Supply Chain Review offers clarity and new headaches for MNOs

Any decision is better than the purgatory of uncertainty which the telcos have been sitting in for months, but the Supply Chain Review offers a whole new wave of headaches.

There are still grey areas to consider, but the Department of Digital, Culture, Media and Sport (DCMS) has offered a foundation for telcos to build on. Some might be slightly disappointed by the decision, certainly some more than others, but any decision was better than playing the waiting game; action can now be taken.

Huawei’s contributions to a UK MNOs 5G radio inventory can not exceed a 35% share. However, another interesting element to consider is that Huawei radio equipment cannot carry more than 35% of internet traffic either. This presents new questions as to how networks are built. Huawei technology might not be able to be clustered in certain urbanised areas, which has been the trend in the past.

But new questions are arising for each of the players in the market.

Is Huawei to lose leadership position in the UK market?

Speaking during a call to the press, Huawei VP Jeremy Thompson said capturing 35% market share in any nation would be a job well done for Huawei, though this is assuming customer relationships are rebalanced.

For Huawei to capture 35% market share, it would have to be a major supplier to all the UK MNOs and for all the MNOs to use every inch of the 35% network share. This is a situation which is very unlikely to happen.

EE and Vodafone are over the 35% limit for Huawei equipment in their 4G networks, therefore these relationships will have to be structured down. Three named Huawei as its sole 5G RAN supplier, Samsung provided 4G RAN equipment, therefore it will definitely lose business here as well. There is room for growth at O2, but this is a telco it has not had notable success in recent years.

Huawei’s RAN equipment makes up less than 1% of O2 radio inventory, only present due to trials, and this is unlikely to change.

As Thompson pointed out, Huawei’s market share in the UK when the Supply Chain Review was initially launched was 35%. Its business with its three main customers will have to decrease for them to meet the targets in three years, and it is unlikely to increase its commercial activity with O2.

Huawei could very feasibly lose its RAN leadership position due to bureaucracy as opposed to head-to-head competition.

Three has the biggest headache of all

Three is not in a healthy position but fortunately its 5G deployment is not that advanced.

“We note the government’s announcement and are reviewing the detail,” said Three UK CEO Dave Dyson.

Last year, Three began stripping Samsung 4G equipment out of its network to ensure interoperability with its sole 5G RAN supplier, Huawei. Fortunately, Three has not been accelerating its deployment plans as quickly as EE or Vodafone, therefore does not have as much work to undo. Three will not have to start again from the beginning, but it will have to redevelop the strategy.

As a city-centric telco, the Huawei decision made sense as the Chinese vendor arguably has the best equipment for the situation. Investing so significantly in Huawei might have been a bold decision two years ago, but it is now looking like nothing short of a disaster.

Business as usual for O2

“Huawei kit makes up less than 1% of our owned network infrastructure,” said an O2 spokesperson. “We will continue to develop our 5G network with minimum disruption with our primary vendors Nokia and Ericsson.

“Whilst we agree with the government that diversity of supply is the best way to serve customers, careful consideration must be given to the distinction between ‘core’ and ‘non-core’ as 5G networks develop and evolve. We’ll now take time to review the full report.”

There are roughly a dozen Huawei radios in the O2 network, a legacy of trials during yesteryear prior to supplier decisions being made. O2 has said it will work exclusively with Ericsson and Nokia in the past, painting a gloomy picture for Huawei, though there is always room for change.

Earlier this month, O2 announced it would be aiming to integrate OpenRAN alternatives into some areas of the network. This was slightly unexpected news and would have altered deployment plans in pursuit of commercial efficiencies. This demonstrates that the plans are not 100% set in stone.

Huawei’s commercial relationship with O2 can only get better, and if it does want to maintain its RAN leadership position in the UK, it will have to figure out how to break into this business. Ultimately, very little changes for O2 unless it wants to change itself.

EE and Vodafone have some thinking to do

“While Vodafone UK does not use Huawei in its core – the intelligent part of the network – it will now analyse the potential impact of today’s decision on the non-core elements of its network (masts and transmission links),” a Vodafone statement reads.

“Vodafone UK uses a mix of Huawei, Ericsson and Nokia equipment for its 4G and 5G masts, and we continue to believe that the use of a wide range of equipment vendors is the best way to safeguard the delivery of services to all mobile customers.”

For its 4G network, Ericsson supplies 50% of the radio inventory, Nokia 12% and Huawei 38%. Vodafone CTO Scott Petty has previously suggested plans to phase out Nokia, though that position might have to be reconsidered. Vodafone will have to scale down its Huawei relationship moving forward into 5G and find a suitable replacement.

