100% of telcos are investigating the promise of OpenRAN – survey

With monstrous investments on the horizon, it seems the telco community is keeping a close eye on the development of OpenRAN technologies.

While you always have to take survey results with a pinch of salt, Mavenir and Senza Fili are claiming momentum is gathering behind the Telecom Infra Project’s (TIP) OpenRAN initiative. 100% of the respondents to the survey suggested they were investigating the application of OpenRAN for one scenario or another.

What is worth noting, is that trialling and testing the technology is very different from commercial deployment, thought the results do perhaps suggest the industry is sick of the status quo and would welcome some sort of disruption to ease the financial burden.

68% of the respondents claim they or the wider business is exploring OpenRAN for densification demands, 47% pointed towards greenfield deployments in urban environments, 42% are looking to replace their incumbent suppliers and 5% are seeking validation in the rural areas.

Whatever the reason, the tier-one vendors in the network infrastructure segments should watch these developments with care.

Interestingly enough, the results of this survey are being touted at the same time as a Vodafone win for the OpenRAN initiative. The telco recently announced plans to trial OpenRAN deployments in 100+ rural locations across the UK. The reasoning behind this trial; to reduce the cost of network deployment and create new opportunities to work with alternative suppliers.

When you consider the majority of network deployment investment is geared towards the access network, you can start to see why a lack of competition is concerning telcos. Another factor to consider is the role of Huawei. If the US Government gets its way, either bankrupting the Chinese vendor or getting it banned from markets, there is even less competition, enhancing the risk of increased prices.

However, those privileged vendors sitting comfortably at the top of the ecosystem might be given some relief. Firstly, these are only trials not commercial deployment. OpenRAN might be a nice idea, but telcos will be hard-pushed to replace a tried and tested solution; interest and signing cheques are two very different matters.

Secondly, the industry is still clearly concerned with how much of a valid alternative OpenRAN actually is. When looking at the barriers, 28% are worried the performance won’t match the status quo, while 14% are focused on interoperability and 11% on maturity. It isn’t clear whether this is maturity of the technology or the new vendors entering the ecosystem, but both would be a concern for anyone handing over vast sums of cash.

OpenRAN does seem to be gathering pace, and while there is still a lot to prove when it comes to overhauling proven relationships and suppliers, the quest for more efficient investments is clear to see.

Orange Spain not going to be rushed into 5G fracas

Although it does appear to be incredibly popular to fight for the ‘first’ title in various markets across the world, one telco which is not buying into the necessity for speed is Orange Spain.

At the 5G Core conference in Madrid, Tomas Alfonso, Head of Product Engineering at Orange Spain, said the telco was taking its time despite pressure being ramped up by other telcos. The team are currently trialling 5G at various locations throughout the country, though there are no plans to speed up the commercial launch, which is currently set for some point in 2020.

“I would summarise our work in two words; testing and learning,” said Alfonso.

“We do not launch the technology because of the technology. We launch the technology to offer a better customer experience.”

This is the challenge which is being presented for the industry right now, according to Alfonso. Many telcos are launching 5G services because they can launch 5G services, not necessarily because it is the best thing for the business or the consumer.

Although we have been talking about 5G for years, realistically the ecosystem is still immature. Stand-alone standards are still embryonic, spectrum has not been aligned perfectly, telcos are still fibering networks, the 5G core is non-existent and the radio technology is not good enough.

The elements are present, but that is not to say the ecosystem or underlying network is ready for 5G. It is a slightly pessimistic view on the state-of-play, but it is difficult to argue with the rhetoric which Alfonso has presented. The radio equipment is an excellent example Alfonso used to illustrate his point.

Irrelevant as to which vendor a telco has selected, the equipment which is being deployed on base stations is still first-generation. Right now, the equipment is too big, its too heavy and it consumes too much energy. These are all challenges which were perfectly predictable, however Alfonso believes the products which will be brought to market next year will be much more appetising. There will be a stronger business case for 5G deployment when the equipment has been fine-tuned.

Although this does sound like a logical argument, it is clearly not shared by everyone; telcos are aggressive launching 5G networks. In the US, all four telcos now offer 5G connectivity, while the three telcos in South Korea have all launched as well. Only O2 is missing from the UK’s 5G party, Deutsche Telekom is up-and-running in Germany, Telecom Italia and Vodafone in Italy, and both Sunrise and Swisscom in Switzerland.

