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Huawei recently held its annual analyst event, HAS 2022. While we were not able to attend in person, we participated in various online events. Below we will discuss some of the RAN-related highlights when it comes to expectations for 2022, 5.5 G, 5G B2B, green sites, DIS, and Sub-3 GHz.

 

Challenges in 2022

Taking into consideration that the US government started banning Huawei from acquiring US components back in May 2020, Huawei has done a remarkable job supporting its 4G and 5G customers, contributing to the stable revenue trends for the broader carrier group over the past couple of years.

And even as Huawei again reiterated that it has enough components to support its 5G Massive MIMO base stations over the near term, Huawei is expecting the external challenges to intensify in 2022.

In addition to the geopolitical situation, Huawei expressed concerns about Covid-19 restrictions, inflation, forex volatility, trade restrictions, and the overall slowdown in the economy.

The direct and indirect implications from China’s zero-Covid strategy are difficult to quantify. In addition to the softer economy – some economists believe the lockdowns in Shanghai could shave off 2% to 3% from China’s GDP – there is a risk that these policies could exacerbate supply chain issues.

While Huawei’s concerns are valid and important to keep in mind for future output analysis, we also need to recognize that it took the operators six months to a year to adjust capex after the GDP deceleration back in 2001 and 2008/2009.

Huawei also stressed the importance of focusing on the variables within their control, especially when it comes to innovation, maintaining competitive RAN products/services, and supporting the customer.

 

5G Evolution, 1+1+N = 5.5G

The industry as a whole is moving towards the next phase in the 5G evolution. 3GPP Release 18, also known as 5G-Advanced, is scheduled to become a commercial reality by the 2023/2024 time frame.

5G-Advanced will take 5G to the next level and create a foundation for more demanding applications and a broader set of use cases. Nokia envisions 5G-Advanced will help to improve the experience, expand the capabilities, extend the reach of connectivity, and spur operational enhancements.

Huawei is marketing the 5G-Advanced evolution as 1+1+N or 5.5G, to reflect the additional layer needed to realize ubiquitous Gbps speeds (current 5G is marketed as 1+N, where 1 represents the foundation network and N refers to the various capabilities and scenarios).

According to Huawei, the 1+1+N (5.5G) architecture is expected to be more commonplace by 2025. It is worth noting here that the Dell’Oro Group does not expect operators will materially grow capex to support the 5.5 G or 5G-Advanced evolution.

 

 

B2B

Huawei is engaged in thousands of trials focusing on various 5G private use cases across 20+ verticals such as manufacturing, healthcare, mining, ports, airports, steel production, cement, energy, utilities, and chemistry verticals, to name a few. During HAS 2022, the vendor shared it has installed around 3K 5G base stations to improve the connectivity in 200 coal mines.

And Huawei remains optimistic about the near-term prospects with private 5G. During HAS2022, the vendor implied global 5G B2B small cell growth will approach 100x over the next five years.

 

Green Sites

Even though the ICT sector only contributes 1.4% (source: Ericsson) of global carbon emissions and 5G sites are projected to drive less than 1% of global electricity consumption (assuming 12 kW per site and 10 M sites), changing the mobile site consumption trajectory is increasingly moving up the priority list for both operators and suppliers.

“Green 5G” was an important topic at the HAS 2022 event. Huawei’s latest MetaAAU, RRU, and SDIF antennas are helping to reduce the overall energy consumption. This taken together with more intelligence in the RAN will ideally help to change the overall energy trajectory.

 

Digital Indoor System (DIS)

The rapid shift from 4G to 5G is not only fueling macro RAN investments. Huawei’s indoor small cell shipments roughly doubled between 2017 and 2021, underpinned by surging 5G DIS deployments. Even with the elevated baseline, Huawei remains optimistic about the long-term growth prospects – buoyed by stable public MBB growth and robust demand for enterprise 5G.

During HAS2022, Huawei reported decent progress with new technologies, including distributed M-MIMO and 5G positioning. Operators in five countries are currently benefitting from the DL and UL throughput boost provided by Distributed M-MIMO.