Interestingly enough, Vodafone has also launched its own OpenRAN initiative, though whether this technology is resilient for a straight swap remains to be seen. It will at some point, but Vodafone will not want to wait until that point.

EE is in a similar position.

“This decision is an important clarification for the industry,” said a spokesperson from EE parent company BT.

“The security of our networks is an absolute priority for BT, and we already have a long-standing principle not to use Huawei in our core networks. While we have prepared for a range of scenarios, we need to further analyse the details and implications of this decision before taking a view of potential costs and impacts.”

EE currently works with Huawei and Nokia. The share of Huawei radio inventory exceeds the 35% limit, though it has time and options to renegotiate over the next three years. It is a bit of a headache for the team, but not the end of the world.

The difficulty which EE faces is the current structure of the network. Huawei provides the radio equipment for the urbanised areas, while Nokia is focused on rural. The internet traffic crossing Huawei radios on EE’s network will dramatically exceed the 35% restriction.

Are Nokia and Ericsson in a stronger negotiating position?

For cut-throat sales opportunists, this is a very interesting position for Ericsson and Nokia. Unless OpenRAN makes significant progress in the short-term future, or Samsung starts swinging punches, 65% network share is effectively a straight shootout between the two.

As Heavy Reading Analyst Gabriel Brown has pointed out, the limits are only directed towards 5G access and is therefore more manageable, but the knowledge of restrictions will always be in the mind of some salespeople; this adds weight to the vendor negotiating position.

Ericsson and Nokia will of course never acknowledge this position, but these are commercial organisations who have seen profits eroded over the last few years. And the guys sitting at the negotiating table are salespeople who like getting big bonus checks.

Could this be the catalyst for OpenRAN and Samsung?

When there are challenges for some, opportunities will always be presented for others. Ericsson and Nokia are certainly set to prosper thanks to Huawei limitations, though the same could be said for the OpenRAN ecosystem and Samsung.

OpenRAN has been touted by US politicians as a potential alternative to Huawei equipment, Senator Mark Warner is proposing a $1 billion fund for the ecosystem, though needs might accelerate demand.

With Huawei’s RAN equipment under restriction, there is certainly a dent in the competitive landscape. It could have been a lot worse, but it will have an impact. The question is how much enthusiasm will be placed in the OpenRAN movement to compensate and create the competitive environment so many are hoping will emerge.

Vodafone and O2 have already dipped their toes into the OpenRAN waters, with commercial deployments to accelerate over the next 2-3 years, though the Huawei saga could make this seem like an attractive alternative to more. The UK Government has seemingly not banned Huawei completely for competition fears, therefore it might be tempted to invest in some developing ecosystems, as would EE and Three.

Samsung is a different story.

This is a vendor which has credibility in the RAN market but has never made a significant impact on the UK telco industry. It did have a healthy relationship with Three prior to the Huawei shift, but activities otherwise have been limited in this segment. Huawei limitations could present an opportunity.

At Three, it would make sense to head back to tried-and-tested waters, while other telcos might consider the Korean vendor to ensure increased diversity in the supply chain. If reliance and variety is the goal, few would want to put more eggs in the Ericsson or Nokia baskets.

With relationships in Korea with KT and SK Telecom, as well as Verizon in the US, Samsung has credibility. The Huawei woes might just be enough to tip the scale in this vendors favour, if it start to throw the right punches.

End of the UK road for ZTE?

The 35% limit is not a restriction for a single supplier, but for any suppliers who are deemed ‘high-risk’. Huawei and ZTE both fall into this bracket therefore it is likely to present a question to the telcos; do we work with Huawei or ZTE? There is room for a slice for each, but this is highly unlikely to happen, especially since the review concludes there is no way to mitigate the risk posed by ZTE.

When it comes to the global market share of RAN, ZTE is a company which falls into the ‘also ran’ category. It has experienced success in Africa and Asia, and of course in China, but exposure in Western Europe has been incredibly limited. In the UK, there is very little evidence of success, though Jersey Telecom named the vendor as its sole 5G RAN supplier.

Jersey Telecom will have to have a complete rethink of its strategy, like Three, but the writing seems to be on the wall for ZTE. This could be the end of the vendor as a player in the UK market.

Open-minded RAN key to 5G success

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Steve Papa, CEO of Parallel Wireless, makes the case in support of the OpenRAN initiative.

Years of consolidation have left the telecoms industry with three Radio Access Network (RAN) technology giants: Huawei, Ericsson and Nokia. But, these players risk becoming obsolete as the telecoms industry starts demanding networks that are open and flexible.

The RAN is a significant expense for mobile operators, in what is already a capital-intensive industry. Legacy RAN networks, built using the technology of the major vendors, is typically hardware centric and designed in silos for each generation (e.g. 2G, 3G, 4G) of connectivity. The technology is ‘closed’ by its nature, which means that it is incompatible with other vendors. Subsequently, networks have been very difficult to adapt and upgrade, with the hardware giants dictating the timings and cost of any maintenance and installation.

