October 2023 - Dell'Oro Group

During its third-quarter earnings call, Harmonic’s CEO Patrick Harshman described having initiated a formal strategic review of its video business and has already received interest from potential buyers of the business. The video business, which represents about 40% of Harmonic’s total revenue, is seeing solid growth in its software-as-a-service (SaaS) segment, but declines in its traditional hardware business, which includes broadcast and contribution encoders, and other products designed to process and play out video.

While the video segment is growing more modestly, Harmonic’s broadband segment has grown considerably and is poised for even stronger growth in the next few years as major cable operators, including Charter Communications, begin their transition to Distributed Access Architectures (DAA) and FTTH. During the third quarter earnings call, Harmonic noted that its broadband products are now commercially deployed with 104 operators, which is up 21% year-over-year.

The potential sale of its video business at this point makes a lot of sense for Harmonic for a number of reasons. The primary reason would be to allow the company to shift 100% of its focus (and capital) on expanding the broadband segment and building on its market leadership position in the vCMTS and remote PHY product segments without having the drag of negative EBITDA coming from the video segment. Another major reason is that the video and broadband business segments aren’t driving the synergies the company was expecting when it figured that a shift in spending on broadband equipment would coincide with a shift in spending on video processing equipment. But here are some other reasons why a transaction makes sense:

Traditional pay-TV providers are moving too slowly in embracing IP-based video delivery: Harmonic’s strength has always been in providing high-quality, hardware-based encoding and video processing platforms to traditional pay-TV providers, such as cable, telco, and satellite operators. As subscriber losses continue to mount, these operators have been less inclined to invest in their video infrastructure, but have also been less enthusiastic about migrating to lower-cost, cloud-based video delivery. They have been sweating their video assets in the hopes that margins would improve despite subscribers continuing to cancel. Unfortunately, rising content costs have eaten into any margins, creating an atmosphere of inertia among the world’s largest pay-TV providers. Commscope has felt the same impact on its video business, which was very heavily focused on service providers and broadcasters.
Growth in video is in AVOD, FAST, and CDNs—areas where Harmonic has not had as much traction: Because Harmonic has historically been focused on the service provider and broadcast market segments, it has not gained traction in the segments that are seeing the fastest consumption growth right now. Specifically, the growth in AVOD (Advertising-based video on demand) and FAST (Free ad-supported streaming TV) channels and content is largely being processed through AWS, or other CDNs or platform providers like Broadpeak and ATEME. Harmonic’s SaaS offering is intended to address these markets, but it is crowded and distributed. To be successful in the long term, scale will be critical. And that scale will likely be achieved more quickly through the acquisition by a competitor or adjacent vendor.
Despite the current inventory correction, the broadband segment is set to boom: There is no question that broadband operators are currently working through purchased inventory as they adjust to a demanding environment and a supply-chain environment that has changed. Subscriber growth at many cable operators has slowed and fiber buildouts by competitors have also slowed, reducing the need for some operators to make significant infrastructure upgrades in the short term. Nevertheless, the expectation is that the inventory digestion—at least for Harmonic’s customers—is ending this quarter. As a result, Harmonic has guided Q4 broadband revenue to be between $105M-$120M. In all likelihood, that will be its biggest quarter on record, with similar quarters set to follow as more operators ramp up their DAA efforts.
Harmonic can potentially consolidate the cable broadband market: Timing is everything. Nowhere is that truer than in the broadband equipment space right now. The impact of inventory digestion and reduced demand has had an incredibly uneven impact on vendors. Nearly all have felt some pain. But the duration of that pain is forcing some equipment vendors to change their short-term strategies. We have already seen layoff announcements and other cost-cutting moves by some vendors who anticipate the spending slowdown to persist well into 2024. Others, like Commscope, are reportedly looking to sell off assets in order to ensure they can pay down debt and focus on their core product segments going forward. If, as reported, CommScope is looking to sell off its Access Networks Solution (ANS) unit, which it acquired when it purchased ARRIS back in 2019, Harmonic becomes a very interesting candidate to acquire the division, especially if Harmonic does sell off the video segment of the company. That additional capital might position Harmonic to take on less debt to acquire the significant cable footprint the former ARRIS would bring.

