ZTE gets ahead of the game with cybersecurity centre launch

With Huawei facing scrutiny over its alleged ties to the Chinese Government, it will only be a matter of time before ZTE faces the same questions considering its own, complex ownership structure.

Taking a page from the Huawei playbook, ZTE has officially opened its European Cybersecurity Centre in Brussels, Belgium. The lab will open its doors to current and potential customers, as well as national regulators, to access the external security verification of ZTE’s products, services and processes.

As with the Huawei Cybersecurity Centre, this is a transparency mission to improve the perception of the vendor at a time where Chinese firms are facing increasing scrutiny in the international arena.

“ZTE’s original intention of the Cybersecurity Lab Europe is to provide global customers, regulators and other stakeholders with great transparency by means of verification and communication,” said Zhong Hong, ZTE’s Chief Security Officer.

“The security for the ICT industry cannot be guarded by one sole vendor, or by one sole telecoms operator. ZTE is willing to play an important role in contributing to the industry’s security along with its customers and all other stakeholders.”

Although ZTE has largely managed to avoid criticism from the US in recent months, which has predominately been centred around collusion with the Chinese Government, it is surely only a matter of time. The complex ownership structure of ZTE has direct ties back to the Government, much more noticeable than the tenuous link at Huawei which has been presented countless times.

ZTE is owned by Xi’an Microelectronics (34%), Aerospace Guangyu (14.5%), Zhongxing WXT (49%) and Guoxing Ruike (2.5%). Xi’an Microelectronics a subsidiary of China Academy of Aerospace Electronics Technology, while Aerospace Guangyu is a subsidiary of CASIC Shenzhen Group; both groups are state-owned enterprise and responsible for nominating 5 of the 9 Directors of ZTE.

ZTE clearly has more of a direct link to the Chinese Government, though it has seemingly avoided the spotlight thus far as it does not have the same market share in the network infrastructure market as Huawei.

According to the Dell’Oro Group, ZTE featured in the top seven network infrastructure equipment vendors worldwide, alongside Huawei, Nokia, Ericsson, Cisco, Ciena and Samsung, with the group accounting for roughly 80% of global market share. Huawei is leading the rankings by some margin, though over the course of 2018, ZTE’s share dropped by two percentage points to 8% global market share.

That said, it does have some significant customers in Europe. Wind Tre in Italy is supposedly one of the biggest customers of the firm, perhaps explaining its 5G research centre being located in L’Aquila, about 100km north of Rome. Elsewhere, ZTE has signed MOUs with Hutchison Drei Austria, Portugal Telecom and Telefonica in recent years. ZTE might not attract the headlines Huawei does, but it has an established presence in 15 countries throughout Europe.

Perhaps the saving grace for ZTE in recent months has been it operates in markets the US isn’t that bothered about. The Trump administration seems to be very selective when it levels its national security concerns at allies, focusing primarily on the more prosperous economies.

ZTE has already been the focal point of a number of different scandals including bribery and violation of US trade sanctions, and it seems it will only be a matter of time before government collusion is thrown on the table again, especially if it starts making progress in the market share league. It seems this cybersecurity centre focused on transparency is an effort to get ahead of the game.

Exciting Time for 5G Has Only Just Started

To say that the buzz about 5G has created excitement in the telecoms world would be an understatement. After the first commercial networks switched on in North America and Asia, Europe is also caching up quickly. More recently, four 5G licences were awarded in China, the world’s largest mobile market, well ahead of the schedule that has been broadly anticipated. But the world has only seen the beginning of the true 5G, with much more excitement to come in the next few years. I used my recent interview by Telecoms.com to explain why.

Telecoms.com: There is no doubt that 5G rollout is accelerating. However, the commercial networks switched on so far have only offered enhanced mobile broadband (eMBB) services and used data speed as the key selling point. Isn’t that a disappointment? How do you see the industry move from here?

Wang: No, it’s by no means a disappointment. As a matter of fact, I see in the 5G services being offered now the beginning of a long exciting time for the telecom industry. We all know 5G can offer much more than broadband access, but to start with broadband access has its advantages.

To start with, in addition to the fact that broadband access is easier for consumers to understand, it is also a good way for the telecom industry to gain experience. 5G is a watershed opportunity for the telecom industry to directly participate in the digitalisation of other industries. Telecom operators will find in offering high-speed internet access a valuable and reassuring starting point to deepen their understanding of other vertical industries.