As we move towards the introduction of 5G, the industry is now beginning to realise that the economics of building the RAN need to change. 2019 saw significant moves towards OpenRAN, a new model of building radio networks, based on a software-centric and open infrastructure. The benefits of OpenRAN were illustrated by Vodafone’s announcement that it would be opening its entire RAN in Europe to OpenRAN vendors during TIP Summit in November. Both the O-RAN Alliance and the Telecom Infra Project (TIP) are leading the industry towards OpenRAN, with the O-RAN alliance driving industry standards, and TIP driving deployments.

Understanding the value of OpenRAN

The OpenRAN approach is achieved by separating hardware and software in the network. This helps networks support open interfaces and common development standards, to deliver multi-vendor, interoperable networks. This gives operators the flexibility to cost-effectively deploy and upgrade their networks, reduce complexity, and deliver coverage at a much lower cost. OpenRAN also makes it easier for network to support dynamic spectrum sharing (DSS) technology, which allows LTE and 5G New Radio technology transmission at the same time. DSS is key to the early adoption of 5G smartphones, which will rely on both 5G and LTE transmission.

Analysts’ projections from ReTHINK show that the costs of building 5G Macro-cell networks will fall by 50% if deployments incorporate open architectures. This saving equates to hundreds of millions of dollars in the overall total cost of ownership, and will help mobile operators extend investments and become more profitable.

In developed markets, 5G roll-out is in full swing and operators are spending considerable amounts building out their next generation networks and marketing them to the public. However, current connectivity standards cannot be neglected, and operators need a new, software-based approach that will allow them to deploy and run 5G technology efficiently alongside their 3G an 4G networks. This is why OpenRAN is so appealing to operators such as Vodafone, as it enables to manage all connectivity standards using a software interface.

Meanwhile, operators in developing markets are currently focussed on scaling 2G, 3G and 4G to rural and urban areas that don’t have internet. But developing markets have a low average revenue per user, so operators in these markets won’t survive with the approach of building and managing siloed networks for each network generation, as CAPEX and OPEX will skyrocket.

Internet para Todos (IpT), a wholesale operator owned by Telefonica, Facebook, and Latin American banks IDB Invest and CAF Bank is also driving momentum. It recently opened talks to bring a second operator on board, after connecting more than 650 sites and covering 800,000 people (450,000 actual customers) with a 4G rollout in rural Peru. Meanwhile, MTN, the South Africa based operator, recently announced that it is deploying OpenRAN technology in 5,000 sites as it looks to unify its 2G, 3G and 4G networks, to save costs for itself and its customers.

The OpenRAN initiative takes off

In 2020, the momentum behind OpenRAN will continue to grow as other operators realise how they can reduce costs, drive more competition between technology vendors, and stimulate higher levels of innovation in the industry.

OpenRAN clearly has the support from major players in the industry, however, it is vital that operators consider the most effective technology partner to enable the OpenRAN vision. OpenRAN must address all generations of mobile connectivity standards together – 2G, 3G, 4G and 5G. If MNOs decide to only introduce OpenRAN for 4G and 5G, they will still be faced with managing separate legacy and new networks, which contradicts the aims of the initiative.

Being able to support all generations of mobile connectivity under the same OpenRAN software umbrella is crucial to providing reliable connectivity for all and allowing the transformative benefits of 5G to be realised. The industry is hungry for change, and open-minded operators are the ones which will succeed. That might mean the traditional ‘big 3’, don’t stay the big 3 for long!

 

Steve has worked in the technology industry for over 20 years and is the founder and CEO of Parallel Wireless. Previously, as founder and CEO of Endeca, he built the business ultimately leading to Oracle acquiring the company. He was part of the team creating Akamai that developed global Internet content distribution – now carrying peaks of 15 terabits/s of web traffic on any given day – and led the team at Inktomi that reimagined the network cache to create carrier class caching. Steve also previously worked with AT&T Teradata. He has a BS from Princeton University and MBA from Harvard Business School.

Deep dive: what’s the deal with network sharing?

Information is only as useful as the context you place it in, and for that reason Telecoms.com periodically provides deep dives into industry-defining topics. In this one Jamie Davies explores the opportunities and challenges surrounding network sharing.

Each year brings different trends and talking points to the forefront of the industry, and 2020 is no different. This year, it appears network sharing will be one of the biggest talking points.

5G is on the horizon and it has the telcos scrambling. Upgrading telecoms infrastructure is going to be a very expensive job, ranging from fibering up a nation, to purchasing active infrastructure for sites and even paying for civil engineering jobs; building passive infrastructure is not cheap! Telcos need a way to make the financials of the telecoms future work.