Beyond a global installed base of CCAP platforms, the ANS division would also give Harmonic a dominant position in the cable outside plant—specifically optical nodes, amplifiers, taps, and passives. A large percentage of these devices are going to be upgraded or replaced by Comcast, Charter, Cox, Rogers/Shaw, and others as they evolve from DOCSIS 3.1 to DOCSIS 4.0. In fact, we estimate that from 2023-2030, cable operators globally will spend a total of $9.9B on this outside plant equipment.

Currently, Harmonic does not focus on cable outside plant equipment. CommScope is estimated to be the global leader in cable outside plant equipment, particularly in the critical North American market. More importantly, CommScope is already working closely with Comcast on both 1.2GHz amplifiers as well as Full Duplex DOCSIS 4.0 amplifiers. Comcast remains Harmonic’s largest customer, representing 41% of Harmonic’s total revenue in the third quarter. For Comcast’s full duplex service to work as advertised, it will take close coordination of the vCMTS, nodes, Remote PHY Devices (RPDs), amplifiers, and CPE. With the current uncertainty around CommScope’s ANS division and where it might potentially land, Comcast undoubtedly has its preference and that is to an organization with whom its procurement department and network engineers are already familiar.

The arguments against Harmonic acquiring CommScope’s ANS division are many. Revenue is declining, as spending on traditional CCAP platforms is dropping faster than RPDs and amplifiers can offset. For many vendors, that declining CCAP market would be an absolute albatross. But if you are Harmonic and can convert a significant portion of that spend to cOS spend while also watching the RPD and amplifier spend increase then perhaps this all makes sense. Even if that legacy CCAP spend never returns because it is being replaced by fiber, Harmonic can recoup some of that revenue via cOS deployed as a vBNG or to simultaneously manage DOCSIS and fiber subscribers.

The existential question for Harmonic here is whether it wants to address the cable outside plant market. How many Comcasts are out there who are closely tying together their cable outside plant equipment purchases with their headend and control plane purchases? It certainly appears that this is happening at many more operators, as DOCSIS 4.0 roadmaps are closely intertwined like never before.

We’ve been participating in the OCP Open Compute Project (OCP) Global Summit for many years, and while each year has brought pleasant surprises and announcements, as described in previous OCP blogs from 2022 and 2021, this year stands out in a league of its own. 2023 marks a significant turning point, notably with the advent of AI, which many speakers have referred to as a tectonic shift in the industry and a once-in-a-generation inflection point in computing and in the broader market. This transformation has unfolded within just the past few months, sparking a remarkable level of interest at the OCP conference. In fact, this year, the conference was completely sold out, demonstrating the widespread eagerness to grasp the opportunities and confront the challenges that this transformative shift presents to the market. Furthermore, at OCP 2023, there was a new track just to focus on AI. This year marks the beginning of a new era in the age of AI. AI is here! The race is on!

This new era of AI is marked and defined by the emergence of new generative AI applications and large language models. Some of these applications deal with billions and even trillions of parameters and the number of parameters seems to be growing 1000X every 2 to 3 years.

This complexity and size of the emerging AI applications dictate the number of accelerated nodes needed to run the AI applications as well as the scale and type of infrastructure needed to support and connect those accelerated nodes. Regrettably, as illustrated in the chart below presented by Meta at the OCP conference, a growing disparity exists between the requirements for model training and the available infrastructure to facilitate it.