Another advantage of starting with enhanced broadband access is that the eMBB scenarios for all Option modes has been frozen in the R19 Late Drop version of Q1 in 2019. Therefore, with a more mature technology, despite its being new too, the success rate will be higher. In comparison, although the technologies are ready for other 5G use case implementations, including low latency and massive IoT, the standardisation for Ultra Reliable Low Latency Communications (URLLC) will only be finalised in March 2020 with Release 16, and the standards of Massive Machine Type Communications (mMTC) for NR won’t be frozen until Release 17. 3GPP schedule for Release 17 is still open though we expect it to be completed in the first half of 2021.

Telecoms.com: That explains why some operators choose to launch 5G early by adopting the NSA mode, some would rather wait till the technologies are more mature and go directly to SA mode. What would be your advice to the operators on their options?

Wang: Technologically, the 5G base stations can handle both NSA and SA modes, but the key difference is in the core. NSA Option3 is built on LTE Evolved Packet Core (EPC), but SA Option2 is built on the new 5G core that is organised around services, i.e. using Service-Based Architecture (SBA). Therefore, to unleash the full potential of 5G, especially the B2B potential, going for NSA mode will make more sense. This is also meaningful in a business sense for the telecom operators who would expect to generate more value from 5G service offerings to business customers.

A fundamental difference between serving consumers and serving business customers is that, consumers are generally more price sensitive, and tend to treat personalised offers as a bonus, while business customers are much more demanding in time to market (TTM) and customisation capabilities. Some current hotspot technologies, including network slicing and virtualization, integration with the cloud, edge computing, and full adoption of AI, machine learning and automation, can be better implemented in a 5G environment.

However, this doesn’t have to be an “either-or” choice. Operators may choose to adopt the NSA mode now, so that they don’t have to wait till all the standards are frozen or SA mode devices are broadly available. They can then transit to the SA mode at their choice of time. Technologies from companies like ZTE are making the transition straightforward and cost-efficient, because we are facilitating the convergence of different technologies and business operations.

Telecoms.com: This leads me to the next question. We have heard industry professionals talk about convergence for many years. What is so unique about the convergence in 5G era? And what is ZTE’s answer to it?

Wang: One of our technology answers to the convergence demand is the industry’s first Common Core. This architecture level innovation serves networks from 2G to 5G and, in the case of 5G, it is equipped with NSA and SA dual-stack capability. Therefore, operators using the Common Core can choose to deploy SA, or NSA, or even SA/NSA dual-mode networks based on their own business needs. The architecture is modular, so it does not only save resources and cost, but also vastly simplifies the network architecture, and fully supports the strong demand for edge computing and low latency in an end-to-end 5G environment.

What we offer are clearly welcomed by our customers. That’s why, so far, ZTE has cooperated with more than 40 operators worldwide in the 5G field. As we speak, we are testing and demonstrating end-to-end 5G services, including automatic cars, real-time robotics, and hologram video calls, in partnership with Telefonica and Orange in Spain. These use cases are driving more excitement for 5G, which has just started by the live 5G networks switched on.

ZTE moves to prove its own security credentials

Taking a page from the Huawei playbook, ZTE is opening its own European cybersecurity lab to demonstrate its own security credentials and appeal to customers.

Although Huawei is taking a battering on the US side of the Atlantic, European nations have stubbornly stood by the side of reason and reasonable behaviour, asking for evidence before signing an execution order. One of the reasons for this will be the apparent transparency to security through its cybersecurity centres in the UK and Belgium, and it seems ZTE is following suit.

“The security lab is an open and cooperative platform for the industry,” said Zhong Hong, ZTE Chief Security Officer.

“ZTE plans to gradually achieve the cybersecurity goals through three steps: first, meeting the requirements of cybersecurity laws, regulations and industry standards as well as certification schemes; second, conducting an open dialogue to enhance transparency and establishing cooperation with customers as well as regulatory agencies; and third, sustaining the open cooperation mechanism to contribute to cybersecurity standardization.”

Opening in Rome, the cybersecurity lab will enable telcos to contribute ideas to improve the security credentials of ZTE products, while customers will also be able to conduct audits of all products and services in the labs. This approach is seemingly working for Huawei, and ZTE is recognising the opportunity to get in on the action as 5G ramps up across the continent.

For ZTE this is a perfectly sensible move to mitigate against future risks. As Huawei is largely a proxy for Chinese aggression, it would be reasonable to assume any action taken against Huawei would be replicated against ZTE. Anything which can be done to get into the good graces of potential European customers should be seen as a priority.

Although it is for selfish reasons, the cybersecurity centre also adds more credibility to the standardisation approach which seems to be forming across the European continent. The more vendors who agree to the higher barriers to entry, the closer the continent comes to standardising security credentials. This approach to risk mitigation, an acceptance that 100% secure is an impossible objective, manages threats while also preserving competition.