All about the money, money, money

While it might not sound like the sexiest of trends to be assessing, it could turn out to be one of the most impactful. Telcos are scrapping and scraping around to fuel the 5G euphoria which has gripped the industry, and any option to do it more cost effectively would be lovingly embraced.

“Network sharing will be vital to mobile operators still grappling with ways to make the economics of 5G add up,” said Kester Mann of CCS Insight. “Deutsche Telekom for example has projected that the cost to deploy 5G across Europe would come out at between €300 and €500 billion.

“It’s no surprise then to see a growing list of operators partnering with each other in a bid to keep a lid on 5G capex. But these deals may just be the tip of the iceberg; investment models probably need to evolve to become more creative and innovative in the long run. For example, Poland has been considering plans for a single national 5G network at 700MHz. And it would be no surprise to see a European city take the plunge and deploy all 5G mobile infrastructure through a third party.”

Back in October, during a Madrid 5G core conference, Telecom Italia’s Lucy Lombardi outlined the difficulties being faced by the operators. Between 2010 and 2018, Lombardi suggested industry revenues were down $27 billion, but the telcos had invested $250 million in the network. Over 2019-2025, Lombardi suggested another $1.4 trillion would be spend by the industry, 70% of which would be on deploying 5G.

In short, the old ways of telecommunications are not going to cut it in the digital world of tomorrow. There are plenty of opportunities for the telcos to make money as everything and anything gets connected to the internet, but new business models need to be created to ensure these companies do not go bust in the pursuit of profits.

As Mann highlights, various different countries and regulators are pursuing different approaches to create value and efficiencies in the deployment of next-generation communications infrastructure. The Poland example is an excellent one, though the UK is pushing forward with its own innovative approach.

“In the UK, the recent confirmation of plans to introduce a shared rural network is rare example of successful collaboration between mobile operators more often engaged in cut-throat competition to attract and retain subscribers,” Mann continued.

“It aims to curb costs and accelerate timelines to bring more people on online who live in remote areas. It will also help overcome the perennial challenge of tough planning and access restrictions that has hindered network roll-out in the past.”

The UK Shared Rural Network could be described as both an innovative initiative and a business compromise.

As part of the initiative, £530 million will be contributed by the telcos with another £500 million being put forward by the UK Government. The plan will include reciprocal agreements between the telcos to share existing infrastructure and also joint investments to build telco-neutral sites for total not-spots.

This is an innovative approach to deliver connectivity to the most difficult to reach places in the UK, but it is also a compromise. To secure agreement from the telcos for the Shared Rural Network, the Government and the regulator will have to agree to drop the deeply unpopular coverage commitments attached to the 700 MHz and 3.6-3.8 GHz spectrum auctions.

However, what is worth noting is this is not necessarily a new idea. EE (or what was T-Mobile at the time) and Three formed MBNL in 2007, initially to operate and deliver 3G networks, while O2 and Vodafone teamed ahead of the 4G rollout to form CTIL in 2012. Both of these organisations offer financial benefits to the telcos.

“From a cash perspective it’s broadly 50/50 on the usual operating expenditures – so site rental, rates, field operations, etc. We then have the option of sharing the build of networks – we don’t do that for 4G or 5G, but we did that in the 3G build and that saved 50% of the initial capital expenditure, including on capacity and transmission costs by usage,” said Tom Bennett, Networks Director at EE

We’re not alone…

Elsewhere around the world, regulators have taken their own approach to encourage cooperation in the industry. In Malaysia, for example, the Malaysian Communications and Multimedia Commission (MCMC) has outlined another unique approach.

Licenses for the 700 MHz and 3.5 GHz spectrum bands will be given to a consortium rather than the individual telcos. Investment in infrastructure will be shared, as will the spectrum resources to deliver commercial services, though it is unclear how the telcos will play with each other.

For Malaysia, this is an important initiative. 5G is an expensive technology to deploy, but the regulator is also keeping an eye on 4G. In Western markets 4G investments are not front of mind as coverage is wide and deep, however in countries like Malaysia, the digital divide is a lot more apparent. 4G investments need to continue, and this approach to shared infrastructure is partly to ensure enough money is still directed towards 4G.

However, what is also worth noting is that not it is not a given regulators will be accepting of shared network initiatives.

Earlier this month, the Belgian Competition Authority (BCA) put the brakes on a joint-venture between Orange and Proximus which would create a shared network. The regulator is investigating whether this would negatively impact competition, after Telenet complained over the tie-up.