The view of waiting until the opportune moment is clearly one being cultivated by the minority, as we suspect the hundreds of other telcos which haven’t launched simply aren’t ready. Orange Spain might be one of the very few playing the long-game.

What is worth noting is that there is no perfect way to enter the 5G world. Those who have already started offering services will grab the early adopters, but they might irritate a few customers with expensive tariffs and limited coverage. Those who wait might have a more established network though they will be playing catch-up. The launch will always be a compromise.

Looking at the work which Orange Spain is doing right now, the team has 50 live trials across the country.

Another point which the Orange Spain team will have to get their head around is the idea of network sharing. This will not necessarily prevent the team from launching 5G services, though it will impact the rollout strategy. Reports have emerged suggesting the team is in conversation with Telefonica and MásMóvil over non-critical 5G sites.

The idea of network sharing is becoming increasingly popular with telcos around the world, and it is easy to see why. During her own presentation, Lucy Lombardi of Telecom Italia quoting research from McKinsey, suggesting network sharing agreements could save as much as 40% of deployments costs for a telco. 5G is going to be a very expensive business, and any opportunity to reduce the financial burden will be strongly considered.

Some might disagree with the position of Orange Spain, but first doesn’t necessarily mean best. Orange has shown itself to be one of the more considered, long-termist and successful telcos in Europe in recent years, so it would be a fair bet to have confidence in the team.

Iliad confirms Nokia for France and Italy 5G push

In a much needed win for Nokia, the Finnish network vendor will be the central cog to the Iliad 5G deployment strategy across France and Italy.

In recent months, Nokia has at times looked like a bit of a suspect partner to work alongside, though that doesn’t seem to bother Iliad that much. In South Korea during April, unnamed officials said all three operators were told to expect delays in receiving 5G base stations, while Sprint in US it was also suggested delays were down to the Finnish vendor’s tardiness.

CEO Rajeev Suri acknowledged the delays, suggesting they were only ‘short-term’ issues, in April’s earnings call, though the chief also tried to shift the blame onto ‘instabilities’ in consumer chipsets. The fact that these issues were not reported by Nokia’s competitors says more than Suri would like.

However, Iliad is an important win for the vendor.

After partnering with Iliad for both its 3G and 4G networks, Nokia would have been confident in retaining the relationship, though it has been losing out over the last 12-18 months. The telco is currently planning its 5G roadmap, with the first base stations set to go live in 2020.

This is somewhat of an important juncture for the telco, which has been licking its own battle wounds over the last couple of financial periods. Despite taking the French market by storm in the early years, Iliad has been suffering at the hands of competition as rivals stepping their own promotional games, chasing down Iliad during the race to the bottom.

The last financial period looked much more promising, though it still has some work to do to repair the damage. In May, Iliad reported an increase in mobile service revenues in France of 2.3%, however the total number of subscribers decreased by 50,000, down to 13.4 million.

The damage was most notable across 2018. Across the first half, Iliad was beaten at its own game, being undercut by rivals and being forced into announced a reduction in profit forecasts. Q1 in 2018 saw churn of 200,000 mobile subscriptions, the first net decline since the introduction of Iliad in 2012. The broadband business suffered the same fate, resulting in roughly a 40% share price crash across the whole of 2018.

Looking at the most recent numbers, there is a bit more stability and perhaps this is where the greatest enthusiasm for an aggressive 5G rollout will emerge from. In both France and Italy, Iliad has an opportunity to generate momentum through the new connectivity euphoria. This is an era which, once again, looks perfect for aggressive pricing and the first to scale 5G across a nation will reap the profits.

The opportunity for Iliad to get back on track is certainly there, it just needs the right partner to help facilitate the rollout and get the company back on track in the 5G world. Iliad executives will be hoping Nokia’s troubles are in the rear-view mirror.

Huawei hasn’t given up on Australia as it plugs 6G smarts

Even though Australia blindly followed the US down the Huawei-accusation rabbit hole, the Chinese vendor hasn’t given up on the country, using the 6G carrot to tempt the Aussies back into the fray.

Speaking at the Emerging Innovation Summit in Melbourne, a Huawei executive suggested Australian decision-makers have been short-sighted in addressing cyber-security concerns.

“The current approach being taken towards cyber-security on 5G mobile networks solves absolutely nothing – and that will be exposed further in 6G,” said Huawei Australia Chief Technology and Cyber Security Officer David Soldani.

This is of course assuming Huawei is an innocent party, though as little (if any) concrete evidence to prove guilt has been presented to date, the fair position would be to maintain this assumption of innocence.