Until there is concrete proof of collusion with the Chinese government for nefarious aims, this is the most sensible approach, taking the argument out of the political arena.

ZTE & China Mobile Jointly Realizing Industry’s First Typical-service-based NB-IoT High-capacity Evaluation with NMVP

Typical services such as smart meter, smart smoke detector, smart park, and electric bicycle have been widely applied in China Mobile’s NB-IoT live network. To evaluate the high-capacity performance of the NB-IoT network, China Mobile proposed a high-capacity evaluation solution and an end-to-end performance optimization solution based on typical NB-IoT service models. At the end of 2018, ZTE and China Mobile carried out the high-capacity evaluation in Tianjin for the first time based on the typical service models with the help of ZTE’s solution named NB-IoT Massive-connection & multi-service Virtual-verification Platform (NMVP). By evaluating the impact of different service models, subscriber distribution, and parameter configuration on capacity, the field test provides support and basis for network deployment and optimization.

Based on the real service model and service performance requirements of China Mobile’s NB-IoT live network, ZTE and China Mobile mainly evaluated the high-capacity, delay, and access performance of typical NB-IoT services such as electricity meter call test, water meter reading report, smoke alarm, and parking information report. Meanwhile, NB-IoT wireless network congestion control feature was also tested. The evaluation in Tianjin provides important reference to the business deployment of China Mobile’s network, high-capacity performance optimization and capacity expansion.

The high-capacity evaluation in NB-IoT live network scenario needs a large number of real terminals. However, except the obvious inconvenience problem in carrying so many terminals, there are also other bottlenecks limiting the field test, such as computer operation, operation space, power supply, and fault tracing. ZTE solves all the issues by simulating a large number of terminal’s access and service interaction processes with NMVP. NMVP not only supports high-capacity and multi-service evaluation for field test, but also supports precise simulation of live network firstly by mirroring technology in the industry, which achieves network optimization remotely. Besides, NMVP can provide capacity evaluation for a variety of different NB-IoT service models and their hybrid service models, and guide network deployment and expansion. Moreover, through NMVP, signaling tracing is also available to improve troubleshooting efficiency.

ZTE and China Mobile are now in the second phase of service plan with NMVP solution. The network optimization will be implemented remotely to ease the network capacity pressure caused by a large-scale smoke-sensing service of Beijing Mobile. ZTE, with its strong R&D and innovative capabilities, can offer the operators around the world with cutting-edge IoT solutions like NMVP, and is committed to helping the operators build high-quality and competitive NB-IoT networks, thus accelerating the evolution of Internet of Things with much improved efficiency.

ZTE CUDR, A 5G-oriented “Safe Box” for User Data

Main risks faced by user data

User data is the most important asset in communication network. Its security and reliability are the basis for ensuring the normal operation of the network. If user data is unreliable, it may cause some users’ services to be abnormal, and the serious result is that the entire network service can break down, causing huge losses to operators and users. In recent years, incidents in the communication system have taken place due to the loss of key user data at both home and abroad, so the security and reliability of user data cannot be neglected.

At present, the security and reliability of user data mainly faces the following risks:

  • Data reliability is insufficient: It can cause risks, for example, user data is easily to lose, data between nodes is easily inconsistent, and user data is difficult to recover in the event of a failure.
  • Data security is not high: It can cause illegal users to access, eavesdrop and tamper with user data, and there is a risk that personal data will be easily leaked.

In order to resolve various risks of user data and ensure the security and reliability of user data, ZTE has launched the Cloud Unified Data Repository (CUDR) solution.

ZTE CUDR is the solution to ensure data security and reliability

CUDR, which is located in the common data layer in communication network, provides common data storage services for various NFs (Network Functions) and applications in communication network. It is a public data layer based on requirements of 5G/cloud/3GPP data services, which realizes the convergence and unified storage of 2G/3G/4G/5G and IMS network user data, and can flexibly meet different deployment requirements of operators.

zxun cudr

Figure1 ZXUN CUDR Solution Architecture

CUDR includes UDR (Unified Data Repository) and UDSF (Unstructured data storage function). UDR is responsible for storing and processing the structured data, and UDSF is responsible for storing and processing the unstructured data. Based on CUDR, the communication network separates computing from storage, and the application focuses on the processing of business logic. CUDR focuses on the processing and reliability of user data, providing high-performance data access interfaces for applications. The applications and data can be flexibly and independently scaled in/out to achieve full load sharing, greatly enhancing network reliability.

ZTE CUDR supports the storage of massive user data and provides millisecond-level user data access services. It is a fully distributed, big-capacity, high-performance, and highly reliable shared data layer solution.

