How to Make the Case for 5G? Techno-Economic Modeling of Course!

John Byrne

John Byrne – Service Director, Service Provider Infrastructure

Summary Bullets:

• The economics of 5G are different than previous radio technology upgrades; CSPs need to be convinced of the business case(s) supporting 5G deployments.

• A multitude of supporting hardware, software and services vendors understand this imperative; Nokia’s Bell Labs-infused “techno-economic modeling” is one of the more forward-leaning approaches in driving 5G investment..

Network technology vendors all seem to reach the same conclusions at the same time.

In the case of 5G, every vendor in the space has figured out – seemingly simultaneously – that 5G is different from earlier iterations. In the case of 3G, CSPs were eager to deploy the technology in order to address rapidly increasing demand for mobile data, fueled in turn by the first iPhone in 2007 and a host of other touchscreen smartphones that made it very easy to access Internet services. This in turn led to some high-profile network degradations as CSPs struggled to keep pace with demand. Similarly, 4G addressed the need by operators to keep pace with video traffic, both in downlink throughput required to stream video but also in the uplink throughput required for everyone to send videos, e.g., from the Super Bowl, where traffic leaving the stadium now exceeds download traffic by a wide margin. 4G also was crucial to improve the latency surrounding both data and video traffic. As a result, market forces drove LTE deployment far more quickly than originally expected, even for reluctant European operators with significant budget constraints.

But 5G is different. Technology vendors have spent the last few years hyping the coming of 5G as a transformative event for the industry. Meanwhile, CSPs, most of which are seeing flat or declining revenue and shrinking margins, face an environment where, frankly, continued evolution of the LTE standard (think 4.5G, 4.9G, 4.99G?) will continue to improve performance on bread-and-butter requirements like throughput and latency. Which begs the question: Why 5G?

Nokia is attempting to answer the “Why 5G” question with 5G “techno-economic modeling” to showcase the benefits of 5G deployment. Taken at the generic level, Nokia is offering key benefits for 5G that previous technologies can’t provide, for example:

• 24x improvement in capacity compared to 4.5G networks

• 50%-75% reduction in network operational cost compared to 4.5G and even 4.9G networks

• 99.999% network reliability, enabling SLAs that far exceed any previous technologies

For all vendors in the 5G space, providing the big picture behind 5G – essentially making the case that 5G performance and efficiency is improved by orders of magnitude over 4G/LTE – is an important step on the way to 5G. And the claims by Nokia are compelling for sure. However, ultimately they do not identify the benefits from specific 5G use cases. To address this, Nokia has introduced specific benefits of investing in 5G, initially honing in on three use case scenarios:

• Connected events – Enabling 360-degree, immersive virtual reality experiences in connected stadiums

• Connected industries – Creating the factory of the future (Factory 4.0)

• Connected cities – supporting multiple connected devices in ultra-high density areas where 4G/LTE will not provide the necessary scale; Bell Labs modeling indicates 5G reduces signaling load and related costs by 65% compared to LTE

Of course, the fact that Nokia (and other vendors) need to work so hard to make the case for “Why 5G” points out the different marketplace dynamics compared to previous technology iterations. However, with that challenge acknowledged, the next step is to take the guesswork out of 5G business planning by combining an understanding of emerging 5G technology with a deep understanding of CSP operating environments and business models.

With that in mind, the next step for Nokia, and for its competitors, will be to provide dozens more use case models that can support the 5G investment case. Specifically, modeling around network slicing will be crucial. That’s easier said than done, but is crucial: getting operators to buy into the numbers will be the key to getting them to stop kicking the tires on 5G and start investing more aggressively.

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Small Cells: What the Small Cell Forum’s New Board Tells Us About the Market

Peter Jarich

Peter Jarich – VP, Consumer Services and Service Provider Infrastructure

Summary Bullets:

• This week, the Small Cell Forum announced a set of new members as well as a newly elected Board.

• A shifting Board composition focused on service providers vs. vendors is a good sign, particularly the presence of tower and in-building deployment specialists; ultimately, they’re the companies who will be deploying small cells – or not.

When the Small Cell Forum announced new members and a newly elected Board, the news could easily have been ignored or seen as nothing more than “business as usual.” After all, a new Board is elected every year, and considering the various parts of the network that small cells touch, it’s only natural for a wide array of companies to be involved in the Forum’s activities.

But looking to the composition of the new Board tells an important story.

Broadly, the companies on the Board can be divided into three groups:

• Vendors that develop small cells and supporting network gear.

• Supporters – like Qualcomm and Node-H – that provide software and silicon components powering small cell technologies and services.

• Service providers delivering wireless services out to consumers and enterprises as well as those in the deployment services and siting business.

And, when looking at the composition of the 2016 vs. 2017 Board, a handful of encouraging facts emerge.

Better Balance. With 60% of the Small Cell Forum board composed of vendors last year, it was clearly over-weighted. You could argue that this is only logical since small cell vendors have the best understanding of the technologies at play and have the greatest exposure to diverse customer demands. Circa 2017, however, a more balanced set of board members promises to help in capturing a more diverse set of market views and requirements in guiding the work of the Forum.