Despite the challenging geopolitical climate, our estimates suggest Huawei’s was the #1 small cell RAN revenue/shipment vendor in 2021 (Dell’Oro RAN).

 

Sub 3 GHz

Although upper mid-band WB TDD deployments have dominated the 5G RAN market in this initial phase, sub-3 GHz FDD NR activations are firming up and expected to comprise a greater share of the combined FDD+TTT 5G NR market over the 2021-2026 forecast period.

During HAS2022, Huawei announced multiple enhancements to its NR FDD portfolio in order to better support 4T4R, 8T8R, and Massive MIMO – the latest FDD Massive MIMO product is lighter and smaller, weighing around 47 kg.

In short, some of the key RAN takeaways from Huawei’s 2022 HAS event are consistent with the message that we have communicated for some time, namely that even with the overall RAN growth slowing, it is still early in the broader 5G cycle. There is still some long-term upside with public MBB and material opportunities with private 5G. At the same time, there is no shortage of external challenges to navigate over the near-term.

 

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In less than a month, the Fiber Broadband Association (FBA) will host its Fiber Connect event in Nashville, TN. The event’s timing couldn’t be better, as fiber deployments continue to surge in the US and abroad, despite the ongoing headwinds of component and labor shortages, inflation, and logistics snafus. The event should ultimately help to provide some clarity on how the entire industry will balance the rush to expand fiber networks and services with the need to maintain capital in an environment of higher interest rates and costs.

Overall investments in broadband infrastructure—specifically fiber networks—have skyrocketed, with private equity fueling a growing number of buildouts in North America. Investing in network infrastructure—which hasn’t been cool since the late 90’s—is suddenly all the rage. As such, the valuations of fiber networks have increased significantly, driven by increased demand for residential broadband, ongoing 5G network buildouts, and an expectation that fiber networks still need hundreds of billions in new investments to keep pace with expected bandwidth demand. Our own expectation is that spending on new PON OLT equipment (typically a strong indicator of new fiber network expansions in addition to bandwidth upgrade projects) is set to increase by 24% in 2022, with investments in XGS-PON infrastructure set to grow at an even higher rate.

Fiber access networks have reached a major tipping point, driven by the simultaneous catalysts of the shift to next-generation fiber technology and the shift to openness, disaggregation, and automation. North American broadband providers are quickly realizing that the need for increased throughput is matched by the need for a highly-scalable network that can respond quickly to the changing requirements of the service provider, their subscribers, and their vendor and application partners. The need to provision and deliver new services in a matter of hours, as opposed to weeks or months, holds just as much priority as the ability to deliver up to 10Gbps of PON capacity. Although service providers might have completely different business drivers for the move to open, programmable networks, there is no question that the combination of data center architectural principles and 10G PON technology is fueling a forthcoming wave of next-generation fiber networks upgrades.

The service providers that adopt the combination of 10Gbps PON and openness will be best prepared to accomplish three major goals:

  1. Deliver the advanced, 10Gbps capacity, and multi-gigabit services subscribers will expect and require using a cloud-native infrastructure that treats bandwidth and the delivered applications as workflows;
  2. Anticipate and weather rapid increases in traffic demand with a highly-targeted and elastic infrastructure that can be activated without a forklift upgrade;
  3. Develop an access network infrastructure that can process multiple workloads beyond broadband access, including hosted services that can be offered on a wholesale basis, as well as fixed-mobile convergence applications.

These advancements in fiber networks will certainly be discussed at the show, as service providers of all sizes share their experiences with the combined transition to fiber and increasingly automated network environments.

Of course, these discussions regarding specific fiber technologies, their deployments, and evolution, will occur against the backdrop of increased public investments in fiber network deployments. Specifically, the Department of Commerce released its rules for the $42.5B Broadband Equity, Access, and Development (BEAD) program last week and they very clearly favor the funding of fiber networks over satellite or fixed wireless options that use unlicensed spectrum for unserved locations. In addition, the rules clarify that areas that are currently only served by satellite or unlicensed FWA will be considered unserved, opening the door for individual states to use BEAD money to subsidize the deployment of end-to-end fiber infrastructure “wherever feasible.” Unserved areas are defined as those that lack access to speeds of 25Mbps downstream and 3Mbps upstream, while underserved areas are those without access to 100/20Mbps service.