“Blocking companies from certain countries does nothing to make Australia any safer from cyber-security issues – in fact it just makes things worse because they are not addressing the real issues on cyber-security.”

This is a point which has been raised frequently but those who advocate the inclusion of Huawei in communications infrastructure moving forward. Banning a certain company or technology from networks does not tackle the issue. For some, the most sensible route forward would be that of risk mitigation, an approach Vodafone in the UK has been very vocal about.

“Huawei is already way ahead of our rivals on 6G research and we can see that the way in which we will be gathering and consuming data on those 6G networks means the cyber security risks will increase,” Soldani added.

Although it might encourage moans from some corners of the industry, 6G is becoming a very real and increasingly important facet of the connectivity mix. 5G is of course not a reality yet, but for the R&D engineers, the job is complete. Work has moved out of the research labs and into production; for these employees it is onto the next task; 6G.

This is another common message which has come out of the Huawei ranks over the last few months; it is critical to work with us, not ignore us. And many of those on the technology side would agree also.

The reason the prospect of a Huawei ban is such a divisive and persistent topic is relatively simple; Huawei produces excellent products. Not only are these products cheaper, while the field support offered to telco customers is largely unrivalled, the products are genuinely at the top of their field. There are large crowds who would suggest Huawei is market leader on in the radio and transmission segments.

“The communique from the Five Eyes was absolutely clear that countries need to ensure entire supply chains are trusted and reliable to protect our networks from unauthorized access or interference,” Soldani said.

“This means there is absolutely no point in simply banning companies from certain countries – it actually makes Australia less secure because it means we have to then increase our reliance on just one or two other vendors – neither of whom are having their equipment tested.”

This is another point which, once again, has been thrown around quite often by Huawei, but is also valid; no-one is 100% free of cybersecurity risk. By reducing the number of attack points for cyber-criminals, arguably it becomes more difficult to defend and the chances of a breach increase.

These are all perfectly valid points, but Huawei is trying to prove a negative here. Nothing which can be said or presented to the world would completely exonerate the firm of suspicion, especially with the US Government constantly hinting there is evidence of wrong-doing. The fact that no-one outside the White House or the Foreign Department has seen this evidence does appear to be irrelevant to some, though that is not to say it does not exist.

This issue is quite frankly becoming tiresome. Of course, governments around the world have a duty to ensure companies are acting responsibly through the sourcing and deployment of secure and resilient products, but the issue is become tedious to discuss week on week. Unfortunately, as the UK Government continues to kick the can down the road, the debate is likely to continue.

Although the UK is finding it difficult to maintain friendships with its peers inside and outside of the European Union, it is still an incredibly influential voice. The Supply Chain Review has attracted interest from numerous parties around the world, and the decision will be carefully scrutinised. It might be rubbing nations up the wrong way with Brexit, but its opinion still matters.

Some nations of course benefit from the on-going stand-still and some don’t. The UK doesn’t benefit as telcos are still no wiser whether supply chains will be in tatters and numerous other countries that rely on Huawei, Germany, Spain or Italy for example, are in the same boat. Australia is in a tricky position as banning Huawei limits the options which are out there. This present complications from a resilience and competition perspective.

The US appears to be one of the few nations which is not going to be impacted. Deployment might be a bit more expensive due to decreased competition, but the telcos have never had the opportunity to include Huawei in plans so there is no disruption from this on-going saga. The US might well be a lost cause, but it does appear Huawei believes it can charm Australia back on-side.

Huawei might not have given up on Australia, but as long as the White House is singing from this hymn sheet, it is likely to be nothing more than a Sisyphean task.

Sunrise claiming 80% (no joke) 5G population coverage already

It might be a small country, and its citizens might be concentrated in the cities, but Switzerland is driving forward with 5G like few other countries around the world.

Switzerland is not the biggest of markets, but it is demonstrating how competition can drive network deployment forward. Alongside market leader Swisscom suggesting it will have 90% population coverage by the end of 2019 for 5G, Sunrise is claiming it has already hit the 80% milestone.

With 262 cities and towns already covered in the 5G blanket, the Swiss consumers are getting treated to a connectivity euphoria few others can claim to match.

“At the start of April, we launched our 5G network for selected customers,” said Olaf Swantee, CEO of Sunrise.

“This makes us the first 5G provider in Switzerland and Europe. Since then, we have successfully extended our lead. The Sunrise 5G network is the biggest in the country and sets a benchmark in terms of coverage quality.