Balance Where it Matters. Where the composition of the board shifted dramatically is on the service provider front. Small cell vendors will have their own agendas, but service providers will always be closer to market demands and the ways in which small cells will get deployed.

The SPs that Matter. The definition of “service provider” here extends beyond carriers who deliver services out to consumer or enterprise end-users. The category also includes companies who deploy small cells for carriers – and they constitute 50% of the service providers on the Forum’s Board. Why is that important? Small cell technology is still evolving, but is fairly mature; the technology isn’t a check on market growth. But deployment dynamics – the time, cost and effort to get small cells deployed – could be. Whether indoors or out, they factor into the small cell RoI. To be sure, SPs like AT&T, Reliance Jio and Softbank understand those dynamics. But, if carrier-neutral deployments are seen as important to moving the market forward, a different set of services providers need to be included. Service providers like American Tower, Crown Castle and Extenet.

It would be naïve to think that an evolution of the Small Cell Forum’s Board would lead to massive new market growth. But, if the Forum’s leadership is meant to reflect the state of the industry and include the companies who understand its issues, the evolution of the Board is a good sign, highlighting shifts in the industry and signaling that the Forum is responding.

CBRS: How Much Does Priority Access Matter?

Peter Jarich

Peter Jarich – VP, Consumer Services and Service Provider Infrastructure

Summary Bullets:

  • Ongoing questions around CBRS priority access license (PAL) terms suggest that licenses won’t likely be available until a year from now.
  • Without priority access, CBRS will still roll out; many use cases don’t require it. However, the sooner PAL terms are decided on and licenses auctioned, the better it will be for driving the industry forward.

Combining insatiable spectrum demands, an interest in targeting enterprises with wireless technology (from vendors and services providers), and imminent commercialization, there was little doubt that CBRS would be a hot topic at the GSMA’s inaugural Mobile World Congress Americas event. Read more of this post

The Summer of Software Defined Access: Foreshadowing Fall Success?

Erik Keith – Principal Analyst, Fixed Access Infrastructure

• Calix, ADTRAN and Nokia, in that order, all hosted media/analyst events this summer which highlighted each vendor’s focus on software-defined access (SDA) solutions.

• Differentiation of SDA solutions between vendors will be more challenging than previous, hardware/performance-focused comparisons. As such, the clearest differentiation for and between vendor SDA solutions will be customer/operator wins, the bigger and more numerous, the better.

With the fall equinox upon us, it is timely to reflect on the summer of SDA. From June through August, SDA was a hot topic for three key fixed access systems vendors: Calix, ADTRAN and Nokia.

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“Use Case Based Marketing:” Passive Aggressive (Yet Defensive) Competitive Messaging?

Peter Jarich

Peter Jarich – VP, Consumer Services and Service Provider Infrastructure

Summary Bullets:                 

  • The concept of marketing new technologies or solutions around use cases seems like a logical way to link deployment to real world carrier requirements and opportunities.
  • Use case marketing is also a not-so-subtle way to suggest that competitor messaging is based on hype more than reality, in the process flagging areas where a vendor potentially sees itself at a perceived competitive disadvantage it needs to counter.

Last week, Nokia held an analyst summit dedicated to its Fixed Broadband business.  One of the most anticipated topics was the discussion around software-defined access.  Beyond the fact that software-defined anything is buzzworthy,  going quiet on a hot, new (or new-ish) technology is a recipe for ceding mind share and giving customers a reason to listen to your rivals. Read more of this post

Google Fiber: Will Gigabit Wireless, and Going Long, Keep It Relevant?

Erik Keith – Principal Analyst, Fixed Access Infrastructure

Summary Bullets:

  • Google Fiber, despite its still-small subscriber footprint, still generates plenty of hype, even after pulling back on its ambitious growth plans.
  • With a commitment to buildouts in major U.S. cities, gigabit wireless networking, and ongoing fiber technology development, Google Fiber appears to be in for the long haul, but must fill its leadership vacuum quickly.

Half a decade ago, Google Fiber announced its intentions to blow up the U.S. broadband market by building out its own gigabit fixed broadband service – a massive improvement over most cable and telco broadband services currently offered – for only $70 per month. Most of the Google Fiber footprint is served by GPON networking equipment, with the exception being the Ethernet FTTP assets in Utah, acquired from the failed Utopia project. Read more of this post

The 5G Migration That’s Already Happening: RAN Vendors Launching 5G-Era Base Stations

Ed Gubbins – Senior Analyst, Mobile Access Infrastructure

Summary Bullets:

  • New base station introductions in the run-up to 5G pose challenges depending on both their timing relative to competitors’ moves and their messaging relative to legacy products.
  • All major RAN vendors have faced challenges unveiling new base stations recently, including Huawei, which was forced to make big changes in response to shifting market demands.

Everywhere you look, people are talking about the coming migration to 5G mobile networks. A much less talked about – but perhaps no less challenging – transition is the one radio access network (RAN) equipment vendors are making from base stations that were optimized for LTE to ones designed to lead operators into the 5G era. Yet, in the waiting period before 5G’s true arrival, marketing new base stations aimed at future networks alongside the current generation of base stations is a balancing act akin to stepping from an unmoored boat to a pier. Read more of this post