This predicament poses the pivotal question: How can one scale to hundreds of thousands or even millions of accelerated nodes? The answer lies in the power of AI Networks purposively built and tuned for AI applications. So, what are the requirements that the AI Networks need to satisfy? To answer that question, let’s first look at the characteristics of AI workloads, which include but are not limited to the following:

Traffic patterns consist of a large portion of elephant flows
AI workloads require a large number of short remote memory access
The fact that all nodes transmit at the same time saturates links very quickly
The progression of all nodes can be held back by any delayed flow. In fact, Meta showed last year that 33% of elapsed time in AI/ML is spent waiting for the network.

Given these unique characteristics of AI workloads, AI Networks have to meet certain requirements such as high speed, low tail-latency, lossless and scalable fabrics.

In terms of high-speed performance, the chart below, which I presented at OCP, shows that by 2027, we anticipate that nearly all ports in the AI back-end network will operate at a minimum speed of 800 Gbps, with 1600 Gbps comprising half of the ports. In contrast, our forecast for the port speed mix in the front-end network reveals that only about a third of the ports will be at 800 Gbps speed by 2027, while 1600 Gbps ports will constitute just 10%. This discrepancy in port speed mix underscores the substantial disparity in requirements between the front-end network, primarily used to connect general-purpose servers, and the back-end network, which primarily supports AI workloads.

In the pursuit of achieving tail-latency and creating a lossless fabric, we are witnessing numerous initiatives aimed at enhancing Ethernet and modernizing it for optimal performance in AI workloads. For instance, the Ultra Ethernet Consortium (UEC) was established in July 2023, with the objective of delivering an open, interoperable, high-performance full-communications stack architecture based on Ethernet. Additionally, OCP has formed a new alliance to address significant networking challenges within AI cluster infrastructure. Another groundbreaking announcement from the OCP conference came from Google, who unveiled their opening of Falcon chips; a low-latency hardware transport, to the ecosystem through the Open Compute Project.

At OCP, there was a huge emphasis on adopting an open approach to address the scalability challenges of AI workloads, aligning seamlessly with the OCP 2023 theme: ‘Scaling Innovation Through Collaboration.’ Both Meta and Microsoft have consistently advocated, over the years, for community collaboration to tackle scalability issues. However, we were pleasantly surprised by the following statement from Google at OCP 2023: “A new era of AI systems design necessitates a dynamic open industry ecosystem”.

The challenges presented by AI workloads to network and infrastructure are compounded by the broad spectrum of workloads. As illustrated in the chart below showcased by Meta at OCP 2023, the diversity of workloads is evident in their varying requirements.

This diversity underscores the necessity of adopting a heterogeneous approach to build high-performance AI Networks and infrastructure capable of supporting a wide range of AI workloads. This heterogeneous approach will entail a combination of standardized as well as proprietary innovations and solutions. We anticipate that Cloud service providers will make distinct and unique choices, resulting in market bifurcation. In the upcoming Dell’Oro Group’s AI Networks for AI Workloads report, I delve into the various network fabric requirements based on cluster size, workload characteristics, and the distinctive choices made by cloud service providers.

Exciting years lie ahead of us! The AI journey is just 1% finished!

Save the date: Free OCP Educational Webinar on November 9, 8 AM PT, explores AI-driven network solutions, market potential, featuring Juniper Networks and Dell’Oro Group. Register now!

Back in September, Charter Communications and Disney were locked in a tense renegotiation of their TV redistribution agreement. The ongoing discussions threatened to result in blackouts for Charter’s video subscribers of NFL and college football games, just as both seasons were beginning to ramp up. Fortunately, both sides came to a historic agreement, which now sets a precedent for future re-distribution negotiations for all video service providers by effectively ending the traditional bundling of linear channels and instead giving video providers more flexibility in how they bundle linear and streaming content.

Traditionally, video providers would be forced to take a bundle of linear channels from a content owner. In the case of Disney, that would include the very popular ESPN and FX, along with the far less popular Freeform, Nat Geo Mundo, Baby TV, and FXX, among others. Instead of being forced to take a bundle of channels, only two of which Charter (and its subscriber base) felt were valuable, Charter proposed packaging ESPN and FX along with access to its ad-supported streaming services Disney+ and ESPN+. Charter will pay a wholesale rate of an estimated $3 per month to provide free access to Disney+ to its 9.5M Signature Select customers, as well as ensuring that Charter’s customers will also receive ESPN when it moves to a direct-to-consumer streaming platform.

