Telecommunications Infrastructure Archives - Page 15 of 40

With the Massive MIMO RAN market recording a third straight year of growth in 2021 and a second consecutive quarter of year-over-year (YoY) revenue declines in 1Q22, the timing is right to review the Massive MIMO market and future growth prospects.

Market Status

For a technology that was initially viewed as being mostly a fit for high-traffic locations, Massive MIMO has come a long way in just a few years, ramping at a much faster pace than initially expected. Preliminary readings suggest global Massive MIMO RAN revenues, which include baseband and radio revenues for large-scale antenna systems featuring > 8T8R sub-6 GHz LTE and NR radio configurations, increased roughly 20-fold between 2018 and 2021, propelling total Massive MIMO revenues to reach new record levels.

Furthermore, global Massive MIMO revenues comprised more than 70% of cumulative 5G NR macro investments in this initial 5G MBB wave. Helping to drive this output acceleration is the fact that Sub-6 GHz Massive MIMO combined with larger swaths of upper mid-band spectrum delivers superior performance, energy consumption, and RAN economics tradeoffs relative to both the low-band and mmWave spectrum. And within the upper mid-band, the Massive MIMO vs. Non-Massive MIMO ratio is typically high.

In addition, operators have for the most part been able to leverage their existing macro grids and minimize the time required for network construction, which generally follow a similar pattern with operators addressing high traffic areas first before transitioning towards less dense populations. Larger countries can realize nationwide coverage in around ~3 years while smaller countries are able to upgrade the first base layer in 1 to 2 years.

Although Massive MIMO requirements and performance will vary depending on a confluence of factors including the inter site distance (ISD), traffic characteristics, and vertical user spread, operators have so far been favoring the capacity, coverage, and performance benefits of the 64T64R configuration. One of the Korean operators is reporting performance and capacity gains in the order of 30% after upgrading its Huawei radios from 32T32R to 64T64R. And with RAN still accounting for 10% to 15% of the overall site opex and wireless capex, the price premium with the 64T64R is justified in most scenarios with ISDs of 500m or less.

As the ISDs are increased, the relative gains slow – According to Ericsson, the relative cell-edge throughput gains with 64T64R vs. 32T32R are in the single digits as the ISD approaches 750m, boosting the business case for the 32T32R configuration.

Regional adoption has been fairly broad based, driven by synchronized upper mid-band rollouts in especially the Asia Pacific region. Wide-band 5G deployments are now ramping up in Europe and North America.

Forecast

Massive MIMO revenue growth did slow in 2021 and the market declined YoY for a second consecutive quarter in 1Q22, in part because of the state of wide-band 5G in China and South Korea. Looking forward, Massive MIMO investments are expected to remain elevated, however global growth is projected to soften as output acceleration in Europe, North America, and parts of APAC will be offset by more challenging comparisons in some of the advanced markets.

At the same time, wide-band R&D is a priority and the products are evolving rapidly with incremental advances improving the form factor, weight, performance, cost, and price. The 64T64R AAU sizes continue to shrink, with leading vendors now offering 64T64R radios weighing just 17 kg to 20 kg, down from the 40 kg+ range just a few years ago. And both Ericsson and Huawei are now offering 32T32R AAUs weighing 12 kg and 10 kg, respectively, ideal for footprint optimized capacity. Nokia is offering a 400 MHz BW 32T32R AAU weighing 17 kg.

Even though the Massive MIMO concept is relatively new, some vendors are already releasing 3rd generation products – Huawei’s latest MetaAAU utilizes 6 dipoles per radio chain. Compared with the traditional 192 array AAU, the extremely large antenna array (ELAA) uses 384 dipoles. More dipoles will boost the antenna gains and the overall performance – Huawei estimates its 3rd generation Massive MIMO AAU improves the experience and coverage by 30% and 3 dB, respectively relative to its 2nd generation products using 192 dipoles.

Continuous product improvements are expected to shorten the lifespan relative to the standard RRU products – some operators are already swapping out Massive MIMO radios deployed just two years ago for newer more efficient and higher-performing radios.

So in addition to upper mid-band footprint expansion with slower to adopt 5G markets, the potential swap opportunity to accommodate new more compact, efficient, and higher bandwidth products will play a crucial role.

In short, operators and enterprises have multiple 5G tools in the toolkit, including sub-1 GHz, 2 GHz, upper mid-band, 6 GHz, and mmWave. And while all of the spectrum will eventually become 5G spectrum, the upper mid-band is clearly a priority in this initial MBB phase.

Following a couple of years of exponential increases, global Massive MIMO revenue growth is expected to moderate going forward. Still, Massive MIMO investments will continue to advance at a faster pace than non-Massive MIMO as operators increasingly turn to the technology to reduce the TCO per capacity.

Mobile networks continue to advance to support changing supply and demand requirements. In order to manage the rise in mobile data traffic and the diversity of the use case requirements with new technologies, frequencies, and more agile networks without increasing the complexity and costs while still maintaining legacy technologies, mobile networks have to become more intelligent and automated, spurring the need for Intelligent RAN. In this blog, we will review Intelligent RAN drivers, current status, and the ecosystem.