The storage of massive data raises a higher requirement for data reliability. The reliability of ZTE is mainly displayed as follows:

  • Reliable geographical disaster recovery: ZTE CUDR supports flexible N+K geographic disaster recovery. The data of each site remains strictly consistent. When one site breaks down, services and data can be smoothly taken over by other sites. The disaster recovery switching process does not require manual intervention or does not need to send Reset. The solution is controlled automatically, and the network services are recovered immediately.
  • SON (Self-Organizing Network) with perfect fault monitoring and self-healing capabilities: It can automatically monitor the status of the system, VMs and service components. In the event of an abnormal situation, the system is automatically recovered by automatically isolating the breakdown node, automatically restoring the node, and making self-healing of VMs, without manual intervention and for the convenience of system maintenance.
  • Perfect overload control mechanism: Firstly, the system resources are increased by making automatic scaling-out to automatically improve the system’s capability to handle enormous traffic. When the system resources are fully utilized and cannot meet the current high traffic processing requirement, the system automatically starts load control, and enables different levels of service control according to different load levels, ensuring that high-priority services are prioritized and the user’s service experience is as good as possible.
  • Multi-level data backup and recovery mechanism: The self-developed high-performance memory database and file storage system are used to process user data. To ensure data reliability, memory database nodes are divided into primary nodes and secondary nodes. The data between the primary nodes and the secondary nodes is fully synchronized. In addition, in order to ensure that user data is not lost when the system is powered off, the storage system persists user data to the local hard disks, cloud storage and external backup servers in real time or quasi real time as required, so that the same data is backed up in multiple-copy mode. When the data node is recovered, multiple data backups are available to ensure that data is not lost.

zxun cudr2

Figure 2 ZXUN CUDR Multi-level Data Backup Solution

 

  • Multi-layer data verification mechanism

1) When reading and writing data, you can verify data integrity based on the schema in real time.

2) You can make strict verification of data replication and recovery between the primary node and the standby node to ensure data consistency between the primary node and the standby node.

3) The data in the memory database is strictly checked with the data persisted to the disk. If the data is inconsistent, it is automatically restored by rebuilding the standby node.

The data security of ZTE CUDR is mainly displayed as follows:

  1. Multi-dimensional data organization security:
    1) Tenant isolation: Data organization and access are made by tenants, and data storage and access are strictly isolated. Operation and maintenance are isolated from each other, and data upgrades do not affect each other. Each tenant implements life cycle management separately, and the scaling-in and scaling-out do not affect each other.

2) Access security: The strict ACL (Access Control List) data access control and strict authorization control are made to provide different data views based on permissions. Access control and view control restrict authorized applications from accessing authorized user data only, and limit access operation types such as add, read, update, and delete at the same time.

3) Sensitive data and backup data are encrypted and stored, and the hardware and software security encryption mechanism is provided for sensitive data (such as terminal authentication parameter Ki) to protect user data.

  • Strict personal data protection:

1) Strict access control: Ordinary operators can only view the anonymous operation interface, and only authorized operators can use the plain text operation interface.

2) Only authorized operators are allowed to export user data and can export the plaintext or decrypted user data based on the rights.

3) Only authorized operators can export plaintext or desensitization logs based on permissions.

  • Strict security audit:

1) ZTE CUDR provides system class logs, operation class logs and call class logs to comprehensively record the system running status.

2) It provides storage management of online logs, dump logs, and backup logs.

3) It sets the audit policy according to the log level, keyword, log type, and specific log field.

4) It provides a way to query logs according to various conditions.

Conclusion

The ZTE CUDR solution is born for 5G, providing unified data storage and processing for all NFs in the network. It can ensure the integrity, reliability and consistency of user data, and calmly deal with the impact of natural disasters and heavy traffic to ensure service continuity. In addition, it ensures that user data is safe, users are not easily illegally accessed or tampered with to strictly protect individual data, and user information is not leaked. It is a “safe box” for user data, ensuring that the network services can run safely and stably all the times.

Huawei forecast to have narrow advantage in 5G RAN race

Analyst firm Strategy Analytics has taken a look at the runners and riders in the global 5G race and has Huawei ahead of its rivals by a nose.

In a report titled ‘Comparison and 2023 5G Global Market Potential for leading 5G RAN Vendors – Ericsson, Huawei and Nokia’, SA took a look at the relative competitiveness of the big three kit vendors when it comes to 5G radio access network kit and made some market share forecasts accordingly.

