The Massive MIMO RAN market – which includes baseband and radio revenues for large-scale antenna systems featuring > 8T8R sub 6 GHz LTE and NR radio configurations – ended the year on a high note, with full-year Massive MIMO RAN revenues more than doubling in 2020 propelling global transceiver shipments to approach the 0.1 B to 0.2 B range.

Not surprisingly, Massive MIMO-based technologies are power the vast majority of the 100+ commercial 5G networks. And more than 75% of the 0.2 B+ 5G subscriptions by year-end 2020 utilized the upper mid-band.

 

 

Helping to explain this output acceleration is the exceptionally robust 5G Massive MIMO growth in the Asia Pacific (APAC) regions, driven by large-scale deployments in China, elevated investments in Korea, and improving trends in Japan. And even though narrow-band NR has been the main focus for the leading US operators, T-Mobile’s wide-band 5G NR network covered roughly a third of the population by the end of 2020.

Even with the elevated baseline, we believe market conditions remain favorable. Global Massive MIMO growth is expected to tick up at a double-digit pace in 2021, underpinned by continued investments in the leading 5G markets and improving Massive MIMO coverage with the early majority segment – the GSA has identified 220 operators in 63 countries/territories with the right spectrum assets to deploy LTE or NR based Massive MIMO systems.

And equally important, the vendors continue to innovate and come up with incremental advances, improving the form factor, weight, performance, cost, and price. Just this past week, Samsung announced enhancements that will improve the Massive MIMO throughput by up to 30%. And Ericsson’s latest AIR 6419 64T64R radio weighs just 20 kg (200 MHz BW, 320 W). It was just two years ago at MWC 2019 in Barcelona when the same product configurations were in the ~40 kg range. Huawei also announced a new Massive MIMO radio weighing only 19 kg, down from 25 kg just last year, though it is not entirely clear from the announcement if we are comparing apples-to-apples with the Ericsson solution. Regardless, the suppliers clearly understand the role that Massive MIMO is already playing and will continue to play to optimize the overall TCO per capacity.

In short, 2020 was a phenomenal year for Massive MIMO, and we remain excited about the short-term and near-term prospects and will continue to monitor the market and vendor dynamics. For more information about our Massive MIMO coverage, please see the quarterly RAN and 5-Year Forecast RAN reports.

With the overall RAN market now growing at the fastest pace in nearly ten years and on track to approach revenue levels not seen since the Chinese operators rolled out 3G, one of the fundamental questions is simply whether there is more room to grow with this elevated baseline, keeping in mind the historically tight coupling between RAN revenue and wireless capital intensity. And if so—where will this growth come from?

We believe that there is room for expansion over the near term as the early adopters continue to roll out 5G at an extraordinary pace. The shift from 4G to 5G is accelerating at a torrid pace and much faster than expected. This is not because operators expect to raise ARPU or because they are anticipating significant near-term revenue upside from new applications. Instead, the main driver is on the supply side, and the ability of the operators to reduce cost-per-bit and to differentiate on the packaging with larger data plans.

After the RAN market reaches a new all-time high, we project that total RAN revenues will give up some gains in the post-peak MBB rollout phase. At the same time, we are anticipating a somewhat less severe pullback relative to the contractions following the 3G and 4G peaks in China.

While some deviation in the capital intensity ratio is expected in the peak coverage rollout phase, this forecast, with the post-peak pullback projected to approach two-thirds of previous declines, rests heavily on the assumption that the aggregate upside of these smaller non-traditional growth opportunities driven by new fixed and enterprise capex will curb the downside somewhat in the outer part of the forecast.

The main reason we remain excited about the opportunities ahead, even if we are still operating in uncharted economic territories, is the fact that the somewhat tepid high-level outlook is masked by all the ongoing parallel efforts taking place in addition to the shift from 4G to 5G, opening up opportunities for both the incumbents and new entrants.