Each state will be eligible to receive $100M from the BEAD program as an initial allocation. Any remaining funds for each state will be determined based on revised coverage maps scheduled to be released by the FCC later this year. Once those revised maps are released, the NTIA (National Telecommunications and Information Administration) will determine how much additional funding each state can receive.

The near-exclusive focus on fiber means that broadband expansion projects that had been placed on the back burner or were scheduled to be completed using unlicensed FWA or satellite will likely shift to fiber, assuming the additional costs of deploying fiber are fully covered under the program. That should mean an extension of the current fiber spending boom here in the US beyond 2024, which is when we had expected spending on PON infrastructure to slow as funding sources dried up.

 

Buy American Requirements and Supply Chain Constraints

One of the requirements for BEAD funding is that all construction materials must contain at least 55% domestic content. This requirement encompasses everything from fiber optic cable to PON OLTs and ONTs. A number of industry trade groups and equipment suppliers have requested waivers from the Buy American requirement since so much of the active electronics in fiber network buildouts are manufactured outside the country.

Indeed, given the current supply chain constraints, increased demand for new equipment and infrastructure, and increasingly global nature of equipment design and assembly, the Buy American requirement seems poorly timed. The intention, of course, is laudable. But it is inconsistent with the reality on the ground, which is that telecommunications infrastructure is one of the most globalized product segments in the world.

We are looking forward to conversations with vendors, network operators, consulting engineers, and industry trade organizations to understand the likelihood of waivers being granted so that projects can be initiated and completed in a more reasonable timeframe.

 

Now, what do you do with all that fiber?

With so many service providers constructing and expanding networks and helping to create a once-in-a-lifetime fiber boom, an important component of the Fiber Connect event will be how to make sure service providers maximize their investment. Whether it’s through the addition of new residential service tiers based on new parameters such as latency and upstream speed or whether it’s expanding to enterprise or wholesale mobile backhaul services, operators are going to want to hear from their peers on how to ensure the long-term success of their new fiber-based networks.

Service providers who deploy fiber will likely be surpassing their traditional cable competitors when it comes to billboard speeds. Obviously, that puts them at a perceived competitive advantage among potential subscribers. Nevertheless, going beyond competing simply on speed is where fiber providers will have to focus. Providers will have to provide the best in-home experience, making sure that the CPE they provide delivers WiFi coverage throughout a subscriber’s home, but also gives them the ability to remotely monitor and manage that device without having to roll a truck unless absolutely necessary. Residential gateway software has evolved considerably since the early days of TR-069, making it far easier to diagnose and troubleshoot subscribers’ network issues without sending out a technician.

But that the same time, in-home networks have also evolved and become far more complex than before. The number of connected devices has increased exponentially, as has the number of access points used to deliver WiFi coverage throughout homes. Service providers have to strike a balance between the sheer number of devices they are willing to provide a customer to ensure connectivity vs. the cost and management issues of those additional access points. With WiFi 6e and WiFI 7 providing access to the 6GHz band, service providers have to determine whether to use that band for access point backhaul or to provide direct connectivity to devices within the home.

With so many questions surrounding in-home networking, providers must also determine whether there is a business case behind charging their subscribers for managed WiFi services. The argument in favor of doing so certainly has increased with Plume, Calix, Adtran, DZS, and Minim all offering devices or a hosted service for operators. But there remain many operators who have not yet jumped on board. Their upgrades to fiber might push them into offering managed WiFi services. But for these operators, the business case has to be airtight.

Finally, providers wouldn’t be putting all this fiber into the ground if they weren’t expecting bandwidth requirements to continue to increase at annual CAGRs of 25-40%. So, what are the applications that will continue to drive that growth, and will speed boosts be enough or will operators need to have more granular control over latency and other parameters? Immersive video and 8k video have both been identified as short-term drivers of additional bandwidth, but also of reduced latency. Combine those services with prolonged work-from-home options and operators have to be smart about how they allocate bandwidth per service.

