Going into 2020 we outlined ten 5G predictions. Since we now have data for 1H20 and will soon start collecting data for 3Q20, the timing is right for a quick status check on the 5G predictions we outlined going into 2020.

1)  5G RAN+Core Infrastructure Market to More than Double

Prediction: 5G NR continues to accelerate at an extraordinary pace, much faster than expected four or five years ago or even just six or three months ago, underpinned by large-scale deployments in China, Korea, and the US. These trends are expected to extend into 2020. The upside in 5G NR will be more than enough to offset declining LTE investments, propelling the overall RAN (2G-5G) market for a third consecutive year of healthy growth.

Status: This is for the most part playing out as we outlined, though we have adjusted the 5G NR and Core outlook upward to reflect larger than expected deployments in particularly China, which is more than enough to offset LTE capex on pace to decline more than 20% in 2020.

 

 

2) Early Adopters to Embrace 5G SA

Prediction: The path toward 5G has become more straightforward since the 2Q19 quarter with only two options now—Option 3 which is 5G NSA, utilizing the EPC, and Option 2 which is 5G SA utilizing the 5G Core. As we move into 2020, we will see the emergence of the first 5G Standalone (5G SA) networks. We expect service providers in China, Korea, the Middle East, and the US to launch 5G SA sometime in 2020.

Status: 5G SA and 5G core is now a reality. According to the 2Q20 MCN report, 5G Core revenues accounted for nearly 15% of overall Mobile Core Network Revenues, underpinned by strong developments in the APAC region. “The ramp-up in the second half of 2020 has already begun, with T-Mobile commercially launching its 5G Standalone network in August, recognizing Cisco and Nokia, as their 5GC suppliers,” said Dave Bolan, Dell’Oro 5G Core, and MEC Expert.

 

3) More than 100 M Transceivers

Prediction: The Massive MIMO business case has changed rather significantly over the past two to three years with the technology now considered to be a foundational building block for mid-band NR deployments. We recently revised the 2020 Massive MIMO outlook upward, driven by surging year-to-date shipments and improved market sentiment for 2020. The overall 5G NR transceiver installed base – Massive MIMO plus Non-Massive MIMO for sub 6 GHz and Millimeter (mmW) macros and small cells – is projected to eclipse 0.1 B by 2020.

Status: Preliminary estimates suggest combined macro and small cell transceiver shipments for non-Massive MIMO and Massive MIMO configured systems was already in the 50 M to 100 M range for the 1H20 period. The forecast remains on track with total transceiver shipments projected to surpass 0.1 B in 2020.

 

4) Dynamic Spectrum Sharing Takes Off

Prediction: The attitude towards spectrum sharing is on the upswing, with both suppliers and operators discussing their spectrum sharing roadmaps. In addition to the spectral efficiency gains of 15% to 20%, operators are considering the benefits from a marketing perspective. Operators also see the extended 5G NR coverage with a lower band spectrum as a key enabler for 5G SA and network slicing. The technology is expected to play a pivotal role in upgrading existing low-band LTE sites to NR in the year 2020.

Status: Operators are clearly warming up to the idea that the upside with DSS outweighs the downside, with the key benefits including 1) Accelerate nationwide coverage, 2) Spectral efficiency upside comparing NR and LTE, 3) Overall performance upside using CA, and 4) Simplify and accelerate the transition towards 5G SA.

The downside with DSS is that it can impact the net capacity. But at the same time, operators also know that there are only three paths to move from 4G to 5G with the existing LTE spectrum — re-farming, static sharing, and DSS. And unless the goal is to stay on LTE, the reality is that the picture becomes more favorable when comparing DSS with static sharing. According to Ericsson, the relative performance upside with both the LTE and 5G NR traffic when comparing DSS with static sharing at various subscriber penetration rates is material (for a 50% NR penetration, Ericsson estimates the LTE and NR upside could be around 86% and 57%, respectively).

And more importantly, operators are shifting from talking about DSS to deploying the technology. Swisscom and Verizon have already deployed DSS nearly nationwide. AT&T is also using DSS to expand its low-band coverage. Deutsche Telekom said with its 2Q20 update that its low-band 5G network will cover two-thirds of the German population by the end of 2020, relying heavily on DSS.

Ericsson said earlier in the year that 80% of customers that are testing DSS have plans to deploy the technology over the next year.

 

5) 5G NR Indoor Small Cell Market to Surpass LTE

Prediction: With more data points suggesting the beamforming gains with Massive MIMO radios delivering comparable outdoor coverage in the C-band relative to 2 GHz LTE deployments, preliminary data from the field also suggests indoor performance will be a challenge and operators are already migrating the indoor capex from 4G to 5G. These trends are expected to intensify in 2020.

