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At this year’s virtual Cable-Tec Expo, four prominent themes have emerged throughout the online panels and technical presentations:

    1. Cable broadband networks have performed incredibly well during the COVID-19 pandemic, with minimal outages and minimal complaints from customers.
    2. Despite the reliability, there is a clear and pressing need to dramatically improve upstream bandwidth.
    3. Cable operators’ future is one of business, infrastructure, and service convergence, with their DOCSIS networks serving as the platform for fixed-mobile convergence on a large scale.
    4. Convergence at all levels will be driven in part by the evolution of a common control and management plane across all networks and services.

I’ve dealt with the first two topics earlier this year in multiple blog posts and articles. Those two themes will certainly continue to evolve and have an impact on cable operator spending and strategic priorities for their access networks for the next year.

With this blog, I do want to spend some time considering the overall impact of convergence on cable operators’ long-term strategic plans, especially when it comes to their desire to become both fixed and mobile network operators.

The FCC’s auction of 3.5GHz CBRS licenses, which concluded in August, yielded few surprises when it came to the leading purchasers of the spectrum. Verizon and Dish Network led all bidders in terms of money spent, with Comcast, Charter, and Cox rounding out the top 5. Other major cable bidders included Mediacom, Midcontinent Communications, Shentel, and Cable One.

Comcast and Charter have been signaling for some time that they intend to build CBRS-based mobile networks in their existing cable footprints in an effort to reduce the amount of money they pay Verizon and other MVNO partners to use their networks. Their MVNO operations were always intended as a way to build a subscriber base and a brand in advance of owning their own wireless networks, even if that meant consistent EBITDA losses.

Cox, which had entered the wireless space a decade ago, only to exit after disappointing results, has signaled its intention to re-enter the wireless market through the purchase of a significant number of CBRS licenses across its cable footprint.

Finally, Cable One has taken an interesting approach, acquiring CBRS licenses but also making investments in two fixed wireless ISPs (WISPs) to provide coverage in rural and less dense areas surrounding its cable footprint.

Though they have no intention, at this point, of becoming national carriers, cable operators can certainly become competitive in their current markets, offering bundles of fixed and mobile services with the goal of reducing churn and stealing away some market share from their telco rivals.

Let’s not forget that the largest cable operators already have a very dense network of millions of Wi-Fi hotspots either through their own doing (Comcast’s Xfinity) or through their CableWiFi Alliance. Additionally, most cable operators have been deploying advanced Wi-Fi gateways in residential and small enterprise locations that typically reserve a single SSID for either open CableWiFi or Xfinity Wi-Fi subscriber access. These hotspots can very easily be turned into 5G small cells, expanding and amplifying mobile network access for their subscribers.

The dense network of hotspots and access points that the largest MSOs already have in place combined with the licensed CBRS spectrum that they have acquired should give them access to 150MHz of spectrum that they can reuse across a larger number of subscribers per individual access point.

But that type of spectrum reuse will only be possible with a vast and far-reaching deployment of CBRS small cells. In fact, according to a fascinating paper by Cisco’s John Chapman presented at Cable-Tec Expo, it “can take 200 CBRS small cells to cover an area equivalent to the area covered by one LTE macrocell.”[1]

Though the deployment of such a huge number of small cells seems daunting and costly at first, Chapman goes on in his paper to show that existing and future DOCSIS networks are completely up to the task. Firstly, a large percentage of small cells deployed by cable operators will be strand-mounted, drawing power from the existing HFC plant. Those strand-mount small cells will be deployed in conjunction with small cells located in residences to expand coverage and capacity, such that cable operators could expect to see a small cell count of anywhere from 1 to 80 per optical node, depending on the density of the area being covered, the average span length, and the number of mobile subscribers being served.

Cable operators are very accustomed to thinking about their networks as a shared resource among households and subscribers and then adding capacity when utilization rates remain consistently above 70% for any particular service group. As MSOs have been pushing fiber deeper into their networks, reducing the average number of amplifiers per node, and deploying DAA nodes in an effort to improve MER (Modulation Error Ratios,) they have prepared themselves for an access network that can handle the variable requirements of both fixed and mobile traffic.

Chapman points out in his paper, DAA nodes and CBRS small cells are essentially performing the same function: They are both RF gateways that convert RF traffic to IP over Ethernet. As cable operators continue to add capacity to their networks by pushing fiber deeper and reclaiming spectrum used for broadcast video (which they have been actively doing during the COVID-19 pandemic,) there is more than enough bandwidth to backhaul fixed and mobile broadband traffic over their existing DOCSIS infrastructure. Furthermore, with the introduction of low latency DOCSIS and the new LLX (Low Latency Xhaul) protocol, the overall DOCSIS network can deliver the 2ms of latency mandated by today’s 5g services.