So, getting fiber into the ground and to subscribers’ homes is really just the beginning of an evolution for thousands of service providers around the world. How to maximize that investment will be the key question to answer for these providers.

 

 

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At the end of April, Nokia, a fairly new entrant to the data center switch space, made the groundbreaking announcement that the company will be supplying its 7250 IXR networking gear to Microsoft, the third-largest Cloud Service Provider (SP).

As I noted in my 2022 prediction blog published earlier this year, I have been anticipating a fair number of new switch vendor insertions at the large hyperscalers in 2022, as the 400 Gbps upgrade cycle starts to materialize outside of Google and Amazon. Silicon diversity would be one of the major reasons for these potential changes in the vendor landscape, as these hyperscalers need to keep pricing pressure on Broadcom, the dominant merchant silicon supplier to date. Supply challenges further accelerated the need for silicon diversity. However, what is intriguing is that Nokia’s 7250 IXR is based on Broadcom’s merchant silicon, not Nokia’s FP5 proprietary chips. So what will Nokia bring to the table?

 

What’s in it for Microsoft?

Although Nokia is a fairly new entrant in the data center switch space, the company is among the leading vendors in the router market and in several other Telecom SP segments. Clearly, Nokia has significant experience in systems design, which – as we learned from the company’s spokesperson – allowed it to achieve power savings at a system level. As a reminder, as network speeds move to 400 Gbps and beyond, power consumption becomes one of the most constraining factors that limits what Cloud SPs can build and deploy in their data centers. In fact, Microsoft already faced this challenge with its 400 Gbps deployment, as it had to wait for Broadcom’s Jericho 2C+ chips that consume less power than their prior generation of Jericho 2 counterparts.

Furthermore, Nokia has made significant contributions to the SONIC ecosystem. (SONIC is the open-source software built by Microsoft that runs in its data center networks.) We view this Microsoft data center win as a reward for the company’s contribution. In fact, this quid pro quo relationship expands well beyond the data center win into several other areas. For example, Nokia is also working with Microsoft on developing 4G LTE and 5G private wireless for the enterprise segment. This collaboration brings together Nokia’s virtualized radio access network (vRAN) and multi-access edge cloud (MEC) with the Azure Private Edge platform.

Additionally, Nokia has the potential to leverage its coherent optics technology; which the firm obtained with its Elenion acquisition to drive cost and power savings at a system level for data center interconnect (DCI) applications.

Last, but not least, although Nokia’s 7250 IXR is built on Broadcom’s silicon which does not satisfy the silicon diversity requirement, it will nonetheless provide Microsoft with another route to access Broadcom chips, which is critical in a supply-constrained environment.

 

Where will Nokia’s 7250 IXR be deployed?

The initial deployment of Nokia’s modular switches will occur in the spine, which Microsoft refers to as Tier 2, but may expand to DCI applications at a later stage. As a reminder, Microsoft has been deploying predominantly Arista in Spine/DCI but has also recently qualified Cisco (with its silicon one-based 8000 chassis). Nokia will also supply fixed form factors for Top-of-Rack (ToR) applications. It is worth noting that Microsoft has always had a multi-vendor strategy for its ToR applications, where volume is high but the margin is thin. So far, the company has deployed a mix of Cisco, Dell, and Mellanox (Nvidia).

 

What does this mean for incumbent vendors?

While we view this announcement as a major win for Nokia and as validation of its competitive positioning in the data center switch market, we believe that Microsoft will strive to keep its existing suppliers happy and provide them with enough motivation to compete for its business. Our interviews revealed that Arista is expected to remain the preferred supplier for spine/DCI applications at Microsoft during the 400 Gbps upgrade cycle. Additionally, we expect Microsoft to go through major expansion and upgrade activities this year and that its data center spending will be strong enough to benefit all vendors – incumbents as well as new entrants.

For more details and insights on cloud service providers’ data center network design and a list of suppliers, please contact us at dgsales@delloro.com.