The long and short of it, as you can see in the first table below, is that SA reckons by 2023 Huawei will account for around a quarter of the 5G RAN market, while Ericsson and Nokia will have closer to 23%. On top of that the ‘others’, largely Samsung and ZTE, will account for almost 30% between them, which is a decent effort. Samsung seems to be doing especially well in South Korea, funnily enough.

SA 5G RAN chart

“By 2023 5G looks to be a very competitive global market as this premium technology finally achieves economies of scale that will drive down the costs per Gigabyte of throughput to make 5G an affordable technology on a global basis,” said Phil Kendall of SA. “The neck and neck battle between Huawei, Ericsson and Nokia for share of 2023’s 5G radio access should lower costs for all segments of mobile, IoT and fixed 5G applications, even as smaller new vendors find specific niches below these three.”

The report also digs down into the strengths and weaknesses of the big three vendors. Specifically it looks at five broad categories: R&D, patents, product portfolio, product performance and deployment support. The bad news for the Nordic vendors is that Huawei comes top in all five categories, only having to share that spot with the other in the case of product portfolio. It looks like Ericsson needs to start putting its hand in its pocket and Nokia wants to take on a few more engineers.

SA 5G RAN comparison

“R&D investment backed by market scale is the most crucial factor for the long term competitiveness of 5G infrastructure vendors,” said SA’s Guang Yang. “Huawei has maintained steady growth in its 5G R&D investment, which bodes well for long term advances in energy efficient, cost effective 5G technology.”

With all that in mind it’s kind of surprising SA doesn’t anticipate a bigger lead for Huawei in four years’ time. The reason, presumably, is that Huawei will be excluded from a bunch of markets thanks to all the US aggro it faces. Opinion seems to be divided about how much slack will be picked up by Chinese sales, with Huawei revealing it has yet to do any 5G deals in mainland China, but the analyst in the video below still seeing that country as a big competitive advantage for them.

 

All four operators are awarded 5G licences in Japan, with security conditions attached

NTT DoCoMo, KDDI, Softbank, and Rakuten have all received the 5G licences they applied for, but they come with coverage obligations and security commitment.

The Ministry of Internal Affairs and Communications announced on 10 April (in Japanese) that all the four applicants have been awarded radio frequencies and licences to rollout 5G services. Each licensee is awarded 400MHz spectrum on the 28GHz frequency, while three of them are awarded 200MHz on 3.7GHz except Rakuten, which has requested 100MHz.

All the operators are going to roll out 5G services starting in 2020. NTT DoCoMo, KDDI and Softbank will launch the service in spring time, with Rakuten planning to open its service in June. The total investment planned by the operators to the end of 2024 amounted to Yen 1.6 trillion ($14.4 billion).

While both NTT DoCoMo and KDDI have pledged to cover over 90% of the country within five years, Softbank only plans to cover 64% of the country and Rakuten 56%. The minimum requirement from the government is serving every prefecture within two years, and at least 50% of the whole country within five years, calculated by the number of geographical blocks the networks will cover out of the total 4,500 blocks the Ministry divides the country into.

In addition to coverage requirement, the Ministry has also attached a dozen granting conditions (pp.16-17 of the summary, in Japanese), including commitments to expand optical fibre networks (#2), to improve safety measures to minimise outage during natural disasters (#3), to prevent interference of existing radio licensees (#7) etc.

The item that may raise eyebrows is Item 4 on the list, which requires the operators to “take appropriate cyber security measures including measures to respond to supply chain risks” (unofficial translation). It refers to earlier regulations including the “”Information and telecommunications network safety and reliability standards” published by the Ministry of Post and Telecommunications in 1987, “Common Standards Group for Information Security Measures for Government Agencies and Related Agencies” issued by the National Information Security Center (NISC) in 2018, and the cross-departmental “Agreement on IT procurement policy and procedures for goods and services” published on 10 December 2018.

The last two documents, though neither of them names any particular countries or brands to be excluded, have been broadly recognised as the Japanese government’s decision to ban companies like Huawei and ZTE from public sector procurements. By invoking these regulations, it may not be too much of a stretch to read it as a message to the operators to stop using equipment supplied by the Chinese vendors. This may not cause serious disruptions to the operators’ business though, as Softbank, the only operator that has Huawei equipment on its network, is already planning to swap for Ericsson and Nokia, Nikkei reported earlier.

Japanese 5G licensees

Orange Spain and ZTE complete Europe’s first standalone 5G call

The mobile operator claimed that the voice and data call over end-to-end 5G network in Valencia was the first of its kind in Spain as well as in Europe. All other trials have been done over non-standalone networks.