Finally, today’s virtual CCAP platforms are already evolving to provide flexible data and control plane functions across cable operators’ converging fixed and mobile networks. Services like DOCSIS, 1588 and SyncE, BNG, as well as PON, can all be containerized and isolated either physically or logically, depending on the operator’s preference. The virtual CCAP becomes the centerpiece for the control and management of a diverse collection of media gateways located in the outside plant, including DAA nodes, CBRS small cells, PON OLTs, Wi-Fi access points, and cable modems.

Cable’s path to convergence is clearer now than it ever has been, from a business and service perspective to an infrastructure perspective. Chapman summarizes his paper with two (of a number) of points:

  • Today’s cable operators are tomorrow’s mobile operators
  • Behind every great wireless network is a great wireline network

I am in complete agreement with him and would add that the efforts being made by vendors to realize this at the control and management planes suggest that they agree, as well.

[1] John T. Chapman, “Small Cell Traffic Engineering: How Many Small Cells are Needed for Proper Coverage,” SCTE Cable-Tec Expo, October 2020.

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Preliminary estimates suggest the small cell radio access network (RAN) market (excluding residential small cells) approached 1 to 1.5 M units in the first half of 2020, comprising a double-digit share of the overall RAN market. Aggregate small cell growth is tracking slightly below expectations, partly due to logistical challenges associated with the pandemic. At the same time, small cell RAN revenues improved more than 20% Q/Q in the second quarter, adding confidence the bulk of these transitory challenges are now in the past and are unlikely to impact the long-term demand for small cells.

The global growth outlook for small cells 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. Cumulative global small cell RAN investments remain on track to approach $25 B over the next five years, advancing at a substantially faster pace than the macro RAN market. Helping to explain this output acceleration is broad-based acceleration across both the indoor and outdoor domains.

The high-level vision has not changed. We expect unlicensed Wi-Fi systems to coexist with cellular technologies. For upper mid-band deployments, operators will need to advance indoor deployments rapidly while the sub 6 GHz micro adoption phase will be more gradual.

Sub 6 GHz small cells, including CBRS, are projected to account for more than 80% of the cumulative small cell market, reflecting the need for operators to complement upper mid-band outdoor deployments with indoor small cells to optimize the combined experience.

Since the last forecast, we have adjusted the cumulative 2019-2024 outdoor micro-small-cell outlook upward, driven primarily by a more favorable outdoor mmWave forecast. With the North American operators leading the way in mmWave, the upward revision is primarily driven by the improved momentum in the Asia Pacific region. In addition to on-going large scale deployments in Japan, the Korean operators are moving forward with plans to deploy mmW for hotspot and smart factory applications. Activity is also picking up in China.

Reflecting back on how we envisioned the market would unfold just a few years back, it is fair at this point to conclude that the outdoor mmWave market has surprised on the upside. At the same time, the indoor mmWave market has disappointed somewhat, reflecting the uncertainty about the timing of this market opportunity. Recent developments with suppliers, including Samsung, announcing the commercial availability of indoor mmWave systems add confidence about future growth prospects.

Preliminary 1H20 estimates suggest the top 5 macro-RAN suppliers accounted for more than 90% of the small cell market. With nearly 30 suppliers planning to support various forms of small cell technologies capitalizing on new opportunities emerging with private wireless, CBRS, Open RAN, and mmWave deployments, it will be interesting to monitor the dynamics between the incumbents and new entrants or small cell suppliers with weaker RAN footprints.

About Dell’Oro Small Cells RAN coverage, please refer to:
  • Dell’Oro Group’s Quarterly RAN and 5-Year Forecast RAN Reports offer a complete overview of the non-residential small cell RAN market by RF output power (pico and micro) and technology (LTE, 5G NR Sub 6 GHz, 5G NR Millimeter Wave), with tables covering manufacturers’ revenue and unit shipments.
  • Dell’Oro Group’s CBRS Report offers a complete overview of the CBRS Small Cell RAN market opportunity.

If you want to get a copy of the above report(s), please contact us (dgsales@delloro.com) for more details.

