcements made at the event included some new 5G mm wave antenna modules, some 5G small cell tech with Samsung, a new Snapdragon SoC designed for mid-tier smartphones and a new 5G smartphone reference design that actually looks like a smartphone.

Qualcomm is determined to makes itself as synonymous with 5G as it did the previous two generations. To do that it needs to be involved in a wide variety of technologies and sectors and the Hong Kong event seemed designed to demonstrate that it’s doing just that. There is a very real danger that the reality of 5G in 2019 will fall well short of the hype, but Qualcomm is clearly prepared to take that risk.

Ericsson just manages first quarter of growth since 2014

Ericsson registered another quarter of gradual recovery but revealed it expect to receive sanctions from a US corruption investigation.

Telecoms.com spoke to Ericsson marketing head Helena Norman and she seemed to be pretty satisfied with the Q3 numbers. She flagged up its 1% annual revenue growth (when adjusted for adjustments), which might not seem like much but is apparently the first time Ericsson has managed it since 2014. At least as important to Norman was the fact that Ericsson managed some profit (net income) for the first time in a couple of years.

A lot of this positive stuff is down to the core networks division, especially in North America. As you can see from the tables below, networks grew organically by 5% in the quarter. Furthermore the division’s operating margin has doubled over the past year, which will have been a big reason for the profit column heading in the right direction.

Among the other divisions Managed Services seems to also be headed in the right direction, thanks mainly to bailing out of a bunch of rubbish contracts and some pretty serious streamlining. Digital Services seems to still be a work in progress, with the sequential picture moving slightly in the wrong direction, and the relatively small emerging business division is moving slowly in the right direction.

Set against these largely positive numbers is the admission that the US corruption investigation, which has been ongoing for a few years, seems likely to result in fines for Ericsson and possibly other sanctions too. Ericsson doesn’t seem to know specific numbers, or even when the process is likely to conclude, but it felt compelled to offer some kind of update.

“While the length of these discussions cannot be determined, based on the facts that we have shared with the authorities, we believe that the resolution of these matters will likely result in monetary and other measures, the magnitude of which cannot be estimated currently but may be material,” said Ericsson CEO Börje Ekholm in his comments accompanying the numbers.

Norman cautioned that the traditional sequential jump in Q4 might not be as big as usual thanks to the US 5G ramp already being well underway. We asked Norman about the financial effect of 5G and she conceded that it’s hard to specifically attribute spend on 5G, as opposed to just general network improvement.

On the whole this seems to be another positive, if unspectacular quarter for Ericsson, and maintaining that momentum is strategically the most important thing. Norman sounded pretty upbeat and it wasn’t a bad quarter to offer an update on the corruption situation. It’s still early days in Ericsson’s turnaround and the cautious guidance about Q4 reveals this newfound confidence is still tinged with fragility.

Ericsson Q3 financials

Ericsson Q3 networks

Ericsson Q3 managed services

Ericsson Q3 digital services

Ericsson Q3 other

NB-IoT gathers momentum

Trials in Australia and the UK involving Ericsson and Vodafone indicate the NB-IoT is starting to become a reality.

Ericsson and Telstra are claiming the longest connection for the narrowband wireless standard that is set to be the default for IoT. The trial used a Telstra base station to communicate with an NB-IoT temperature sensor 94 km away on Mount Cenn Cruaich in New South Wales, Australia. They say the previous range limit was more like 40 km.

“We’re partnering with Telstra to deliver its customers a world-leading capability in NB-IoT extended range cells and demonstrating the huge opportunity that IoT represents in rural and regional areas for both Australia and globally, particularly for logistics and agriculture,” said Emilio Romeo, Ericsson’s MD for Australia and New Zealand.

“Telstra already had Australia’s largest IoT coverage with Cat M1 across our 4G metro, regional and rural coverage footprint,” said Channa Seneviratne, Telstra’s Executive Director of Network and Infrastructure Engineering. “With this NB-IoT extended range feature, we have now extended our coverage to more than three and a half million square kilometers, delivering our customers the best IoT coverage and capability in the country.”

Meanwhile Vodafone has started trialling NB-IoT in the UK, as reported by Light Reading. Energy company Scottish Power is Vodafone’s first UK NB-IoT customer and is using IoT temperature sensors to detect when some of its remote kit might be overheating. They’re apparently powered by standard AA batteries and each one costs a couple of quid.