The issue in Belgium seems to be focused on the number of telcos which are currently present and the breadth of the agreement between the pair. As there are only three mobile players in the market, and the JV would span across all generations from 2G to 5G, the complaint focuses on the idea that it would reduce the number of infrastructure players from three to two. This might have an impact on deployment, as well as placing an unreasonable stranglehold on Telenet.

This is not the first time this issue has been raised either.

Last August, the European Commission informed O2 CZ and T-Mobile CZ that the proposed network sharing agreement in Czech Republic would breach the Commission’s rules on competition. The duo have been in a network sharing agreement since 2011, which incorporating 2G, 3G and 4G for 85% of the country, though the European Commission has now prevented this expanding further.

As is the case in Belgium, the Czech Republic only has three material telcos investing in mobile communications infrastructure. Although there are benefits for scale deployment, the European Commission suggested:

“…the network sharing agreement is likely to remove the incentives for the two mobile operators to improve their networks and services to the benefit of users.”

The European Commission and national regulators are generally open to ideas on how the telecommunications industry can be more efficient, though they are particularly sensitive to competition. Anything which would hint at removing competition would be quashed almost immediately, which is the tricky path which telcos tread. This is particularly notable in markets where there are only three operators, and one has been left out of the network sharing agreement.

Looking at the rules in question at a European level, Article 101 dictates the state of play. These rules effectively look to prevent:

  • Price fixing
  • Production, development or investment limitations
  • Supply scarcity
  • Placing a competitive disadvantage on other parties

The maintenance of a fair and reasonable market is of course a noble pursuit, but the European Commission and national regulators do have to be careful in applying these rules. The telcos do need to apply new models to ensure the feasibility of the 5G business model.

Consolidation is still the enemy

“Regulators will clearly be vigilant, as they want to make sure that sharing does not turn into mobile-to-mobile consolidation, which they don’t like,” said Dario Talmesio, 5G Practice Leader at analyst firm Ovum.

“They could see that sharing can be consolidation through the backdoor.”

The European Commission and its regulators are very sensitive to consolidation. Despite the industry begging for attitudes to change in the pursuit of scale economics to ease the burden of deployment, the regulators have stood their ground to refuse consolidation. The attempted merger between O2 and Three in the UK during 2016 was blocked on the grounds of competition, as was an effort by Telia and Telenor to merge their Danish businesses in 2015.

The rationale for both of these mergers was to create a single-entity where the economics of running a telco at scale were more attractive. As Talmesio points out, network sharing initiatives are very important to ensure the industry progresses in a manner which keeps pace with the consumer and enterprise.

“CSPs have for very long been sharing some elements of their networks, and every G has pushed them to share a bit more, mainly because of the cost and time it would take to build new sites,” said Talmesio.

While it will never be the case that the network is finished, the widespread upgrades which are demanding with every new ‘G’ is what makes the telco industry unique and eye-wateringly expensive to play in. This is where the economics of scale are critically important and why European telcos are perhaps on the backfoot.

European nations are small, and some are drastically smaller than say China or the US. While larger countries present their own challenges in terms of coverage, the benefit of a scaled subscriber base gives more confidence to make bigger investments. Some European telcos will never have this advantage so will have to look for alternative means to fund network deployment.

Although the estimates vary quite considerably, one thing is for certain; network sharing initiatives ease the financial burden of network deployment.

There are of course financial benefits to network sharing, though the estimates do vary. A report from the Body of European Regulators for Electronic Communications (BEREC) suggests the following:

  • Passive sharing cost saving of 16-35% on CAPEX and 16-35% for OPEX
  • Active sharing cost saving 33-35% on CAPEX and 25-33% for OPEX

Efficiencies are increased when spectrum costs are also shared, though this is unlikely to be a common practice as spectrum assets are often considered a differentiator. If this was to be removed, the industry would start the precarious walk towards utilitisation.

Looking at the proposed joint-venture between Orange and Proximus, the duo will of course be saving money, but another interesting opportunity is in scaling the network. The shared network initiative would increase coverage by 20% in comparison to the combined footprint if the teams are to pursue network deployment independently. We suspect 20% is a comfortable number, and this could be increased should a partnership want to deploy more aggressively.

The financials of the telecoms industry is not working in conjunction with the demands of the consumer and authorities. Cheaper tariffs, faster speeds, greater coverage, better reliability. All of these factors weigh one side of the equation making it difficult for the telcos to continue.

Another factor to build the case for network sharing initiatives is somewhat more bureaucratic.

Telcos are being asked to improve both outdoor and indoor coverage in both the rural and urban environments, but in some cases the biggest problems can be accessing or procuring new sites to deploy infrastructure, both passive and active. It might make sense to share these sites as there is limited availability, or it would at least make more sense to share the transmission lines to ease the burden of civil engineering costs. Another factor you have to consider is the rental fees charged by landowners, some of which are deemed unnecessarily high by the telcos. This has been frequently highlighted under the term ‘ransom rent’ as the telcos have little option if they are to expand coverage.

