5G: The Efficient Engine to Virtual Infrastructure Optimization

Ahead of his participation at TM Forum Live!, ACG Research’s Elias Aravantinos looks at how 5G technology can be the engine to optimize the different parts of the network to enable new, faster and more profitable services.

Infrastructure optimization

In an effort to address the demand for capacity and average revenue per user (ARPU) pressures, service providers are looking at 5G technology as the engine to optimize the different parts of their networks and deliver faster, new and more profitable services. In many cases, they realize that upgrading their physical infrastructure has limitations because of costs and inefficient time to market constraints, and they are looking for solutions, specifically virtualization, that scale their networks to meet the capacity demand while simultaneously delivering business value – savings.

Click to read the TM Forum article.

    

    Elias Aranvantino

    earanvantino@acgcc.com

    www.acgcc.com

WORLDWIDE MOBILE IP INFRASTRUCTURE WILL GROW TO $7.4 BILLION BY 2020

Mobile data, LTE upgrades, all-IP transformation and services, and network modernization are expected to positively impact demand for mobile IP infrastructure

The Worldwide Mobile IP Infrastructure market is projected to increase from $4.5 billion to $7.4 billion by 2020. ACG Research anticipates that the total Mobile IP Infrastructure market will increase 15% in 2016 as well as increase in each successive year. Mobile IP Routing Backhaul revenue will increase 7.1% and Switching Backhaul revenue will grow 1.8% during the forecast period. The Packet Core, both Mobile Packet Core and Evolved Packet Core, will surpass 15% by 2020. Although major LTE roll-outs, mainly in the macrocell layer, were completed in 2015, there is continued pressure for more mobile data capacity as mobile broadband subscribers and smart devices continue to grow. Providers want advanced services such as WiFi calling and VoLTE, fueling the demand for packet gateways, control plane functions and virtualization. LTE Carrier Aggregation, 5G and IoT capacity planning are expected to positively impact demand for mobile IP infrastructure. Vendors continue to upgrade their networks and technologies, as densification will be the key driver behind demand for data, which is expected to increase.

The projected five-year growth will be strongest in the Americas region, CAGR +11.0%, followed by the EMEA, CAGR +10.5%, and APAC, CAGR +9.0%.

“In the next five years, service providers will continue to focus on LTE but also target ultra-network transformation, looking into new architectures that will allow them to capitalize on the existing networks, identify new revenue streams, and deliver high quality of experience, service agility and innovation,” says Elias Aravantinos, mobility analyst. “Service providers are looking at vendors’ solutions that will allow them to not only manage existing networks but also let them transform to next-generation networks with simplicity, scalability and, most importantly, with low failure risk services to preserve service viability and minimize network downtime.”

TREND AND DRIVER HIGHLIGHTS

To address the demand for capacity and average revenue per user pressures, service providers are looking at 5G technology as the engine to optimize the different parts of their networks and deliver faster, new and more profitable services. 

Mobile data traffic and 4G/LTE subs are projected to increase significantly during the next six years with operators responding with faster network deployments to satisfy subscribers’ demand, which is driven by video, for more capacity. 

Data centers, flexible virtualized platforms and new software modules are now changing the traditional physical infrastructure thinking over the next 6 years that will put pressures to operators as they need to manage and maintain both virtual and legacy networks. 

How networks proliferated by SDN and NFV will look in next 3 to 5 years will impact 5G standards and subsequent deployments. New network architectures delivering service agility, such as network slicing and virtual automated platforms, could save time and generate quick revenue.

For more information about ACG's mobility services contact info@acgcc.com.

    

    Elias Aranvantino

    earanvantino@acgcc.com

    www.acgcc.com

The 5G Wave of the Future

Today, congestion plagues low-frequency below 6GHz spectrum bands, which, consequently, not only makes it very difficult to add more capacity but also limits the number of antennas used (no more than two or three antennas).