The Spanish branch of Orange successfully trialled a voice and data call on a “100% 5G” network with standalone architecture, the company announced. The end-to-end solution was provided by ZTE, one of Orange’s suppliers. The test achieved a peak downlink data rate of 876 Mbps on one test terminal, and 3.2 Gbps with 12 test terminals working simultaneously in the same cell.

“It is critical to understand this new and disruptive technology, with which we could close the gap from our 4G networks to offer our customers the best possible 5G network in the world when the time is right,” said Mónica Sala, Director of Networks at Orange (translated from Spanish). “The know-how of ZTE is evident in achieving this milestone and we are very proud of the results.”

The live 5G networks today, in South Korea and the US, for example, are primarily providing enhanced mobile broadband services, which can be achieved with non-standalone mode, i.e. overlaying 5G radio networks on top of 4G core. This was the architecture that Huawei used when demonstrating 5G at MWC on Vodafone’s network. On the other hand, to achieve 5G’s full capabilities, including to provide virtualised networks (e.g. network slicing for a particular client) and to run the extreme low latency applications (e.g. automatic cars) there would need end-to-end 5G networks, i.e. 5G radio and 5G core.

ZTE was also obviously happy with the success of the trial. “It is a great pleasure for us to work hand in hand with Orange for technological innovation and 5G leadership,” Xiao Ming, President of Global Sales at ZTE stressed. Orange is one of ZTE’s two biggest accounts in Europe (the other being the Three group), so holding on and expanding the partnership is critical for the company that has been struggling in the mature markets.

Orange Spain plans to extend 5G trials to other industries including construction, energy, health, automotive, and tourism, to test out the use cases. The company also said that it is going to test 5G in a handful of cities with the support provided by Red.es, the country’s digital transformation programmes, operated under the direction of the Secretary of State for Information Society and Digital Agenda.

Despite a $1 billion loss ZTE is seeing light at the end of the tunnel

The Chinese telecom vendor ZTE reported a total annual net loss of over $1 billion from its business in 2018 but is foreseeing returning to profit in Q1 2019.

After a roller-coaster year, ZTE reported a total operating revenue of RMB 85.5 billion ($12.7 billion, at the exchange rate $1=RMB6.7233) in 2018, a 21.4% decline from a year ago. The net loss amounted to RMB 6.9837 billion ($1.04 billion), down from a net profit of RMB 4.57 billion from 2017, or a decline of 253%. After pulling off a surprising return to profit in Q3 last year,  the net profit in Q4 came down to RMB 276 million, narrowed by more than a half from the RMB 564 million from the previous quarter, despite that the quarterly revenue increased by over 38%.

When looking at the results by business lines and by sector, we can see that its consumer business, mainly smartphones, which account for more than a quarter of ZTE’s business before the US sanction, suffered the heaviest decline. The unit’s total revenue came down by 45%, and only accounted for 22% of the total business in 2018. The revenue from carrier’s network business shrank by 10.5%, and that from B2B business including public sector was down by 6%.

When it came to its performances in different markets, the heaviest decline came from its business in mature markets in Europe, Americas and Oceania, where the revenues dropped by 45%, followed by that from Asia, which was down by 25%. The domestic market, representing 63.7% of ZTE’s total business, suffered a decline of 12%. Its business in Africa actually registered a growth of 8.4%, despite that it only accounted for less than 5% of ZTE’s total business. Incidentally, it was in Africa that ZTE reaped the highest gross margin of 48%, compared to 38% in China, and only 13% in Europe, Americas and Oceania.

The decline of the annual total business could largely be attributed to the heavy fines of $1.4 billion ZTE had to pay the US government for the settlement in the middle of last year, in addition to the wholesale change of management and the board. The market has chosen to look at the upside after the ban was lifted. Its share price had already gone up by over 50% by the end of last year and has now more than doubled the low of last July.

Looking forward, ZTE predicted that it would generate between RMB 0.8 billion and RMB 1.2 billion ($119 million to $178 million) net profit during Q1. To power future growth, the company spent 12.8% of its income on R&D during 2018 and will continue to do so this year. In particular, ZTE “has continuously concentrated on the core 5G technical fields and further intensified 5G R&D investment.”

However, 5G is a long play, and is a game that there is no guarantee ZTE will win. The prospects in China, by far ZTE’s biggest market, are less than certain, as the Chinese operators are among the cautious ones when it comes to 5G investment. Africa and Pakistan, where the company has a relatively strong position, are not going to deliver results from 5G very soon. In Europe and North America, where its customer base is already limited, ZTE has been included in the list of “Chinese vendors” which the US government is lobbying to ban, despite the limelight is often on Huawei, ZTE’s arch-rival.