Other takeaways from the January 2021 5-Year RAN Forecast include:

• The Asia Pacific region is expected to dominate the overall RAN revenue mix.
• Total macro and small cell radio shipments are projected to surpass 50 M over the forecast period.
• mmWave investments are growing rapidly, with total mmWave RAN revenues on track to more than double by 2025.
• Fixed Wireless Access (FWA) Radio Access Network (RAN) investments, including mobile network and dedicated fixed networks, are projected to comprise a growing share of the overall RAN capex envelope over the next five years, reflecting the size of the potential upside, various technological advancements, and improving market sentiment for both basic and high-performance connectivity.
• Private wireless RAN revenues are still small relative to overall MBB investments but activity is on the rise, underpinned by a new spectrum, an improving device ecosystem, technology improvements, and the emergency of new use cases that require cellular QoS.
• Open RAN is here to stay. Total Open RAN revenues are projected to account for more than 10% of the 2025 RAN market.

 

About the Report Dell’Oro Group’s Mobile RAN 5-Year Forecast Report offers a complete overview of the Mobile RAN industry by region – North America, Europe, Middle East & Africa, Asia Pacific, China, and Caribbean & Latin America, with tables covering manufacturers’ revenue, transceivers or RF carrier shipments, unit shipments for 5G NR Sub 6 GHz, 5G NR mmW, and LTE macro and small cells. The report also include projections for Massive MIMO and Open RAN. Click here to learn more about the report or contact us (dgsales@delloro.com) for the full report.

 

With 5G and the overall RAN market coming in a lot faster for the full-year 2020 relative to the projections we outlined a year ago, the time is right to review our 2020 projections and discuss the 2021 outlook.

2020 Predictions Are Mixed

First when it comes to the accuracy regarding the 2020 predictions we outlined a year ago, the results are mixed. Preliminary findings suggest that we correctly identified the high level trajectory for both 5G and RAN. But at the same time, we underestimated how fast some of the 5G developments are moving. Below is a quick summary of some of these predictions:

Forecast	Status
RAN market to advance 4% in 2020	RAN market is growing at the fastest pace since 2011, spurring upward revisions
Early adopters to embrace 5G SA	Revenues for the 5G Core market are expected to approach $1 B for 2020
More than 100 M transceiver	Total transceiver shipments remain on track to approach the 0.1 B to 0.2 B range
5G NR indoor small cell market to surpass LTE	5G NR pico revenues are on track to comprise more than half of total pico capex
Millimeter wave (mmW) to approach 10% of 5G NR small cell installed base	This is falling short, partly because of strong sub 6 GH small cell NR uptake
Forecast: 5G NR subscriptions to approach 200 M	5G subs will approach 0.2 B to 0.3 B in 2020 (Ericsson Mobility Report)

 

Total RAN Market to Advance in 2021

As we discussed in the 3Q20 RAN report, we are projecting the overall RAN market to advance for a fourth consecutive year in 2021. While we are fully aware that the RAN market has only recorded a 4-year+ growth streak once in the 20 years we have tracked the mobile infrastructure market, we recently adjusted the near-term outlook upward, reflecting improved outlooks in multiple regions resulting in a more favorable outlook both including and excluding China.

We have adjusted the near-term outlook upward in the North America region to reflect the improved market sentiment and higher baseline. Low-band activity is expected to remain elevated while mid-band activity is projected to improve, with T-Mobile moving ahead at full throttle and C-Band deployments picking up pace in 2H21, though the timing of the C-band availability remains uncertain.

5G RAN and Core Revenues to Top $20 B in 2021

Total 5G RAN and core revenues are accelerating at a faster pace in 2020 than originally expected, reflecting not only the stronger than expected upside in China but also positive developments in North America and Europe. These trends are expected to extend into 2021, underpinned by elevated 5G capex levels in the advanced MBB markets including China and North America and improving market sentiment in slower to adopt MBB markets.

Within the 5G mix, the ascent will be uneven with 5G core capex growing at a faster pace than NR revenues, solidifying the message we have communicated for some time, namely that the 5G Core/5G RAN ratio will trend below historical core/RAN averages in the initial 5G wave and then gradually improve as operators start embracing 5G SA.