The landscape, however, is much different in the high-frequency bands, usually known as the millimeter wave (mmW). The channels are much wider, reaching even 250MHz and multiples thereof in some bands (such as E-band), providing the needed capacity for 5G access and backhauling. In general, the mmW can request a wide availability of spectrum, which is a prerequisite for both access and backhaul. More antennas can be used (ranging from 4, 16 or even 32), resulting into beamforming that as it advances to shorter wavelengths allows for smaller antennas (including arrays needed for beamforming and beamsteering). Antenna directivity is much better in high frequencies, allowing a high spectral reuse factor. High-frequency radios can widely be used today and demand will continue to grow, especially for E-Band (80GHz) in dense areas where high capacity is needed. ACG anticipates that the momentum for E-Band will continue and will be preferred for new 5G (by 2020 or earlier) deployments technologies. (One in five links could be E-band in 2020.)

Regulation is the main enabler for high-frequency solutions adoption because by applying different licensing models it could encourage better use of spectrum, weighing in factors such as frequency bands, geographic region, and local microwave hop density. Ericsson recently described the multiband booster method, which could maximize spectrum efficiency, add new technologies that can exploit unused spectrum, and upgrade the capacity of microwave backhaul networks up to tenfold. This is a great option that has been used for years from other leading vendors as well but in most cases is still restricted by regulation.

Introducing and allowing wider channels in less deployed areas would further encourage the use of multiband solutions. Leo Macciotta, Huawei’s Senior Marketing Manager, highlights that “the challenges in capacity and latency requirements posed by LTE-A and in the future 5G make this kind of equipment the best and most cost-efficient choice for a future-proof deployment. Continuous investments in component, system and antenna technology provide a clear and dependable road map of improvement in performance such that we are confident that E-band will become one of the key building blocks of the future front- and back-haul networks for 5G and beyond.”

For access, most vendors could offer high modulation, wider channels, and multiple antennas (MIMO). The capacity offer varies between 2 and 4 Gbps full duplex, although some vendors are testing solutions in the lab that could go up to 10 Gbps in a range of a few kilometers. The MIMO types used today in most cases are 2x2 and 4x4 but could increase much higher along the 5G spec. This is not the case for backhaul; although the MIMO feature is offered, there is no real demand yet, but that might change beyond 2020.

E-band has recently come into mainstream use for mobile backhaul, allowing capacities of up to 10 Gbps over link lengths up to several km (even more than 10 km when bundled with lower frequency bearers) and is currently shipping in volume. Regarding backhauling, Yigal Leiba, co-founder and CTO of Siklu, mentioned that “a capacity of 2 Gbps could be enough today and possibly for the next 2 years for Mobile Operators and specifically for network aggregation layers and major Macro Base Stations backhauling, while 1Gbps street level backhaul could serve effectively Small Cells.” Looking to the future, the industry shares a vision of using frequencies above 100 GHz, as they will enable capacities in the 40 Gbps range over hop distances of about a kilometer but mostly for access. Regarding 5G and backhaul, there is already pressure, and leading vendors and major Tier 1 operators are worried that backhaul requirements may not be kept in the right considerations.

Tying the whole industry ecosystem together is the ETSI mWT (Millimetre Wave Transport) ISG, a common forum for component, subsystem and system manufacturers, telecommunications operators, and regulator. The forum promotes understanding and acceptance of mmW worldwide. With endorsements from such respected groups the future of these technologies looks promising.

    

    Elias Aranvantino

    earanvantino@acgcc.com

    www.acgcc.com

Tremendous Packet Core Momentum Fuels 2Q Worldwide Mobile Infrastructure Market, Surpasses $1 Billion

LTE-Advanced deployment, Packet Core deployments, VoWiFi trials and the high interest in end-to-end VoLTE solutions are driving the mobility market

The Worldwide Mobile Infrastructure market grew revenue in Q2 quarter over quarter. The Q2 Total Worldwide Mobile Infrastructure market surpassed $1 billion in revenues. The APAC region, mainly China, led this growth during this quarter, followed by EMEA. Mobile broadband net sales were primarily driven by overall radio technologies, specifically LTE. In the North American region the market managed to stabilize, helping most vendors to maintain flat revenues. Although most operators have completed their LTE deployments, it is anticipated that the fast-rising data traffic will definitely require further upgrades of U.S. wireless networks to add more capacity and avoid congestion experiences such as those recently witnessed in New York and Chicago, and generate opportunities for vendors.