ZTE Considerations for 5G Network Deployments

5G will not only bring much faster access rates, but also penetrate into every corner of the world through flexible network slicing. It will drive the digital transformation of vertical industries and become the cornerstone of digital society.

With the freeze of R15 standard, the release of 5G spectrum, the maturity of 5G equipment and the accelerated development of 5G terminal chip, 2019 will be the first year for 5G commercialization. At this stage, the focus of mobile operators is gradually shifting from 5G equipment testing and verification to more practical network deployment. This article will discuss the key challenges in 5G network deployment, and give some suggestions to operators who are preparing for 5G deployment.

Choosing the Most Suitable Network Architecture

5G deployment has two architecture options: Standalone (SA) and Non-Standalone (NSA). With NSA, a first-mover advantage can be derived from architecture maturity, but it is only applicable to eMBB services and involves complex coupling with 4G network. SA, as the ultimate target network of 5G, has obvious advantages in new service support, coverage, performance, network flexibility and terminal energy efficiency. At present, the major concerns operators have with SA architecture including network coverage, SA terminal and 5GC maturity.

From the 5G R&D roadmaps unfolded by 5G terminal chip vendors like Qualcomm, Intel and MTK, chipsets released from 2019 onwards will support NSA and SA at the same time; thus for operators starting 5G network construction after 2019, terminal is not a decisive factor in choosing NSA or SA.

Considering the maturity of 5GC, there is no need to have complete features in the initial stage of 5G deployment. Operators can adopt the target architecture in one step, open the interfaces step by step, and introduce the functions in stages, so that the commercial time of 5GC can be advanced to Q1 2019. Therefore, 5GC does not constitute a constraint factor to the commercialization of SA.

Taking the obvious advantages of the SA architecture into account, if operators could achieve continuous 5G coverage with reasonable investment and build an independent 5G network, operators are not very motivated to choose the NSA architecture. Therefore, besides the mandatory requirement of new service, we believe that the coverage capability of 5G base station and the operator’s 5G network investment are the key factors for choosing SA or NSA, whether 4G and 5G co-site deployment is feasible highly depends on the cell edge speed requirement of 5G and the density of existing 4G base stations.

Once the quantity of antenna elements, the independent transceiver channels and the transmit power of the 5G AAU are determined, the coverage of the 5G base station mainly depends on the available 5G frequency bands, the complexity of the wireless environments, and the KPI requirements for 5G services, especially the cell-edge access rates. And the planning of cell-edge access rates depends on the minimum network performance requirement of 5G services, whether to support seamless mobility, and the acceptable 5G network construction cost.

Based on the above principles, if an operator only has the millimeter-wave spectrum for 5G construction, it is more appropriate to select the NSA architecture because millimeter-wave has larger propagation loss and poor scattering or diffraction capabilities compared with 1.8 GHz or 2.6 GHz band. When millimeter-wave spectrum is used for mobile access service, it can hardly achieve continuous coverage as 4G network, so it’s better to rely on the 4G network coverage and only use it as a capacity layer to the ultra-high-speed service in hotspot areas.

If an operator can obtain the mainstream 3.5 GHz spectrum, has reasonable cell edge access rate requirement, for example 50 Mbps downlink (supporting 2K/4K HD video and AR applications), 2 Mbps uplink (supporting 720p video upload anytime, anywhere), and also has enough investment to build a 5G continuous coverage network in dense urban areas, we believe that SA is a one-step and more suitable network construction mode. According to ZTE’s field test data, in dense urban scenarios where the inter-site distance is less than 400 meters, it is possible to achieve continuous coverage of 5G through 4G/5G co-site deployment; in the area where the site spacing is more than 400 meters, an appropriate number of 5G macro or micro base stations can be added to meet the uplink data rate requirement of 2 Mbps.

Of course, if an operator has very limited investment at the initial stage of 5G deployment, can only deploy a small number of 5G base stations in 4G network hotspots for marking purpose, it is more economical and practical to choose the NSA network construction mode.

If the operator has higher requirements for network edge performance, such as increasing the uplink rate to 5 Mbps (supporting 1080p video upload anytime, anywhere), it is recommended to use carrier aggregation of 3.5 GHz spectrum and 1800/900/700 MHz spectrum. Since 1800/900/700 MHz bands have been refarmed for 5G New Radio, the network construction mode is still SA. We think It is very difficult to achieve 5 Mbps uplink data rate in NSA mode with around 400 meters inter-site distance even if the uplink capability of both 4G and 5G is utilized; deploying a large number of new base stations also involves high investment costs, and supplemental uplink solution is too complex.