Massive MIMO Investments to Surpass $10 B

For a technology that was initially viewed as being mostly a fit for hotspot scenarios, Massive MIMO has come a long way, accelerating at a much broader and faster pace than initially expected. Preliminary estimates suggest Massive MIMO RAN investments remain on track to surpass $10 B for the full-year 2020, up nearly 20-fold in just two years. And even as the focus NR coverage is expanding beyond the urban areas, the technology is projected to play a pivotal role in 2021, not just in high traffic areas.

Small Cells to Account for 10% to 20% of Total RAN

The global growth outlook for small cells – including sub 6 GHz and mmWave – remains favorable, underpinning projections the technology will play an increasingly important role supporting the overall RAN network as operators and enterprises navigate new technologies, spectrum bands, and use cases.

Small cell RAN revenues are projected to approach 10% to 20% of the overall RAN market in 2021. Within the small cell mix, Sub 6 GHz capex is expected to characterize the lion share of the investments, driven partly by the reduced gap between macro and small cell radios associated with upper mid-band deployments.

mmWave Shipments to Surpass 0.1 M

Preliminary 3Q20 findings suggest 5G NR mmWave RAN revenues more than doubled year-over-year for the 1Q20-3Q20 period. Helping to explain this output acceleration is the improved activity in both the US and Japan.

And while outdoor mmWave deployments have surprised on the upside, indoor mmWave have disappointed partly because the viability of the indoor mmWave market remains uncertain. With products coming to market and service providers ramping up trial activity, we remain hopeful commercial indoor mmWave deployments will become more meaningful in 2021.

Open RAN to Account for 1% to 2% of Total RAN Market in 2021

Open RAN and Virtual RAN continues to gain momentum, bolstered by Ericsson now formalizing its support with its Cloud-RAN announcement. The uptake remains mixed between the various Open RAN segments, as noted with our 3Q20 Open RAN update. These trends are expected to extend into 2021, with adoption accelerating in some RAN settings while the uptake remains weak in other RAN segments.

FWA RAN Revenues to Surpass $1 B

Preliminary estimates suggest the demand for Fixed Wireless Access (FWA), including both the mobile network and dedicated fixed deployments, continued to accelerate in the third quarter of 2020, with FWA related RAN investments on pace to advance at a double-digit pace in 2020. With more than half of the operators now offering some form of FWA and the number of service providers offering FWA on the rise (GSA, Ericsson Mobility Report), the outlook for FWA RAN remains favorable, adding confidence FWA will comprise a growing share of the overall RAN capex in 2021.

Open and Virtual RAN continues to gain momentum, bolstered by Ericsson now formalizing its support with its Cloud-RAN announcement. The uptake remains mixed. In this blog we will discuss three key takeaways for the 3Q20 quarter including:

1) The primary objective of Open RAN is to address market concentration and vendor lock-in;

2) Open RAN revenues are trending ahead of schedule;

3) Not all Open RAN is disruptive.

First, when it comes to the broader movement behind Open RAN, the leading drivers have not changed since we published the Open RAN Forecast this August. Addressing vendor lock-in and market concentration remain the leading drivers behind the Open RAN movement. Initial readings suggest that the overall RAN market concentration levels as measured by the Herfindahl-Hirschman Index (HHI) increased around 10% between 2010 and 1Q20-3Q20, underpinning projections that these trends will not reverse anytime soon with the current RAN model.

Preliminary estimates suggest Open RAN revenues – including radio, baseband, and software – are coming in at a slightly faster pace than initially expected, reflecting positive developments in the Asia Pacific region. We have adjusted the 2020 outlook upward from ~$0.2 B to ~$0.3 B.

Even though we are in the middle of updating the long-term projections, at this point we just want to clarify that the stronger than expected short-term acceleration does not necessarily translate to faster or slower brownfield adoption beyond 2020.

The results are mixed. While Dish is running into delays in the US market, Rakuten is moving forward at a rapid pace in Japan deploying a variety of both sub 6 GHz and mmWave RAN systems. In addition, some of the Japanese suppliers are reporting that the lion share of their radio shipments are already O-RAN compatible.