Global mobile infrastructure spending posted single digit growth with most carriers adopting a “wait and see” status for new deployments and services. However, Packet Core, specifically EPC, grew in double digits and it is expected this growth will continue in the next quarters as operators modernize the network with new services. We anticipate more spending into EPC but also into virtual solutions, vEPC, in the coming quarters as the trials will start scaling up into commercial accounts. Services virtualization continues to gain traction because of the savings and the short time to market service delivery. More VoLTE and VoWiFi deployments are expected in the next quarters as most operators understand that these services are complementary and offer different benefits for indoor and outdoor support.

“There are three interesting points to note this quarter. The focus of Mobile IP Infrastructure spending has shifted to the Asia-Pacific region, coming mainly from China; the Evolved Packet Core market is the fastest growing segment. This trend will maintain momentum in the next quarters, and it will gain traction even more in North America with significant LTE network expansions,” states Elias Aravantinos, principal analyst, ACG Wireless and Mobility.

“The second point relates to another interesting trend related to the previous trend, the large scale of virtual service trials that are becoming commercial because operators have realized the savings and the advantages when virtualizing certain parts of the network. The first commercial Virtual EPC projects are expected to massively scale by the end of 2015. Finally, there is special focus on Voice over WiFi service adaptation and spending on the Evolved Packet Data Gateway or ePDG, which is a native part of this new infrastructure and ensures the call connectivity between the WiFi and the cellular network. Operators have already understood that there is no competition between VoWiFi and VoLTE and that these services complement, helping them to face coverage, traffic offload and churn issues,” says Aravantinos.

Click for more information about ACG’s mobility services or contact information@acgcc.com.

    Elias Aravantinos

    earavantinos@acgcc.com

    www.acgcc.com

Juniper and Ruckus: A Combination Sure to Shake Up the Unified Communications Market

This strategic alliance reinforces the inter-relatedness of the wireless market and portends disruption.

Juniper Networks, which has been looking for a unified communications solution for quite some time, recently announced its partnership with carrier/enterprise Wi-Fi hardware and software vendor Ruckus. The companies plan to offer solutions that pair Juniper’s EX Series Ethernet switches with Ruckus’ ZoneFlex Wi-Fi access points and SmartZone Wi-Fi management software to enterprise, government, and education clients. This alliance comes on the heels of another significant announcement: HP’s (Juniper Ethernet competitor) acquisition of Aruba Networks, which was Juniper’s partner since last year.

Juniper’s alliance with its interesting value proposition will pose significant competition to Cisco/Meraki and HP/Aruba and no doubt will shake up the expanding unified communications market. We believe that the Cisco/Meraki and HP/Aruba will maintain strengths as they do have extensive wired and wireless offerings but as Juniper puts down stakes we would anticipate some serious changes in market shares. The bottom line is that it’s all about innovation and positioning, for example, if Juniper can enhance the enterprise environment by introducing products that could lower the number of logical network devices that need to be managed by IT administrators that could result into a key advantage. Similar solutions could be attractive enough to disrupt the WiFi enterprise market and threaten the major vendors’ leadership.

We do see this partnership as one of many in broader enterprise access realignment (in parallel with Enterprise Small Cells market) with more to come this year and next. The enterprise and the indoor coverage and access markets have been a hot field lately with high promising revenues, on which undoubtedly Juniper wants to capitalize. This alliance is expected to pay bigger dividends in the service provider market where both companies see their strengths.

This next step for Juniper is extremely important as it joins this upcoming unified communications market in a “never too late” move. Perhaps market pressures, dynamics and the new strategic plan will force a severing of the Aruba relationship, which will most likely cease in the next six months or earlier. Time will tell.

Click for more information about Elias Aravantinos.

    

    Elias Aranvantino

    earanvantino@acgcc.com

    www.acgcc.com

Worldwide Small Cell Market to Grow Five-fold by 2019

Medium and large enterprises will boost the small cell market indoor residential coverage, with the total small cell market expected to surpass $1 billion by 2019

The Worldwide Small Cell market grew to $134.1 million, up 2.1 percent Q-Q and up 17.5 percent Y-Y. The market was primarily driven by the high demand for better indoor coverage. Small cells are not only used to offload traffic but also for backhauling and to substitute macro networks plugging the gap between capacity and demand for data. Residential and femtocells continue to be the key drivers of the current market growth; however, new multi-operator solutions with advanced SON features and interference avoidance are expected to have a tremendous positive impact to the market.