Maximizing the Value of Existing Site Infrastructure

Besides the network architecture, how to introduce 5G into the existing sites with high-density of RAN equipment is also a major challenge for operators. At present, the majority of operators have multiple bands (such as 900 MHz, 1.8 GHz, 2.1 GHz and 2.6 GHz) and multiple standards (GSM, UMTS, LTE and NB-IoT) in the same site. It is also very common for several operators share the same site infrastructure such as towers and cabinets. Most of the sites have dense deployments of antennas and RRUs, making it difficult to add 5G AAUs. While building new sites face such problems as difficult site acquisition, high investment costs, and long construction periods.

The introduction of multi-band, multi-port passive antennas, active + passive hybrid antennas, and ultra-wideband RRU provides a new way to solve the problem of tight antenna installation space in the macro base station. Operators can consolidate and optimize the multiple antennas of each sector of the existing network before or during 5G construction. Thus, valuable space will be released for installing 5G AAUs, and each sector will only use one or two multi-band antennas to cover all frequency bands and wireless standards for 2G, 3G and 4G, and one active antenna to serve 5G networks. In this way, the 5G network can be deployed without adding new sites, and the multi-network operation and maintenance (O&M) costs can be reduced.

Regarding the 5G AAU equipment, ZTE recommends using 64T64R AAU in dense urban areas to achieve the highest performance, and 16T16R AAU in urban and suburban areas to make a good balance between coverage and network construction costs. The 64T64R AAU consists of a large number of independent transceiver channels, which can support accurate horizontal and vertical beamforming at the same time, thus achieving ideal capacity gains with space division multiplexing in densely populated areas. In addition, 64T64R AAU has strong beam reflection, diffraction, and anti-interference capability. Even in dense urban areas with complex wireless environments, 3.5G NR can achieve the same coverage as existing 1.8 GHz 2T2R LTE with co-site deployment mode, thus reducing the difficulty and cost of 5G network deployment. For the general urban and suburban scenarios with a small number of data users, low traffic density, a very low pairing probability of MU-MIMO, 16T16R AAU is recommended, because it has higher cost-performance ratio, and also enables 3.5G NR to have the same coverage as 1.8G LTE even with co-site deployment mode.

For 5G network blind spots or hotspots, it is recommended to use Pad micro station to improve local performance. The pad-sized 5G micro base station can be installed in a concealed location like the exterior wall of the building, the street light pole and the advertising light box, which significantly reduces the difficulty of the site acquisition and can quickly increase the hotspot capacity and eliminate blind spots.

In terms of baseband processing unit, the future-oriented high-capacity baseband processing unit can support all wireless standards from 2G to 5G, and flexible deployments of centralized units (CUs) and distributed units (DUs). Besides converged 4G/5G networking capability, it can support smooth transfer of hardware processing resources from 2G and 3G to 4G and 5G in the future when the existing 2G/3G network reaches the end of its life cycle, thereby maximally protecting the investments of operators.

Introducing AI to Improve Multi-Network O&M Efficiency  

In the 5G era, operators will face the challenges of complex networks, diversified services, and personalized experiences.

The network complexity is mainly reflected in the coexistence of multiple networks; and with the dense networking of large-scale antenna arrays, the complexity of beam control and parameter configuration in 5G is increased by an order of magnitude compared with 4G. The SDN, NFV, and cloud deployments also disrupt the familiar network O&M model of the operator’s O&M team. Business diversification is mainly reflected in the fact that 5G exceeds eMBB business and penetrates into vertical industries such as industrial manufacturing, agricultural production, smart home, telemedicine and autopilot. Experience personalization is mainly reflected in the fact that 5G delivers customized and differentiated services for specific industries or users, builds network access, data analysis and application services covering a user’s full business processes and full business scenarios, and allows lifecycle management and continuous optimization of customized network slices. The above three challenges urgently need the introduction of AI to improve O&M efficiency.

AI technology represented by machine learning and deep learning can be widely used in network alarm, fault root cause analysis, network coverage, performance optimization, network capacity prediction, accurate network construction, network-level energy management, dynamic scheduling of cloud network resources, and intelligent network slicing, thereby improving network O&M efficiency and reducing network O&M costs. The application of AI can be roughly categorized into intelligent site equipment, intelligent O&M, intelligent edge cloud engine, and intelligent network planning and optimization.

Summary

Although operators will face various challenges during the 5G network deployment period, 5G’s flexible slicing capability and its potential for digitalization and intelligent transformation of vertical industries also give operators confidence about the network profitability in the 5G era. ZTE is willing to closely cooperate with operators to solve the problems in network deployment and O&M, and work together to create a brilliant future!