“We do not differentiate between ‘fast’ and ‘wide’, between fast and slow 5G. Private and business customers want good and fast 5G coverage. That’s why we will also be offering 5G coverage in all Sunrise Shops by the end of the year. In addition to this, we will be launching a dedicated solution for companies, allowing them to benefit from 5G as soon as possible to aid their digitization.”

The first phase of this 5G push is upgrading existing cell sites. This is the simplest aspect of the strategy, though with Huawei’s ‘LampSite’ solution the Sunrise team is addressing the indoor coverage dilemma. As the focus on indoor coverage moves forward, the team is quickly turning its attention to driving ROI through enterprise solutions.

So, what is different in Switzerland? How have the telcos driven forward so quickly into the 5G era?

Firstly, you must take into account the size of the country. At 41,284 km2, Switzerland is ranked 132nd worldwide. It is not massive. And with a population of roughly 8.5 million, it is listed at 99th globally.

Secondly, ARPU is notably higher in Switzerland. During the last quarter, ARPU for post-paid customers was £32.01 for Sunrise. This compares to £20.7 at EE in the UK or £15.33 in France with Orange. Not only does this offer more free cash to drive network investments, it provides more security and confidence when judging ROI.

Thirdly, competition is critically important here. With Swisscom being aggressive with its own rollout, Sunrise has to keep pace. And the faster Sunrise moves, it drags Swisscom forward as well. It is competition at its finest, a virtuous cycle.

Finally, the presence of Olaf Swantee should not be underestimated. As Ovum’s Paul Lambert points out, Swantee is aware to the power of 5G, and having led EE’s successful 4G deployment, the drive and experience to move into the next generation is right at the top of the organization.

Sunrise is not particularly in the same league as Swisscom for the moment, though an aggressive push towards 5G could bridge the gap (6.3 million subscribers at Swisscom, versus 2.4 million at Sunrise). This appears to be the strategy employed by Sunrise according to Lambert; scaled 5G coverage offers a differentiator for the telco and an opportunity to capture higher paying customers.

What is worth noting is population coverage is very different to geographical coverage. Switzerland is a highly urbanised country, roughly 73% live in urban environments, easing the demands on network deployment. When you look at the rural landscapes in Switzerland however, the challenges start to mount up very quickly.

This is a common trait in the majority of the markets where 5G has gotten off to a flying start. South Korea is another example of a market moving very quickly towards the 5G era, and once again, it is a highly-urbanised country. The UK is a third which has the advantage of a relatively small land mass, combined with a concentrated population.

Although these are factors which will simplify the network deployment equation, that should not take away from the progress being made across the Swiss telco industry. In the absence of coverage obligations, good old competition and ambition is driving the agenda.

Telco competitors aren’t other telcos anymore

It might seem like an unusual statement to make, but if the fortunes of the fourth industrial revolution are going to be realised, telcos need to stop bickering between themselves.

The new competitive landscape seems like a very counter-intuitive one. The status quo for years has been to capture as many subscriptions as possible, building profits on top of connectivity, though the digital economy is so much more. This might seem like a very obvious statement to make, though the dangers are seemingly more apparent on the African continent, with the OTTs and cloud players a larger threat to a telco than other telcos.

This was a fear which emerged during the opening panel sessions at the AfricaCom 2018 show in Cape Town. Connectivity is not enough, especially on a continent where ARPU can be as low as $4 a month. There is of course demand for more data connectivity, but where is the value when you actually deploy data networks? According to Hind Elbashir, Group Chief Strategy Officer at Sudetal, not in the connectivity business.

“The OTTs have spread their wings, while we are continuing to compete in a very small place,” said Elbashir.

While the telcos are laying the foundations for the digital economy in Africa, they are continuing to focus efforts on traditional business models focused around connectivity and subscriptions. This is a limited section of the value chain, becoming increasingly crowded, and built on the race to the bottom. Value will become increasingly difficult to find and profitability will erode as the telcos fight for customers on pricing. However, the fourth industrial revolution is creating value elsewhere in the ecosystem.

Nic Rudnick, CEO of Liquid Telecom, echoed Elbashir’s point. While the African telcos are building the networks and spending all their time on securing more subscriptions, foreign players in Silicon Valley or China are swooping in to collect the more lucrative rewards at the top of the digital value chain. The OTTs are capitalising on the vast expenditures outlaid by the telcos and stealing the new value which is being created through enhanced connectivity.