In some towns there is another bureaucratic nightmare to consider; listed and historical buildings. In Cambridge, UK, for example, so many of the structures are deemed historical or protected, the number of potential mobile cell sites is substantially smaller; share infrastructure is a creative solution.

Its not all plain sailing

What is worth noting is that there are also drawbacks to network sharing agreements.

Firstly, more cooks spoil the broth. With shared assets in operation, especially active assets, require consent and coordination between the sharing parties. There are numerous challenges here, most notably aligning commercial objectives of the parties and more signatures to acquire. Evolution of these sites could certainly take longer in the future.

Another challenge arises when something goes wrong. Debugging the issues could be much more complicated, though this is entirely dependent on how much the two operations are entwined.

BEREC has also noted shared networks could also increase the electromagnetic field emissions. Each regulator imposes limitations on electromagnetic field emissions therefore bureaucratic revision might well be needed should more of these initiatives bear fruit.

The combination of or joint-funding of assets also decreases the resilience of communications infrastructure in a country. Fewer independent mobile networks or infrastructure might well make a country more vulnerable as it reduces the number of points of failure and robustness.

It is also worth bearing in mind that there is only so much space available on masts for active equipment. These concerns were raised in Bulgaria, Cyprus and Croatia, amongst other nations. Networking planning is another concern, as each MNO has its own unique requirements, while technical issues in relation to existing suppliers and protocols could mean MNOs are not compatible with each other.

It would be unfair to suggest network sharing is an uncomplicated path forward.

Despite there being momentum for network sharing, not all of the regulators share the enthusiasm. Aside from Belgian scepticism, Hungary believes non-participating MNOs would face a risk of being squeezed out of the market, while Austria has suggested incentives for investment will decrease in the long term.

There will be pros and cons on both sides of the equation, but it does look to be the fairest and most reasonable compromise to ensure a healthy and sustainable telecommunications industry. The traditional way of deploying networks does not look to be financially feasible, therefore new ideas are needed.

Network sharing is one of the most prominent trends during the early days of 2020 for good reason, and it is safe to assume more of these initiatives will emerge as we progress through the year.

Ericsson soups up its 5G software

Kit vendor Ericsson has released some new software designed to help operators with their move so standalone 5G NR when they eventually get around to it.

The early 5G we’re getting now still relies on a 4G core and hence is known as ‘non-standalone (NSA)’. It’s largely a way for the industry to start banging on about 5G a year or two earlier than it would otherwise have been able to. Proper 5G, known as ‘standalone (SA)’, will come with release 16 of the 5G standard, which won’t even be finalised until March next year.

Ericsson’s latest announcement is designed to equip its customers to jump on the SA bandwagon and also to augment its narrative about Existing Ericsson gear being software upgradable to 5G. The latest software not only supports what is expected to be SA architecture but also enables inter-band carrier aggregation, which will be handy for combining the coverage characteristics of low-frequency spectrum with the capacity potential of high-frequency beams.

“We continue to focus our efforts on helping our customers succeed with 5G,” said Ericsson Networks boss Fredrik Jejdling. “These new solutions will allow them to follow the 5G evolution path that fits their ambitions in the simplest and most efficient way.”

Not Fred’s most comprehensive canned quote, but it seems to cover the essence of the announcement. Ericsson also launched a couple of new radios to support mid-band 5G and refreshed its NFV infrastructure offering in ways the video below attempts to illustrate. Lastly it got some analysts to say how great all this is, which is nice.

 

No surprises as Ericsson goes all-in on 5G for MWC 2019

Ericsson had its traditional pre-MWC media and analyst fest yesterday, at which it focused on improvements being made to its 5G Platform.

Given that this is the year we finally start to see 5G in the wild, and that Ericsson’s business is largely devoted to mobile networks, the utter inevitability of this set of announcements can be forgiven. As can the relative lack of eye-catching launches at a time when every part of the 5G ecosystem is focused more on making sure its stuff works properly, rather than flashy new initiatives.

So Ericsson’s message was that it’s all over this 5G thing and that whatever your 5G needs might be, it’s got them covered. “Ericsson has the portfolio in place for service providers to switch on 5G today and we are currently rolling out commercial 5G networks in the US, Europe, Asia and Australia,” said Fredrik Jejdling, Ericsson’s networks head. “We’re continuously developing our portfolio to make life easier for our customers, enabling them to manage increased data traffic growth, simplify operations, and secure 5G revenues.”