Lastly Counterpoint Research has found that global cellular IoT connections grew by 72% in the first half of this year and forecasted NB-IoT will account for around half of all IoT connections in the long term. As you can see from the charts below most of the action seems to be happening in China, but Vodafone is leading the international effort.

Counterpoint IoT 1

Counterpoint IoT 2

“Emerging markets like India, Brazil and in Africa while can offer tremendous scale but will likely be late followers compared to China in this path to connected everything,” said Satyajit Sinha of Counterpoint. “However, the massive growth opportunity remains in terms of cellular-IoT connections in emerging markets which will be possibly catalysed by operators such as Jio in India but more specifically from multi-market players such as Telefónica, MTN or Vodafone with plans to deploy LPWAN networks such as NB-IoT leveraging scale across their coverage markets.”

“Revenue generation from the IoT ecosystem is not siloed to any one specific segment of the value chain, rather it is distributed among all segments,” said Neil Shah of Counterpoint. “On an average for a cellular IoT solution deployment, connectivity represents around 12%, whereas hardware components, modules and devices represent 22%.

“The rest of the bulk of the value in an IoT solution is captured by system integrators, middleware, software platforms, and cloud analytics vendors. Hence, if operators are looking to capture maximum value, the strategies need to provide an end-to-end IoT solutions by bundling IoT devices, secure connectivity, platform, and data management to capitalize on the overall opportunity.”

The big variable with IoT, of course, is revenue. It doesn’t look too tough to scatter billions of sensors all over the place and connect them to the cloud via NB-IoT or whatever, but getting companies to pay for services on the back of them is another matter. It looks like a lot of the commercial precedent will be set in China, so the rest of the world might wait to see how that plays out before committing.

We’re patient enough to make money from video – MediaKind

With major players scarpering away from video as quickly as possible, MediaKind is confident there is money to be made, you just have to be patient enough.

Nokia was the latest to put the venture into video behind it, while Cisco exited in recent months and Ericsson’s divestment in video creating the very subject of this story. With so many industry heavyweights fleeing the scene after investments were massacred, the claim there is money to be made might be something of a surprising one.

At IBC 2018 in Amsterdam, MediaKind executives were gracious enough to lay down their own markers. Firstly, the business is not reliant on the legacy technologies, its creating new services as we speak. And secondly, there is money to be made in video, you just have to be patient enough to realise it.

MediaKind was created through some swift Ericsson moonwalking. After making the decision to exit the video segment, Ericsson split its portfolio and managed to secure buyers for 51% of the assets which would eventually be named MediaKind. The rest of the Ericsson video business was rebranded to Red Bee Media, and is still proving to be a drain on the Ericsson profit margin.

With Ericsson trying to hide its horrible wander towards video, Nokia selling its smaller venture to Canadian private equity group Volaris and Cisco selling its Service Provider Video Software Solutions (SPVSS) business in May, it would be a safe bet to assume the money is not there to be made. However, according MediaKind CEO Angel Ruiz as long as you are patient, success is possible.

The issue right now is the market is overcrowded. There are too many suppliers fighting over a small number of customers, a similar position the telco industry found itself in in years gone. Consolidation is a trend which will almost certainly develop over the coming months and years, just as it did in the telco space, and those remaining on the other side will have a strong brand and a buoyant marketplace. Ericsson rode the wave of consolidation in the telco space, surviving to become one of the world’s most influential vendors today, and MediaKind will aim to replicate this journey in video.

Whether the same outcome can be realised remains to be seen. More established players in the market are making moves, though consumer videos trends suggest investment in technology will only increase. For the likes of Ericsson, Nokia and Cisco, this diversification strategy seems to be a step too far. These are companies which can realise profits from consumer video trends, but divestments suggest it will be done closer to core competencies; networking products and infrastructure.

The theory is sound, now all Ruiz and his cronies need to figure out is how to combat the offerings from new-boys on the market such as AWS.

Ericsson lands $3.5 billion T-Mobile US 5G contract

Kit vendor Ericsson has announced a major deal win in the form of a $3.5 billion contract to bring TMUS into the 5G era.