But why is this more of a risk in Africa than anywhere else? That is a very simple question to answer; Africa does not have anywhere near the same scale or penetration of connectivity infrastructure as in the developed markets, while ARPUs are significantly lower, adding more pressure to the bottom line. With African telcos having to spend more CAPEX to deploy infrastructure to realise the digital economy than European or North American counterparts, while simultaneously collecting smaller tariffs off customers, it cannot afford to lose the added value created in other areas of the ecosystem.

This is a change in the industry’s landscape which has been coming for years, but the telcos seem to be struggling to capitalise on. The rules are shifting with the cloud and OTT players securing the lion’s share of newly created revenues without assuming the risk and vast expenditure of network deployment. Not only will the telcos have to transform culture and operations to reverse this trend, but also create new relationships with competitors.

Elbashir pointed to joint investments in infrastructure to reduce financial exposure and allow telcos to spread CAPEX further. Multiple joint ventures would allow for quicker expansion of network infrastructure, increasing the connectivity footprint of the telcos, but also allow talent to focus on creating strategies and products to capitalise on the created value in the digital ecosystem.

Collaboration is a key word, though we all know how difficult it can be to create. However, telcos should recognise the greatest threat is not from other telcos who are fighting for subscriptions, but the OTTs and cloud players who so easily secure revenues in segments of the ecosystem the telcos are struggling to exploit. The threat from the OTTs is a simple one, but if it is not addressed, growth is going to be impossible.

This is a new market dynamic, and while the OTTs might be a threat to all telcos around the world, it seems to be more pronounced in Africa.

Dallas, Atlanta and Waco win the AT&T 5G jackpot

The cities of Dallas, Atlanta and Waco have been selected by AT&T as the first to receive mobile 5G services by the end of the year.

The move comes after a promise from AT&T that it would deliver 5G to twelve cities across the US. At the time there was no indication what the cities would be (or any real details) and it did appear to be a bit of a panic move from the telco in reaction to 5G claims from competitors, all of which had already made commitments. The confirmation of these three cities is at least progress, but taking two months to unveil 25% of the plan (one of the locations is the home of AT&T HQ, so that should have been a given) doesn’t remove the fears AT&T might be making it up as it goes along.

Meeting the demands of this stringent timeline will be tricky and to help the momentum build AT&T will be opening a new 5G lab in Austin. The purpose of this lab will be to stress test mobile 5G network equipment and devices from multiple vendors, and also features an outdoor 5G testbed to trial 5G applications and usecases.

“After significantly contributing to the first phase of 5G standards, conducting multi-city trials, and literally transforming our network for the future, we’re planning to be the first carrier to deliver standards-based mobile 5G – and do it much sooner than most people thought possible,” said Igal Elbaz, SVP of Wireless Network Architecture and Design at AT&T. “Our mobile 5G firsts will put our customers in the middle of it all.”

Irrelevant as to whether AT&T is making it up as it goes, or if it was caught off guard with competitor announcements at the end of the year, it has shot to the front of the 5G race with this announcement. Details are the enemy of marketers and PR gurus but the friend of the customers, and this move from AT&T seems to offer much more clarity than the telcos suspect attempts to seemingly fool customers with LTE-A rebranded as 5G Evolution. 5G is coming and AT&T is now pumping its chest loudly.

What is worth noting is that there won’t be a huge number of 5G capable devices on the market when AT&T launch the networks, though this could have a positive effect on the supply cycle. Perhaps the presence of a 5G network will fuel demand from customers and force the manufacturers to hit the market with devices at an increased pace. This could be the case, though sceptical individuals would argue the manufacturers would simply use 5G capable features as a means to encourage customers to upgrade to more expensive devices. Bottlenecking the breadth of 5G capable devices would almost certainly encourage some users to consider more expensive devices, but should such nefarious strategies start to appear it could potentially open the door for a brand to disrupt the market.

The initial 5G deployment will be based on 3GPP standards and operate over mmWave spectrum, with the telco claiming the services will seamlessly integrate with current LTE technologies using the non-standalone configuration outlined in 3GPP release 15. It should be worth noting that AT&T has not forgotten about the LTE roll out, which is yet to be completed nationwide, but the technology being deployed here will be easily migratable to 5G, the telco has said.

Naming these three cities is certainly a positive step and AT&T has said it will name the other nine over the next couple of months. A good guess at where they might be Houston, Plano or Palo Alto, as these are the other locations of AT&T Foundry (aside from Atlanta), though it would also be worth having a look here where the telco names the cities it is ‘super-charging’ its network over the next couple of months.