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During the Huawei AirPON Commercial Release Conference last week, Huawei formally introduced its AirPON solution, a combination of a blade OLT (Optical Line Terminal) and Digital Quick ODN (Optical Distribution Network) equipment designed specifically to be deployed at existing cell sites. Though Huawei is first out of the gate with a blade-based OLT designed to deliver FTTH from distributed, non-cabinet locations, we fully expect to see other vendors address this space in the near future. The target market for the AirPON solution and those expected from competing vendors is existing mobile carriers looking to expand their service portfolio by adding FTTH (Fiber-to-the-Home) access by taking advantage of their existing cell sites and fiber infrastructure.

These distributed solutions aim to capitalize on the trend towards fixed-mobile convergence among global operators that have only recently been accelerated by the COVID-19 pandemic. The pandemic has shown that universal access to premium broadband services is absolutely critical, and operators are responding by ensuring they can provide premium broadband services across both their fixed and mobile networks. Additionally, the proliferation of national broadband plans or subsidized broadband expansion efforts include both fixed and mobile network options to speed the availability of broadband throughout entire countries.

AirPON Specifics

At the heart of the AirPON solution is an OLT on a blade that can be deployed either on a pole or the wall of a building. The unit can be installed alongside an existing cellular BBU (Baseband Unit) and either draw from an existing DC or AC power source or be deployed with a new power source. The blade OLT is environmentally hardened to withstand extreme temperatures and wind. The unit itself weighs less and is smaller than current strand- or pole-mount OLT nodes, because typical antenna installations on building rooftops are quite a bit smaller in diameter when compared with traditional utility poles.

The blade OLT a maximum of 1,024 subscriber connections, depending on the split ratio the operator selects and how much bandwidth they want to deliver. For mobile operators beginning to offer fixed broadband services, this range is ideal for addressing buildings where either cable, DSL, or 3G/4G fixed wireless connections were only available or where no fixed connections existed previously.

During the online event, Peter Lam of Hong Kong Telecom (HKT) noted that the AirPON solution allows them to deliver fiber services to over 700 villages in remote islands and rural areas of Hong Kong. For HKT, the AirPON solutions solve two significant issues: limited access to existing fiber and the typically high costs associated with delivering FTTH access. The vast majority of HKT’s FTTH offerings are via OLTs located in central offices. However, in remote areas, those central offices are often limited in their reach and limited in their ability to deliver FTTH connectivity.

In a similar presentation, Joel Agustin of the Philippines’ Globe Telecom, which is the country’s largest mobile network operator, noted that the AirPON solution allows the company to deliver residential broadband services, where it is estimated that the penetration rate remains near 20%. Some of the challenges that have hindered operators’ ability to deliver universal fixed broadband services in the Philippines include extremely long fiber spans, owing to an insufficient number of central office locations, particularly in suburban and rural areas, and extremely long times for civil works projects to be completed.

The historically long lead times to complete fiber deployment projects pushed Globe to consider using its existing base station locations as distributed central offices where they could co-locate the AirPON OLTs to reduce the time and cost required to roll out FTTH services. In the Philippines, the typical ODN distance for a CO-based OLT was 7km. By moving to a more distributed architecture using the AirPON solution, Globe was able to increase the number of distributed OLTs and reduce the ODN distance to 1-2km. The reduction in the distance reduces the total fiber infrastructure while also making it easier to secure right-of-way access to add in additional fiber strands to the individual OLT locations. Finally, the approvals and construction process is reduced significantly because Globe doesn’t need to set up additional cabinets to deploy the OLT. Instead, the blade OLT can be placed on the existing rooftop site, taking advantage of existing power supplies and optical backhaul cables.

From the OLT, the feed fiber connection can be dropped directly to an optical distribution point located either on a utility pole or in the MDU to then distribute fiber connections to individual subscriber homes. Globe is taking advantage of advances in ODN equipment and connections to be able to quickly turn up new subscribers while also identifying and isolating faults, such as fiber impairments. The new ODN equipment eliminates the need for fiber splicing using pre-connectorized cable, while also eliminating the need for the technician to open up the optical distribution point unit when connecting a new feeder cable.

Distributed solutions for FMC will continue to grow

The AirPON solution and other vendors expected to enter the market are targeted initially at mobile operators in the Asia-Pacific region who face similar network or geographic constraints as HKT and Globe Telecom, where the re-use of existing rooftop antenna sites for the blade OLT makes economic sense. Countries in Southeast Asia are particularly ideal candidates for the solution, assuming they have determined that the competitive environment and ROI make it feasible to begin rolling out an FTTH service.