The growth in small cell market is expected to accelerate as operators realize that small cells are an increasingly cost-effective technology to add capacity while at the same time improve cell edge performance and increase the value of the spectrum they currently hold. Plug-n-play products equipped with advanced features and the latest 802.11ac WiFi and LTE technology will also add demand pressure.

“This quarter has yet again seen many indoor deployments, which will continue to grow but are expected to shift to enterprise and public access venues in the coming years. This shift will generate new business opportunities and sources of revenue for MNOs,” states Elias Aravantinos, principal analyst, ACG. “The ongoing hype around small cells is expected to end by 2016. High data demanding LTE networks and lack of spectrum in the macro layer will force the investment and deployment of a large volume of small cells to boost backhaul, access applications and new services. In the near future the demand of Gbyte levels at the small cell layer toward 5G adoption is expected to boost deployments and significantly affect operators’ spending. Finally, the market is expected to grow at least fivefold by 2019.”

TREND and DRIVER HIGHLIGHTS

• LTE connections worldwide increase 150%, growing the demand for high-speed connectivity indoor and outdoor

• 3G and LTE multimode small cells will continue to be on demand

• Integrating WiFi network with small and macro cells will enable operators to monetize WiFi

• The market is expected to grow because of increasing mobile data access pressure and increasing LTE subs

• Enterprise environment should enable MNOs to generate new sources of revenues

• Traditional microwave and potentially satellite are the top technologies for small cell backhaul applications

Click for more information about Elias Aravantinos.

    

    Elias Aranvantino

    earanvantino@acgcc.com

    www.acgcc.com

1Q Worldwide Mobile Infrastructure Markets Driven by LTE

LTE-Advanced deployment is a major industry, voice over LTE activities and high interest in end-to-end VoLTE solutions is driving the mobility market

The Worldwide Mobile Infrastructure market decreased revenue in Q1 and year over year. The Q1 Total Worldwide Mobile Infrastructure market posted revenue of $87.4 billion. Although mobile broadband net sales were primarily driven by radio technologies, and specifically LTE, the market downturn is attributed to the Ericsson’s North America decline, as most operators have completed their LTE deployments. But it is anticipated that the fast-rising data traffic could eventually require further upgrades of U.S. wireless networks to LTE-Advanced, generating opportunities for vendors.

Mobile spending was flat in the quarter and is attributed to carriers in the phase of planning to prepare for new deployments and network upgrades. Current trials with the different forms of LTE could potentially slow down spending until MNOs are convinced of the added value they bring to the networks with carrier aggregation. 3G remains strong and continues to grow as developing economies upgrade and invest in this technology. Mobile infrastructure will continue to be a highly dynamic market for the next several years as vendors and carriers are getting ready to offer new technologies such as VoLTE, network function virtualization, small cells, Hotspot 2.0, millimeter wave backhaul and DAS. Vendors with a plurality of solutions will need to have solid strategies and execution plans in this demanding environment.

“It has been an interesting quarter as the LTE key revenues shifted from North America and EMEA to Asia, which is becoming a very vibrant market across all the mobile technologies because of the large deployments and tremendous demand for mobile data,” states Elias Aravantinos, principal analyst, ACG. “However, there is ongoing 5G preparation and services convergence trend across all leading operators. This trend will result in high-performance networks. Providers are trialing new LTE forms, NFV, and virtual services as well as addressing densification affecting the small cell market and creation of a new IP voice services that support VoWiFi and VoLTE as complementary services. This is expected to increase operators’ spending the coming years.”

TREND and DRIVER HIGHLIGHTS

• Network innovations will facilitate bandwidth increases by expanding the capacity of the access network, reducing service providers’ costs, and creating new incentives for subscribers to stay on-net. For example, the benefits of LTE-Advanced include optimized heterogeneous networks with a mix of macro cells and small cells to improve coverage and reduce costs and use of multicarrier to support higher data rates.