The last point we want to make is that not all Open RAN is the same. There is no shortage of ways to segment the Open RAN market – at a highly simplified level, we envision there at least 14 ways to think of the Open RAN opportunity. And while revenue remains a fundamental metric to determine the overall market adoption, it will be particularly interesting to pay attention to the RAN supplier segmentation. This will be important to assess if Open RAN is also disruptive. Because at the end of the day, Open RAN will likely not be considered a complete success story even if Open RAN comprises 100% of the total RAN market but the HHI is still hovering around 2500.

So on the one hand, we estimate total Open RAN revenues are tracking ahead of schedule. On the other hand, the lion share of any “security” related RAN swaps are still going to the traditional RAN players, suggesting the technology for basic radio systems remains on track but the smaller players also need to ramp up investments rapidly to get ready for prime time and secure larger brownfield wins.

For more information about the Open RAN and Virtualized RAN forecast and assumptions, please visit the Open RAN site or please email us at dgmedia@delloro.com or dgsales@delloro.com.

We just wrapped up the 3Q20 reporting period for all the Telecommunications Infrastructure programs covered at Dell’Oro Group. Preliminary estimates suggest the overall telecom equipment market – Broadband Access, Microwave & Optical Transport, Mobile Core & Radio Access Network, SP Router & Carrier Ethernet Switch (CES) – advanced 9% Year-Over-Year (Y/Y) during 3Q20 and 5% Y/Y for the 1Q20-3Q20 period.

The analysis contained in these reports suggests revenue rankings remained stable between 2019 and 1Q20-3Q20, with Huawei, Nokia, Ericsson, ZTE, Cisco, Ciena, and Samsung ranked as the top seven suppliers, accounting for more than 80% of the total market. At the same time, revenue shares continued to be impacted by the state of the 5G rollouts in highly concentrated markets.

 

We estimate the following revenue shares for 2019 and the 1Q20-3Q20 period for the top seven suppliers:

Top 7 Suppliers	Year 2019	1Q20 to 3Q20
Huawei	28%	30%
Nokia	16%	15%
Ericsson	14%	14%
ZTE	9%	11%
Cisco	7%	6%
Ciena	3%	3%
Samsung	3%	2%

 

Additional key takeaways from the 3Q20 reporting period include:

• • Following the 4% Y/Y decline during 1Q20, the positive trends that characterized the second quarter extended into the third quarter, underpinned by strong growth in Optical Transport and multiple wireless segments including 5G RAN, 5G Core, and Microwave Mobile Backhaul. Technology segments that were impacted more materially by COVID-19 and the lockdowns during 1Q20 continued to stabilize in the quarter.

• • Preliminary estimates indicate increasing Mobile Infrastructure and Optical Transport revenues offset declining investments in Microwave Transport and SP Routers & CES for the 1Q20-3Q20 period.

• • The overall telecom equipment market continued to appear disconnected from the underlying economy. While the on-going transition from 4G to 5G is helping to offset reduced capex in slower-to-adopt mobile broadband markets, we also attribute the disconnect to the growing importance of connectivity and the nature of this recession being different than in other downturns improving the visibility for the operators.

• • With investments in China outpacing the overall market, we estimate Huawei and ZTE collectively gained about 3 percentage points of revenue share between 2019 and 1Q20-3Q20, together comprising more than 40% of the global telecom equipment market.

• • The Dell’Oro analyst team has not made any material changes to the overall outlook and projects the total telecom equipment market to advance 5% to 6% in 2020 and 3% to 4% in 2021. Total telecom equipment revenues are projected to approach $90 B to $95 B in 2021.

Dell’Oro Group telecommunication infrastructure research programs consist of the following: Broadband Access, Microwave Transmission & Mobile Backhaul, Mobile Core Networks, Mobile Radio Access Network, Optical Transport, and Service Provider (SP) Router & Carrier Ethernet Switch.