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I recently had the opportunity to moderate a panel for the Business Innovation Leaders Forum that brought five veteran security executives together to discuss contemporary CISO demands and challenges. On the five-person panel, I had two CISOs at major multi-billion firms, the former Deputy Director of the U.S. National Cybersecurity division, the godfather of Zero Trust, and the Executive Vice President for the cloud and security business at a major telecommunications company.

This blog summarizes five takeaways that stood out from our discussion.

  1. The COVID pandemic has been both a crisis and an opportunity

The pandemic has been an enterprise crisis. The pandemic compounded the rate of technology and threat change, which was already a source of discomfort for many enterprises. Two key examples are the shift to remote work and the acceleration of enterprise digitalization (the shift and embrace of public cloud for enterprise apps), each of which has thorny security problems to solve.

But the pandemic has also been an opportunity for enterprises. The massive disruption caused by the pandemic has provided the impetus for new ways of looking at security problems and has driven investment that in a non-pandemic environment would not have been possible.

  1. Enterprise users have and will continue to pose a complex security challenge

If a CISO’s job wasn’t already challenging enough, they need to contend with enterprise users being humans that flourish off three Cs: curiosity, convenience, and comfort. Curiosity will lead to users doing unexpected things that may open security holes. Likewise, users will defeat security measures they find inconvenient. Passwords on a post-it note, anyone? The pandemic-induced need to work remotely has caused many users to appreciate the comfort of working at home and no longer want to commute to the corporate office. Yet, remote work has enormous security implications compared to the traditional office environment.

Rather than fight the users and change behavior, a CISO needs to continually evolve and always look for new security controls that match the current user landscape and behaviors.

  1. The threat landscape is not only more brutal but innovating faster than enterprises can counter

Not only has the Internet threat landscape gone from being a tough neighborhood to open warfare, but the threat actors are moving at a blinding speed. Threat actors aren’t constrained by processes like enterprise change control, which is valuable in preventing unintended IT instability, but often leads to slow, glacial response during an active attack.

So what’s a CISO to do? While there’s no panacea, the panelists repeatedly remarked on the need to focus on the security fundamentals, like knowing what in the enterprise needs to be protected and developing a solid security plan focused on that needed protection.

  1. Security vendors are a double-edged sword: New products are distractions, yet relationships are key

The security vendor landscape is highly fragmented, with hundreds of products vying for CISOs’ attention. New products are a dangerous pitfall. Persuasive vendor marketing for new products may lull CISOs into thinking they need the product even though the reality could be the opposite. Unless a CISO is working off the knowledge of what needs to be protected in their enterprise and a robust security plan, a CISO can’t assign security value to any new product.

However, a CISO is not to shirk all vendors.   The panel agreed that relationships play an essential role, particularly with those select vendors seen as trusted and willing to listen to the CISO. Bi-directional communication is vital to help vendors develop security controls and technologies that benefit the enterprise.

  1. Zero-trust is a strategy, not a product: The folly of mixing up strategy and tactics

Among hot industry buzzwords, “zero trust” has been white-hot recently. Vendors of all stripes have applied the buzzword to their products and looking to turn zero trust into a product sale. “Buy my product, and you will have zero trust,” say many security vendors. However, the clear consensus of the panel was that zero trust isn’t a product but a strategy–and a valuable strategy at that.

Putting the value of zero trust aside, this situation highlights how easy it is to mix strategy with tactics. A CISO that buys a “zero trust” product from a vendor may think they are covering all necessary security bases. But, the reality is that this CISO is stuck in the tactics that may or may not align with the strategy that the enterprise needs to follow. A CISO that doesn’t have a coherent strategy – anchored to knowing what needs to be protected and having a good plan – is at best wasting IT budget on products that minimally improve security posture. Still, at worst, creating a false sense of security that eventually will lead to an enterprise being compromised.

There are several more key takeaways from the discussion, and I highly recommend watching the playback. However, if there were a common thread among all, it’s that CISOs face a wide variety of challenges that can only begin to be addressed by a diligent focus on doing the fundamentals right.

 

Watch the on-demand video:

CYBER SECURITY – MEETING CISO DEMANDS