Intelligent RAN Automation Background

RAN automation and intelligence are not new concepts. In fact, both existing and new 4G and 5G networks rely heavily on automation to replace manual tasks and manage the increased complexity without growing operational costs. But the use of intelligent machine-learning-based functionality embedded in the management system and RAN nodes for real time and non-real time processing is new. The combination of machine learning and automation will enable operators to evolve their 5G networks to the next level by autonomously optimizing resources resulting in improved cost and energy budgets.

Intelligent RAN Automation is not confined to just the RAN infrastructure. Instead, these solutions will improve performance, reduce energy consumption, and lower costs across multiple infrastructure and services domains. Huawei envisions its IntelligentRAN portfolio will address three key areas, including networks, services, and operations. Similarly, Ericsson’s Intelligent RAN Automation solution is targeting four main areas: Network evolution, network deployment, network optimization, and network healing. And Nokia’s recently launched Intelligent RAN Operations is targeting operational efficiency gains and equipment power savings across multiple domains.

Not surprisingly, the level of automation varies significantly, with most operators in the very early phases in the RAN autonomy transition. For review, we are showing a table summarizing the current automation framework outlined in the TM Whitepaper:

Why More RAN Intelligence and Automation?

Mobile data traffic continues to grow at an unabated pace while carrier revenue growth remains flat, implying operators have limited wiggle room to expand capex and opex to manage the increased complexity typically inherent with the technological and architectural advancements required to deliver the appropriate network performance while supporting more demanding and diverse end-user requirements.

Leading RAN suppliers envision Intelligent RAN automation will deliver several key benefits:

Maximize ROI on network investment
Improve performance and experience
Boost network quality
Accelerate time to market
Reduce complexity
Reduce energy consumption
Bring down CO2 emissions

The ongoing shift from proprietary RAN towards disaggregated Open RAN could accelerate innovation, however, costs and complexity of managing multi-vendor deployments could increase if the networks are not effectively managed. According to Ericsson, operator opex could double over the next five years without more automation across deployment and management & operations just to support the expected changes with MBB-driven use cases.

Performance gains underpinned by Intelligent RAN will vary depending on a confluence of factors. Ericsson estimates Intelligent RAN Automation solutions can improve the spectral efficiency by 15% while Huawei has been able to demonstrate that its IntelligentRAN multi-band/multi-site 3D coordination feature can improve the user experience by 50%, in some settings.

The intensification of climate change taken together with the current power site trajectory forms the basis for the increased focus on energy efficiency and CO2 reduction. Preliminary findings suggest Intelligent RAN can play a pivotal role in curbing emissions, cutting energy consumption by 15% to 25%.

It is still early days in the broader 5G transition, with 5G MBB and FWA in the early majority and early adopter phases, respectively. However, 5G IoT has barely started yet. As private 5G and IoT begin to ramp more meaningfully and diverse use cases comprise a greater share of the overall 5G capex, operators will need to evolve their networks to manage varying latency, throughput, UL, positioning, and reliability requirements. Ultimately it will be extremely challenging to deliver optimal network efficiency across the RAN spectrum with the current networks.

This is why RAN intelligence and automation are increasingly viewed as fundamental elements in the broader digital transformation and autonomy roadmaps. At a recent RAN intelligence roundtable, leading operators agreed AI and automation will be essential components in future networks.

Intelligence and Automation Status

RAN Intelligence & Automation is a relatively nascent but growing segment. Rakuten Mobile’s focus on vRAN and automation has enabled the operator to deploy more than 270 K macro and small cells while maintaining an operational headcount of about 250 people, which is a fraction of that of the typical operator. In the US, greenfield operator Dish is leveraging its cloud-native 5G network and IBM’s AI-powered automation and network orchestration software and services along with VMWare’s RAN Intelligent Controllers to manage costs and to improve performance and innovation for more diverse use cases.

Germany’s fourth operator, 1&1, is planning to build a fully virtualized and open RAN network utilizing specially developed orchestration software to automate operations.

While most of the green field networks are clearly moving towards new architectures that are more automation conducive, change typically does not happen as fast with the brownfields – the average brownfield operator today falls somewhere in between L2 and L3 and still has some way to go before reaching high and full autonomy. Still, China Mobile remains on track for L4 automation by 2025. Vodafone is using RAN Intelligence to boost network quality and to implement Zero Touch Operations.

Also, Etisalat, Du, STC, and Zain recently announced at the SAMENA Telecom Summit that they are collaborating with Huawei to bring more AI into the RAN to improve the performance, enhance the customer experience, and provide the right foundation for more RAN autonomy.

Per Huawei’s HAS2022 analyst event, the vendor remains optimistic L4 High autonomous network will be more prevalent by the 2025 timeframe.

Vendor ecosystem

The top 3 RAN players are also heavily focused on improving their Intelligent RAN Automation portfolios. Huawei recently announced its IntelligentRAN solution, using the Mobile Intelligent Engine (MIE), will be more widely available for both the Site and Network layers by 2023.