We’d expect no less of you Fred, so let’s have a look at some of the fruits of this continual development. Right now Ericsson is all about making the evolution to 5G is smooth as possible for its customers. A key component of that is the Dual-mode 5G Cloud Core, which supports all legacy mobile technology generations as well as SA and NSA 5G and promises to dynamically switch between them depending on what’s available. Here’s how it works, simple eh?

Ericsson 5G Cloud Core

Of course it wouldn’t be an Ericsson launch without a bunch of shiny new radios, nine of them to be precise, including new dual band, triple band, and Massive MIMO ones. On top of that there’s a new microwave backhaul product and an upgrade to all the clever virtualization and orchestration software you need to make all this 5G magic happen, and that’s about it.

“As we evolve our network to 5G, we need to simplify operations, reduce time to market for new functionalities, and open up our network for innovation,” Ericsson got Patrick Weibel, Head of 5G at Swisscom, to say. “Ericsson’s dual-mode 5G Cloud Core allows for the flexible evolution of our 4G Core network to a combined 4G and 5G network while maintaining cost efficiency. Adding to this, the evolved Ericsson Dynamic Orchestration solution bring us the automation of network slices required to reduce our provisioning time of services from weeks to hours.”

If Ericsson’s and Nokia’s pre-MWC events are anything to go by, this is going to be a tricky show for us hacks. The arrival of 5G means we’ve entered the boring, pragmatic, implementation phase and the announcements reflect that. While we can hardly hold that against the industry, especially having mocked its hyperbolic tendencies of previous years, it does make finding the ‘story’ a bit more challenging. Bring on 6G, that’s what we say.

Vodafone puts the brakes on core Huawei spend

There aren’t many things that could rival Huawei’s headaches derived from government bans, but a snub from another one of the worlds’ largest telco groups might be up there.

With 275 million customers around the world, plus another 250-odd million through joint-ventures, this is one of the biggest telcos in the world. With networks spreading across Europe, Africa and Asia, the buying power and influence of Vodafone is considerable. This could a massive blow to the prospects of Huawei, both financially and in terms of credibility.

Speaking on the earnings call last week, CEO Nick Read stated the following:

“Specifically on Huawei, what I was really trying to make clear is, I think we need to move to more a fact-based conversation, I think at the moment is a simplistic political level and there is a big distinction between radio and core. We are predominately using Huawei in radio. We are continuing to use them in radio for 5G. However, in the core, we have put them on pause. They are not significant in the scale of our operations in the core and therefore it’s not a big financial implication.”

This is where Huawei finds itself in a difficult position. In numerous markets it is still fully free to compete for on-going 4G and up-coming 5G contracts, though these telcos will question the risk. Does the benefit of working with Huawei outweigh the risk? Why spend money on kit when you might have to strip it out in the near future?

As it stands, Vodafone does not have a huge level of exposure in terms of Huawei in the core, this is the case for most European telcos, though should the ban extend to radio or transmission this might become a significant issue. A full-scale ban is certainly not out of the question, very little is when you consider how aggressive and antagonistic the current political climate is, and this could send ripples throughout the ecosystem.

Vodafone confirmed to us Huawei equipment is in the core in some minor markets and Spain, and this is where the pause is relevant. Huawei will continue to supply Vodafone with equipment in other areas. In this sense, the fallout should be contained. Just to put things in perspective, Vodafone’s position is similar to that many telcos around Europe are taking.

However, as Read notes, should a ban extend to other areas of the network it could proves to be a sticky situation for everyone involved.

“Clearly, if there was a complete ban at the radio level then it would be a huge issue for us, but it would be a huge issue for the whole European telco sector,” said Read. “And what, Huawei have probably, what 35% market share through the whole of Europe, so I think that is a totally different consideration, but we now need to make a lot more fact-based conversation.”

The point which Read is making is a logical and incredibly important one. Too many people are getting swept up in the political rhetoric and not looking at the facts which are on the table. The negativity surrounding Huawei is starting to snowball, but little (if any) hard evidence has been put on the table. People are forgetting about the facts, instead contributing to the momentum.

What businesses like Vodafone need is certainty. The political see-sawing with Huawei is not providing much confidence for the telco to appropriately invest in networks. If this has a negative impact on the performance of the networks in the future, the politicians will be the first to point the finger of accusation at the infrastructure owners. The perfect storm of disaster and disorganisation is started to develop.

Ericsson upgrades Radio System, partners with Juniper on backhaul and buys CENX

Ahead of MWC Americas Ericsson has embarked on a frenzy of announcements around its core product offering.

The headline news is a significant upgrade to the Ericsson Radio System, its signature RAN product suite that has been a major part of its apparent recovery. Specifically Ericsson is launching something called the RAN Compute portfolio, which consists of a couple of baseband processors and a couple of radio processing units designed to be positioned wherever in the network you want your processing to be done. In other words this is a mobile edge computing play.