Beyond Southeast Asia, these solutions can be applied to operators in Central and South America, as well as parts of Europe, the Middle East, and Africa. Again, with operator consolidation occurring more frequently and with mobile and fixed technologies and architectures beginning to merge, solutions that distribute traditional CO-based platforms are certainly viable technology options. In many cases, there is simply no cost-effective way to deliver FTTH services to rural areas without a distributed platform that allows the operator to build out an FTTH service incrementally. The additional benefit of the AirPON solution and others that will enter the market is that operators can also re-use their existing investments in rooftop antenna locations to help further improve the ROI and overall business case of deploying FTTH.

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With 5G now being deployed at full speed in the sub 6 GHz spectrum utilizing both the low-band and the upper mid-band, the focus is shifting to the next spectrum frontier. Even if the upper mid-band in conjunction with Massive MIMO has been a tremendous success story both from an economic and technical perspective providing far more aggregate capacity and throughput upside at a much lower capex than initially envisioned, the baseline scenario suggests mobile data traffic is projected to advance another 15x to 25x over the next decade, surpassing 1 Zettabyte (ZB) per month by 2030. While Massive MIMO and the sub 6 GHz spectrum will go a long way delivering another 5x to potentially 15x of upside, it will likely not be enough to meet the capacity demands of the next decade given the economic constraints the operators are facing.

As a result, all eyes are now on the next 5G spectrum frontier – also known as the 6 GHz spectrum (5.925-7.125 GHz). The Federal Communications Commissions (FCC) recently announced plans that make 1200 MHz of spectrum in the 6 GHz band available for unlicensed use permitting low-power device across the band and standard-power devices in 850 MHz. In order to maximize the overall efficiency and potential impact on the wireless-based economy, it will be imperative for other countries/regions to consider a more balanced approach between the unlicensed and licensed spectrum for the 6 GHz spectrum. The WRC-23 IMT identification for the 6425-7025 MHz band would provide service providers with a solid foundation to realize the 5G vision while at the same time providing consumers, enterprises, and industries with 600 MHz of incremental unlicensed spectrum to manage increasingly congested WiFi networks.

The baseline scenario assumes mobile data traffic will advance 15x to 25x over the next decade. While this initially might appear to reflect a slowdown in relative terms when compared with the growth rates in previous decades, the reality is that we are on track to consume as much data in 2030 as we did in the first twenty years combined of the smartphone era.

And there is no magic. Since the beginning of the first 1G networks through today’s 5G networks, operators have had three basic tools at their disposal to manage capacity growth including introducing more efficient technologies, deploying more cells, and using more spectrum.

The role of these capacity vehicles has fluctuated over time as the cellular industry has evolved, however, one consistent theme across the board is that the low hanging fruit has been picked, and it is increasingly challenging to extract significant gains.

The shift from 4G to 5G provides ~20% to ~30% of spectral efficiency upside, assuming everything else remains constant. The global macro cell site installed base is advancing at a high single-digit rate annually. Small cell deployments are firming up, but at the same time, co-channel densification without the use of beamforming can increase the interference between the base stations constraining the upside.

Massive MIMO and beamforming technologies address the interference limitations associated with small cell densification by increasing the antenna count at the site, enabling operators to optimize the RF signals directed towards the targeted users while at the same time minimizing interference levels for the remaining users.

So from a technical perspective, Massive MIMO and beamforming represent the next most effective solution of the capacity tool kit. In addition, the more targeted beams are improving the cell range of the base stations, enabling operators to realize equivalent 2 GHz LTE coverage with the upper mid-band, reducing the need to add more sites to compensate for the higher path loss associated with higher operating frequencies producing comparable 5G coverage relative to the 4G coverage.

And since the coupling between mobile infrastructure investments and wireless capital intensity remains strong, implying that constrained operator revenue growth will ultimately impact operators’ ability to raise capex, the appeal of Massive MIMO in the mid-band is not difficult to conceptualize. The combination of the capacity upside and the resulting cost per bit benefits by not having to add more sites forms the basis for the success with Massive MIMO – the technology accounted for more than 70% of the 2019 5G mobile infrastructure market.

Not surprisingly, the outlook for Massive MIMO remains favorable, underpinning projections that operators will squeeze as much as they can out of this valuable mid-band spectrum using 32T32R, 64T64R, and eventually 128T128R antennas. It is challenging to pinpoint the exact upside at this juncture but it is not inconceivable that an effective Massive MIMO strategy could produce another 5x to 15x of upside, depending on the spectrum assets.