• LTE worldwide initiatives will remain strong by the end of 2015, driving the demand for mobile backhaul, evolved packet core, and edge routing solutions; however, there will be a decrease in the mobile backhaul business when LTE roll-outs end. In 1Q some vendors benefited from a second round of investments in LTE backhaul infrastructure to raise capacity for demand. LTE TDD is gaining traction, as the LTE-TDD mode with unpaired spectrum continues to develop in all growing regions, particularly in China. LTE-Advanced systems commercially launched in more than 30 countries, expected to double in 2015.

• Market is expected to grow as operators start implementing their plans, upgrading networks because of mobile data access pressure and the LTE subs explosion. Online video will add to this data pressure because more than two-thirds of the global mobile data traffic will be video by 2017. VoLTE service and its growing demand will require, mainly in APAC and North America, more Small Cells for better coverage. Global machine to machine will triple its revenue growth mainly from international businesses.

Click for more information about Elias Aravantinos.

    

    Elias Aranvantino

    earanvantino@acgcc.com

    www.acgcc.com

SDN Requires a Standard Version as "a Prerequisite"

The networks programming process is quite challenging, as operators face several issues within Software Defined Networking (SDN) planning such as maintaining the five-nines reliability of telecom networks striving for reliability and high tolerance. Ultimately, a standard version of SDN is "a prerequisite" and operators are looking to deploy whatever can really interoperate not only with other pieces of the network but also with future networks. The SDN products, today, need to ensure full compliance with mobile-specific requirements in an identified and globally accepted proof of concept.

Recently, Nokia Networks has laid the foundations for deploying SDN in mobile backhaul through a proof of concept developed in conjunction with Finland-based Aalto University and other industry partners. The proof of concept has centralized SDN controllers operating standard transport and packet core switches in a virtualized LTE network with all control software running on generic data centers to enable a global view of the network but also running mobile backhaul, transport and core entirely in the telco cloud.

Huawei is engaged in a joint innovation project with the China Telecom Guangzhou Institute. It has released new products under its SDN based mobile backhaul solution LTEHaul, supporting SDN capabilities through the release of its CX600 series aggregation router, its ATN910 series cell site router and U2000 network management system.

There are several ongoing projects and forums where vendors have been proactively participating in standardization efforts in collaboration with stakeholders, operators, equipment manufacturers and research institutions, to promote the application of SDN in end-to-end networks.

Some examples are the Open Networking Foundation and the OpenDaylight project where Intracom Telecom serves as Silver Sponsor, aiming to transform the most mature SDN controller to carrier-grade status by evaluating and enhancing its performance and stability for massive scale deployments comprising several thousands switches. Ultimately, the goal is to extend this project to wireless backhaul networks. Intracom Telecom’s popular MW nodes (OmniBASTM and StreetNodeTM) have been designed to be OpenFlow ready; new networking functions are being developed on the OpenDaylight Controller to facilitate a smooth shift to the SDN architecture

The use of SDN in backhaul networks allows MNOs to work more easily with a number of suppliers, but also allows them to consider flexible network-sharing arrangements to drive down deployment, capital expense and operational costs. SDN is expected to redefine the backhaul network’s ecosystem and value chain, but there are still questions of when and how to migrate the critical network elements.

    

    Elias Aranvantino

    earanvantino@acgcc.com

    www.acgcc.com

Small Cells: Ideal for Smart City Applications

“Digital urbanism” is rapidly becoming a central pillar for urban planners, technology architects, developers, and transportation providers, as well as in public service provision. For the last two years the UK has been pushing its smart cities concept and testing applications in collaboration with vendors and is, consequently, becoming an innovative test bed for smart applications. City councils throughout the countries are considering new high-capacity wireless and optical networks to efficiently support a wider range of end-user’ needs. The smart cities of the future could offer ultra-low latency connectivity for driverless cars, kilobits per second connectivity for machine to machine sensors to monitor the health of citizens with long-term chronic conditions, hundred megabits per second for ultra high-definition TV broadcasts, video surveillance and terabits per second data transfers for collaborative research and development programs between global universities.

Universities, which are a good place to look for future trends, are pushing hard to become “mini cities” and are frequently early adopters of smart city technology. One such example of “mini cities” is the University of Bristol, Cambridge, where staff is adding the new public platforms with the assistance of several vendors, such as NEC and Cisco. With small cells these “mini cities” could be easily rescaled to larger ones as they can effectively satisfy the requirement of a carrier-grade, high- capacity transport network in the urban environment.