The other big thing in new, improved ERS is some new software called Ericsson Spectrum Sharing. This is designed to help with dynamic support of both 4G and 5G on the same spectrum, so long as you’re using ERS shipped since 2015, and can be installed remotely. While some of 5G will take place on higher frequencies, the stuff currently being used by 4G has the best propagation characteristics and will therefore remain valuable. This is the kind of 5G software upgrade Ericsson has been promoting as a key feature of ERS from the start.

“The hardware and software that we are launching today continues to address the flexibility needed for the next-generation networks,” said Ericsson EVP of Networks Fredrik Jejdling. “They offer our customers an expanded and adaptable 5G platform, making it easier for them to deploy 5G.”

We had a chat with Nishant Batra, Head of Product Area Networks at Ericsson, ahead of the announcement and he stressed this is all about ramping ERS’s 5G capability. Initially the propaganda was all about it being 5G upgradable, then about being ready for the 5G launch. Now the narrative revolves around this kit being positioned for the mass deployment of 5G.

Ericsson wants the world to see a picture of growing positive momentum and trying to be the perceived leader in 5G kit is a key part of that. “The momentum has never been better and we want to keep accelerating,” said Batra.

All this RAN shininess isn’t much good without some top-notch backhaul, however, and nobody is claiming that as an Ericsson strength. 5G is set to massively increase the volume of data passing across networks so, which being sure to big-up its own Router 6000 backhaul product and microwave tech, Ericsson has announced the extension of its partnership with Juniper to augment its transport efforts, as well as a new partnership with ECI on the optical side. So much for the big Ericsson Cisco partnership eh?

“Our radio expertise and knowledge in network architecture, end-user applications and standardization work put us in an excellent position to understand the requirements 5G places on transport,” said Jejdling. “By combining our leading transport portfolio with best-in-class partners, we will boost our transport offering and create the critical building blocks of next-generation transport networks that benefit our customers.”

“Commercial 5G is expected to represent close to a quarter of all global network traffic in the next five years,” said Manoj Leelanivas, Chief Product Officer at Juniper Networks. “With both companies bringing together industry-leading network technology, Juniper and Ericsson will be able to more effectively capitalize on the immense global market opportunity in front of us and help our customers simplify their journey to fully operational 5G networks.”

In other Ericsson news it has indulged in a rare bit of M&A via the acquisition of US service assurance vendor CENX. This move is designed to augment Ericsson’s OSS and managed services offerings and CENX is all about cloud-native automation, so its technology and 185 staff should be especially helpful in the area of virtualization. They haven’t said what it cost.

“Dynamic orchestration is crucial in 5G-ready virtualized networks,” said Mats Karlsson, Head of Solution Area OSS at Ericsson. “By bringing CENX into Ericsson, we can continue to build upon the strong competitive advantage we have started as partners. I look forward to meeting and welcoming our new colleagues into Ericsson.”

“Ericsson has been a great partner and for us to take the step to fully join Ericsson gives us the best possible worldwide platform to realize CENX’s ultimate goal – autonomous networking for all,” said Ed Kennedy CEO of CENX. “Our closed-loop service assurance automation capability complements Ericsson’s existing portfolio very well.”

Lastly Ericsson has announced a new partnership with US operator Sprint to build a new virtualized core and operating system dedicated just to IoT. Network slicing will be a major feature of the 5G era and IoT has network requirements quite distinct from other usage models, so it makes sense to not just apportion a piece of the network to it, but customise all the other tech too.

“We are combining our IoT strategy with Ericsson’s expertise to build a platform primed for the most demanding applications like artificial intelligence, edge computing, robotics, autonomous vehicles and more with ultra-low-latency, the highest availability and an unmatched level of security at the chip level,” said Ivo Rook, SVP of IoT for Sprint. “This is a network built for software and it’s ready for 5G. Our IoT platform is for those companies, large and small, that are creating the immediate economy.”

“Sprint will be one of the first to market with a distributed core network and operating system built especially for IoT and powered by Ericsson’s IoT Accelerator platform,” said Asa Tamsons, Head of Business Area Technology & Emerging Business at Ericsson. “Our goal is to make it easy for Sprint and their customers to access and use connected intelligence, enabling instant and actionable insights for a better customer experience and maximum value.”

That Ericsson is making so many announcements ahead of MWC Americas would appear to be a major endorsement of the event and of the GSMA’s regional expansion of the MWC brand. The timing might also have been influenced by the staging of Huawei’s Operations Transformation Forum event and even IFA, and it’s clear there is room in the telecoms calendar for big Autumn trade fests.