Regardless, Massive MIMO in the upper mid-band spectrum will not be enough to manage the baseline scenario of total mobile traffic surpassing 1 ZB per month by 2030. And it most certainly will fall short addressing any game-changing device introduction spurring a change in behavior and video consumption utilizing the mobile network. Though video consumption comprised the lion share of the 2019 mobile data traffic, the average smartphone user still spends only around 20 min per day streaming videos on the cellular network, and baseline projections are resting on the assumption that the typical smartphone user will spend no more than 45 minutes per day streaming 4K videos by 2030.

Unlicensed proponents prefer to allocate the majority or all of the 6 GHz band for unlicensed applications, implying they expect mobile data consumption growth will slow at a much faster pace than consensus estimates or Millimeter Wave (mmW) technologies can play an important role addressing the projected shortage.

With the 2020 mmW installed base projected to surpass 0.1 M base stations and mmW smartphone devices already delivering Gbps performance, most everyone agrees Millimeter wave (mmW) based 5G NR technologies have advanced at a much faster pace than initially expected. At the same time, it will take time before the economics become compelling enough for early and late majority operators to deploy mmW systems over wider city areas and before the technology can address a significant portion of the overall mobile data traffic given the constrained capex envelopes. Even with upward forecast revisions, mmW based 5G systems are projected to account for less than 5% of the radio shipments over the next five years.

But with 600 MHz of 6 GHz spectrum and macro based EIRP levels, operators would be able to deploy Massive MIMO systems with beamforming utilizing the existing macro grid, thereby providing operators with incremental capacity to navigate not just the baseline growth projections over the next decade within the constrained capex envelope, but also including some margin to navigate new game-changing device introductions or stronger than expected IoT/FWA usage.

And from a speed perspective, one of the more important requirements in the IMT-2020 standard and vision is that 5G networks should consistently be able to provide 100 Mbit/s data rates to all users – anytime and anywhere. So in addition to dimensioning the networks for capacity, operators also need to design the networks to deliver a consistent experience throughout the cells and the day.

In short, we don’t know exactly how much of the 5G vision will be realized over the next decade. But we do know what tools the operators have at their disposal to navigate this ongoing transition from MBB to eMBB and IoT. And while it is possible that growth on the mobile network will slow at a much faster pace than expected, spectrum policies also need to consider the alternative – what if people end up spending more than 5% of the day streaming video content on the mobile network?

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We just wrapped up the 2Q20 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 4% Y/Y for the 1H20 period.

Preliminary readings suggest revenue rankings remained stable between 2019 and 1H20, with Huawei, Nokia, Ericsson, ZTE, Cisco, Ciena, and Samsung ranked as the top seven suppliers. At the same time, revenue shares changed slightly as the Chinese suppliers benefited from large scale 5G rollouts in China.

Revenue shares for the 1H20 period relative to 2019 for the top five suppliers – the latter indicated herein parenthesis – show that Huawei, Nokia, Ericsson, ZTE, and Cisco comprised 31% (28%), 14% (16%), 14% (14%), 11% (9%), 6% (7%), respectively.

Additional key takeaways from the 2Q20 reporting period include:

  • Following the 4% Y/Y decline during 1Q20, the overall telecom equipment market returned to growth in the second quarter, with particularly strong growth in mobile infrastructure and slower but positive growth for Optical Transport and SP Routers & CES, which was more than enough to offset weaker demand for Broadband Access and Microwave Transport.
  • For the 1H20 period, double-digit growth in mobile infrastructure offset declining investments in Broadband Access, Microwave and Optical Transport, and SP Routers & CES.
  • The results in the quarter were stronger than expected, driven by a strong rebound in China across multiple technology segments including 5G RAN, 5G Core, GPON, SP Router & CES, and Optical Transport.
  • Also helping to explain the output acceleration in the quarter was the stabilization of various supply chain disruptions that impacted the results for some of the technology segments in the first quarter.
  • Shifting usage patterns both in terms of location and time and surging Internet traffic due COVID-19 has resulted in some infrastructure capacity upside, albeit still not proportional to the overall traffic surge, reflecting operators ability to address traffic increases and dimension the network for additional peak hours throughout the day using a variety of tools.
  • Even though the pandemic is still inflicting high human and economic losses, the Dell’Oro analyst team believes the more upbeat trends in the second quarter will extend to the second half, propelling the overall telecom equipment market to advance 5% in 2020.

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.