Meanwhile, both Ericsson and Nokia have recently announced enhancements and additions to their Intelligent RAN solutions. Qualcomm recently announced its intent to acquire Cellwize, a RAN SMO and Non-RT RIC supplier.

In summary, it is still early days in the 5G journey. Today’s networks are already leveraging automation to manage the increased network complexity. The network of the future will gradually include more automation and AI to provide operators and enterprises with the right tools to proliferate 5G connectivity efficiently. The revenue upside will be limited over the short-term. However the long-term prospects remain healthy.

Each year, I like to take the pulse of the vendor landscape in Optical Transport, and each year I am always impressed by the number of companies that compete in this market. This year is no different.

The good news is that the Optical Transport market, by most measures, is very healthy. The market revenue is just north of $15 billion and has grown at an average annual rate of 5 percent since 2003 (a year when the Optical Transport market was at its worst and network capacity was more aligned with demand). If we focus on WDM systems, this market has grown at an average annual rate of 12 percent. The profit margins here are not the highest among industries but also not the lowest. That said, when considering the type of technology these optical system companies produce, many (myself included) would argue the profit margin should be higher. This leads me to my annual review of the vendor landscape and assessment of vendor competition. The result of my assessment is unchanged—vendor competition is very high in the Optical Transport industry. However, as we all know, the higher the competition, the slimmer the profit margins.

The following are key findings of the vendor landscape that I find the most interesting:

There are 23 vendors actively selling optical systems. Nine have headquarters in North America, seven in Europe/Middle East, six in Asia Pacific, and one in Latin America.
Of the 23 vendors, there are 10 that develop some optical components either in-house or through a sister company (subsidiary or part of a corporate group).
The 10 vendors that have optical component development are also the top 10 vendors in the Optical Transport industry with a combined market share of 97 percent.
Among the top 10 vendors, I find that 5 compete in technology. That is, 5 companies spend a larger amount on R&D to develop the latest coherent DSP and photonics to be first-to-market with the newest coherent wavelength technology.
The 5 vendors that compete in technology amass a combined market share of 70 percent. More importantly, these 5 companies have 90 percent share of the faster growing 400+ Gbps wavelength shipments and 90 percent of the business with Internet Content Providers.

Hence, while there are 23 optical system vendors in the industry, they are located in different regions of the world, giving them some advantage when selling to local customers. Also, among these 23 vendors, 10 capture the vast majority of the market with half of them competing for technology leadership.

So, what about the 13 vendors competing for 3 percent of the market? First, I am pretty sure each of them will state that they are striving to go after the entire $15 billion. However, considering that 70 percent of the market is held by technology leaders, I argue that the 13 vendors have a SAM (serviceable available market) closer to $4 billion. Second, the remaining companies are not all the same. I believe some are poised to grow and grab some market share while others are just holding on or close to exiting. My assessment of the remaining 13 companies are:

Four are growing
Four are sustaining
Five have stalled

This means that, in actuality, the total number of Optical Transport vendors competing each year is probably closer to 18.

As a point of reference, when I first did my assessment of the vendor landscape over a decade ago, I recall the number of vendors was closer to 30. It took over a decade to go from 30 vendors to 23. Perhaps, in another decade, the vendor count will be below 20.

We just wrapped up the 1Q22 reporting period for all the Telecommunications Infrastructure programs covered at Dell’Oro Group, including Broadband Access, Microwave & Optical Transport, Mobile Core Network (MCN), Radio Access Network (RAN), and SP Router & Switch.

External challenges including the war in Ukraine, Covid-19 containment measures, and supply chain disruptions impacted the 1Q22 growth rate but were not enough to derail the positive momentum that has characterized the broader telecom equipment market over the past four years.

Preliminary readings suggest the overall telecom equipment market advanced 4% to 5% year-over-year (Y/Y) in the quarter, underpinned by robust demand for wireline-related equipment and modest growth in wireless.

Regional dynamics were mixed in the quarter. Surging revenue growth in North America (+13%) and modest mid-single-digit expansion in Europe, Middle East & Africa (EMEA) were enough to offset weaker trends in the Asia Pacific region.

Vendor dynamics were relatively stable in the quarter, with the top 7 suppliers driving around 80% of the overall market. 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 customers and maintaining its leadership position. At the same time, diverging trends between existing and new footprints are putting some downward pressure on Huawei’s revenue share.

Following three consecutive years of steady share advancements, ZTE started the year on a solid footing, primarily driven by share gains in Broadband Access. Our assessment is that ZTE’s 1Q22 telecom equipment revenue share approached 12% in the quarter, up roughly four percentage points since 2018.

Even with the unusual uncertainty surrounding the economy, the supply chains, the war in Ukraine, and China’s zero-Covid-19 policy, the Dell’Oro analyst team remains relatively upbeat about the short-term prospects. Global telecom equipment revenues are projected to increase 4% in 2022 and record a fifth consecutive year of growth. While this is a moderation relative to the 8% growth rate in 2021 and the outlook might initially appear somewhat tepid in real USD terms with inflation hovering around 7%, it is important to keep in mind that the severity of the risks and the visibility vary across the telecom equipment segments.

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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