Not much detail has been offered up, but it involves Ericsson hardware such as ERS and plenty of involvement from the Digital Services silo, including dynamic orchestration, BSS and Ericsson Cloud Core. The chances are a spot of managed services may well be chucked in for good measure.

“We have recently decided to increase our investments in the US to be closer to our leading customers and better support them with their accelerated 5G deployments; thereby bringing 5G to life for consumers and enterprises across the country,” said Niklas Heuveldop, Head of Ericsson North America. “This agreement marks a major milestone for both companies. We are excited about our partnership with T-Mobile, supporting them to strengthen, expand and speed up the deployment of their nationwide 5G network.”

“While the other guys just make promises, we’re putting our money where our mouth is,” blurted TMUS CTO Neville Ray in the approved corporate style. “With this new Ericsson agreement we’re laying the groundwork for 5G – and with Sprint we can supercharge the 5G revolution.”

That’s the long and short of it, but Ericsson couldn’t resist another plug of its main USP, stressing that T-Mobile’s installed base of ERS radios will be able to run 5G NR technology with just a software upgrade. There is likely to be a bit of a PR arms race over big 5G deal wins among the kit vendors, but we won’t be seeing any of that action from Huawei in the US. Or Australia.

AT&T and Verizon compete for yet more 5G ‘firsts’

US carriers AT&T and Verizon have completed what they both claim to be the world’s first data transfer to a smartphone form factor device over mmWave 5G live networks.

If we put together all the 5G ‘firsts’ claimed by the industry players it would make a long read, especially if we included cases where similar firsts have been claimed by different companies. In this most recent case, both AT&T and Verizon called themselves the world’s first to successfully transfer data over live 5G networks to purpose-built mobile devices, in Texas and Minnesota respectively.

Temporally, AT&T might have stolen a step ahead of its competitor. The AT&T test took place “over the weekend”, while news coming out of Verizon on Monday declared the success happened yesterday, but they were essentially the same kind of tests. Probably the most intriguing part of the story is that both carriers used Qualcomm’s terminals on networks supplied by Ericsson.

Even the technical details disclosed look very similar. Both tests were using smartphone form factor test devices from Qualcomm integrating the latter’s Snapdragon X50 5G modem and RF subsystem (see the picture), both were going through Ericsson 5G-NR capable radios connected to 3x virtual core networks.

These announcements followed hot on the heels of a couple of other 5G firsts in the last few days: last week Verizon and Nokia claimed to have completed the first over-the-air data transmission on a commercial 5G NR network in Washington DC, though the receiving end was not exactly a smartphone-like device. On Monday Nokia announced its demo with Sprint to conduct the first (in the US though) 5G NR connection over Massive MIMO.

Ericsson and Qualcomm claimed to have completed the first 5G NR ‘call’ to a smartphone-like device (which was pretty similar to the ones used in the AT&T and Verizon tests). That announcement itself came a couple of days after Ericsson announced another similar test with Intel. These two slightly earlier tests were conducted in lab environment while the latest AT&T and Verizon cases were done over live networks, or as AT&T emphatically stressed, “Not a lab. Not preproduction hardware. Not emulators.”

We understand the marketing departments of these companies must be busy generating as big a buzz as possible in the run-up to the Mobile World Congress America (starting tomorrow). Meanwhile we cannot discount that tests and announcements (and claims) like these do show the wider world 5G potentials when the commercial networks roll out in the coming months and years, though at the moment all these firsts still do not mean anything for consumers as no 5G terminals are available yet.

Another interesting angle to look at these tests is how active the US carriers are in pushing ahead 5G on mmWave, which contrast with how slow the European operators and regulators are moving. The European Commission launched a project to look into the feasibility of using mmWave for 5G deployment in the EU. A reporting session was organised in Brussels in June this year. The views were divided, and conclusions elusive. The main doubt from the industry looked to be the lack of compelling business case and the wrangling between the telecom industry and the satellite industry on the utilisation of the lower mmWave spectrum, hence the lack of contiguous bands for 5G buildout.

It may be a worthy reminder that we can never tell with full confidence what new technologies can do. Andre Fuetsch, AT&T Communications’ CTO was bang on when he said “… yet to be discovered experiences will grow up on tomorrow’s 5G networks. Much like 4G introduced the world to the gig economy, mobile 5G will jumpstart the next wave of unforeseen innovation.”