The smart city technology architecture when boosted by the small cells should be able to deliver the following benefits:

• Simplicity and availability. End-to-end IP, high bandwidth guarantees high service quality and relatively low maintenance.
• Security. IP security mechanisms ensure a highly robust and resilient system.
• Multiservice. Solutions should place equal importance on data, voice, video, and sensors.
• Technological scalability. The new architecture should be designed to handle the large number of connected “things.”
• Business scalability. Solution should offer “pay-per-use” opportunities to enhance granularity so that it can be scaled as budgets allow.
• Manageability. The end-to-end nature of the solution makes maintenance easier by enabling greater visibility into the infrastructure.
• Flexibility. The architecture allows city managers and citizens to utilize the same services and information for their specific needs.

For more information about Elias Aravantinos click here.

 

    

    Elias Aranvantino

    earanvantino@acgcc.com

    www.acgcc.com

Nokia-ALU Merger: Can the New European Force Race to the Wireless Top?

Following a trend I predicted in March 2015 (Intense market transformation and consolidation will be among the key 2015 wireless market features) Nokia recently announced it bought the French networking supplier Alcatel-Lucent in a deal valued at $17bn (€15.6bn). The combined company will be called Nokia Corporation, headquartered in Finland, with Rajeev Suri, continuing to serve as CEO.

The company’s goal is to “create the foundation of seamless connectivity for people and things.” Nokia plans to establish a €100m fund to invest in Internet of things startups in France following the closure of the deal, which is expected toward the end of the 2015, that is if there are no serious delays.

Alcatel-Lucent propelled by its successful growth in core networking and routing, was ranked No. 2 in edge routers in 2014 behind Cisco. The new Nokia will definitely take advantage of that position as this core networking unit will add a large percentage to the company’s total revenue. In addition, Alcatel-Lucent has managed to put together a serious wireless partner “ecosystem”, especially for metro and small cell requirements.

Alcatel-Lucent is also poised to capitalize and lead on new technologies such as 5G as the company is exploring a new air interface on the Filtered OFDM, and its strategic small cell partnership  with Qualcomm could be possibly expanded to enhance its future radio access portfolio.

Complementing this ecosystem is Nokia’s Flexizone and Flexi Radio, which covers macro and small cell layer in addition to virtualization, as the company has virtualized most of its core, RAN, as well as delving into NFV alternatives. Nokia also brings strategic partnerships with Dragonwave (mobile backhaul) and Juniper Networks (IP/routing) to the table.

However, the companies do face obstacles common in all mergers. The difficult points in this deal will be staff and product harmonization, especially related to existing customers. The company will have to deal with issues such as orchestration of product overlaps, multiple business partners (internal and external), LTE customers’ relations, and common management across USA, Europe and China. All of which could shake up the global market for quite some time.

Competitors, naturally, are digesting the impact of this gigantic deal but also realize that to stay competitive they will need to adjust their strategies as well as introduce new products as more intensive competition is anticipated across all sectors. Historically, Ericsson is used to that pressure, but this case is definitely unique and more challenging; NokAlu is expected to become a global leader in ultra-broadband, IP networking and cloud applications, has raised this competitive bar.

Investors should closely follow the new company’s milestones and stock as undoubtedly there will be many upturns and downturns before the company stabilizes. The core networking segment is a high-margin, strong performing one that should add and increase the value of NokAlu’s stock. Today, if we benchmark Nokia and Ericsson’s stock, there has not been much volatility during the past year, but there is a respectful gap in the value per share. But this merger could be a game changer.

Once the merger and its accompanying issues have been address and processes, policies staff, etc., are integrated, Nokia will be strongly positioned with a highly efficient and complete end-to end portfolio across all sectors to capture 5G global contracts. With 5G expected to be multidimensional very few vendors with innovative product portfolios will be able to comply and implement providers’ demands but with this merger Nokia will.

For more information about Elias Aravantinos click here.

    

    Elias Aranvantino

    earanvantino@acgcc.com

    www.acgcc.com