Status: We have not made any material changes to the overall outlook and still expect full-year 2020 5G NR indoor revenues to surpass LTE pico investments. While shipments were impacted negatively sequentially between 4Q19 and 1Q20, partly due to COVID-19, market conditions improved significantly during 2Q20 propelling the overall 1H20 indoor 5G NR revenues to advance more than 10x year-over-year.

 

6) Millimeter Wave (mmW) to Approach 10% of 5G NR Small Cell Installed Base

Prediction: Even though deploying 5G NR in the mid-band using the existing macro grid will deliver the best ROI for some time for operators seeking to optimize cost per GB and average speeds, 5G NR mmW shipments and revenues increased substantially in the third quarter of 2019, with the overall mmW NR market trending ahead of expectations. We recently adjusted our near-term mmW outlook upward to take into consideration the state of the market and improved visibility about the underlying fundamentals in the US, Korea, and Japan.

Status: As we discussed in the recently published 5-year RAN Forecast, the outdoor mmW market has surprised on the upside while the indoor mmW market has taken a bit longer to ramp than we initially expected. Even with the recent upward adjustment for the outdoor segment and downward revisions for the indoor mmW forecast, the total mmW market remains on track to surpass 0.1 M units and is expected to account for 5% to 10% of the overall 5G NR small cell installed base by the end of 2020.

 

7) 5G MBB to Account for More than 99% of the 5G NR Market

Prediction: We remain optimistic about the IoT upside for Industrial IoT/Industry 4.0, reflecting a confluence of factors including 1) Suppliers are reporting healthy traction with the vertical segments, 2) More countries are exploring how to allocate spectrum for verticals, 3) Ecosystem of industrial devices is proliferating rapidly, and 4) New use cases that require cellular QoS are starting to emerge. At the same time, the LTE platform is expected to suffice for the majority of the near-term vertical requirements implying it is unlikely 5G NR IoT-related capex will move above the noise in 2020.

Status: MBB continues to dominate the 5G capex. LTE IoT is picking up the pace and remains on track to comprise a low-single-digit share of the 2020 LTE RAN market. 5G IoT is moving in the right direction with interesting use cases starting to emerge. But it will take some time before the 5G IoT NR capex will move above the noise. At the same time, we adjusted the overall FWA outlook upward with the recently published 5-Year RAN Forecast, reflecting an improved business case and shifting usage patterns triggered by COVID-19. With this adjustment, we currently estimate 5G MBB remains on track to account for more than 97% of the 5G NR market.

 

8) Virtual RAN 5G NR Revenues to Exceed Open RAN 5G NR Revenues

Prediction: There are multiple ongoing efforts driven both by operators and suppliers with the primary objective of realizing a more flexible architecture that will optimize TCO for both the known and unknown use cases while at the same time improving the ability for the service providers to differentiate their services. Given the current state of these tracks with the incumbents investing more in virtual solutions and the readiness of Open RAN initiatives for existing 5G MBB deployments, we envision Non-Open RAN Virtual 5G NR revenues will be greater than Open RAN (virtual RAN with open interfaces) 5G NR revenues in 2020.

Status: With Open RAN now developing at a faster pace than initially expected, we might need to revisit this assessment.

 

 

9) 5G NR RAN Revenue HHI to Increase > 100 Points

Prediction: Total RAN HHI has been fairly stable over the past three years, reflecting a competitive dynamic that remains fierce, moderately concentrated, and relatively stable. Initial readings suggest the 5G NR HHI for the 4Q18-3Q19 period is trending below the 2018 overall RAN HHI, however, we expect the 5G NR HHI to increase in 2020.

Status: Preliminary estimates suggest the 1H20 5G NR HHI was about 5% to 10% greater than the overall RAN HHI, underpinning projections that large scale 5G NR deployments in China are impacting the 5G RAN landscape.

 

10) 5G NR Subscriptions to Approach 0.2 B

Prediction: Preliminary estimates suggest the shift from LTE to NR is roughly two to three years faster than the 3G to 4G migration from a RAN infrastructure and subscription adoption perspective. The end-user ecosystem is developing at a rapid pace with multiple chipsets, devices, and phones supporting both NSA and SA for the low, mid-, and mmW spectrum now commercially available. While TDD has dominated mid-band and mmW deployments to date, FDD based 5G NR phones became a reality in 2H19 and will proliferate in 2020. End-user device adoption is projected to accelerate rapidly in 2020, with 5G NR approaching 0.2 B subscriptions, bolstered by healthy NR subscriber adoption in China, Korea, and the US.

Status: According to the GSA, 5G subscriptions approached 138 M in the second quarter. It is possible our 2020 forecast is low with total 5G subscriptions not only approaching but even surpassing 0.2 B this year.

 

For more information about our 5G RAN, Mobile Core Network, Open RAN, and MEC programs, please contact us at dgsales@delloro.com.

 

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

1. 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.

 

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.

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.