The deal includes wins and losses for both sides. For Disney, the deal means more subscribers to its Disney+ offering and more value to advertisers. However, it also means that those channels that Charter does not want to carry are now on life support. If, as expected, other video providers follow suit and negotiate similar arrangements, subscriber numbers for those channels will ultimately dwindle to zero.

For Charter, the deal ends the double-dipping by content owners—essentially using the subscription revenue from the linear channels to subsidize the content creation and marketing of direct-to-consumer streaming services. Now, the streaming services are just different channels on the traditional cable TV lineup. It also replaces a group of low-value channels with limited viewership with high-value streaming channels that customers previously paid separately for.

Deal’s Impact on Broadband

For Charter and subsequently for all other cable operators, the deal provides tremendous benefits to their broadband networks and services, as well as their likelihood of retaining broadband customers in the face of increasing competition from fiber overbuilders and fixed wireless providers.

The most obvious benefit is the reduction in the total number of channels Charter has to carry and, thereby, the amount of spectrum and bandwidth it uses to deliver these linear channels. This reclaimed bandwidth can be used in conjunction with its high-split DOCSIS 3.1 and eventual DOCSIS 4.0 upgrades to deliver even more bandwidth to consumers. Imagine if Charter is able to negotiate similar distribution deals with Warner Bros. Discovery, which offers some 30 different channels spanning news, lifestyle, and general entertainment. Further, consider the reclaimed bandwidth through a deal with Paramount Global.

Now, Charter has already likely moved many of the less popular channels onto a switched tier, whereby the channels are only delivered to a set-top box when requested by a user. But there are far more cable operators that never deployed switched digital video (SDV) than did. So, their potential reclaimed bandwidth would be significant.

Beyond just increased bandwidth, by adding more streaming content, delivered via IP, cable operators can also continue their move away from traditional, QAM-based delivery of video. Cable operators (and video providers, in general) have continued to watch their linear subscribers, and revenue declines while overall video consumption continues to increase. For customers who are consuming video via SVOD services like Netflix, Hulu, and Max, AVOD (Advertising-based Video on Demand) and FAST (Free, Ad-Supported Streaming Television), and via Instagram Reels, YouTube Shorts, and TikTok, linear TV just doesn’t have a place, especially with content costs continuing to increase annually.

But cable operators need to find ways to ensure those non-linear video consumers remain broadband customers. They can do this and add value to an increasingly distributed viewing experience by becoming content aggregators and ensurers of high Quality of Experience. This is exactly what Comcast, Charter, and others intend to do through the Xumo platform, and what other operators are doing via their partnerships with TiVo. Instead of always being the middleman and having to pass along price increases to their subscribers due to the increasing cost of content, operators can add value by delivering a unified interface for all SVOD channels, FAST/AVOD channels, and their own IP-based linear TV service, all with flexible pricing packages to match a customer’s budget. The operator can provide content discovery features and multiple viewer profiles through a single interface, among other features.

Ultimately, the goal for operators is to generate as much revenue as possible from a bundled video offering to what were previously broadband-only households. Equally as important as the additional revenue is the higher likelihood of retaining these broadband subscribers.

While visiting China and Taiwan, I still felt connected to the cable broadband industry in Denver via all the stream of announcements made during the show. I anticipated DOCSIS 4.0 advancements with a focus on new components, products, and partnerships to assist cable operators in transitioning from DOCSIS 3.1. In recent weeks, there have been inquiries about a single chipset supporting both DOCSIS 4.0 variants: Extended Spectrum (ESD) and Full Duplex (FDX).

As usual, where there is smoke, there is fire, as Comcast and Broadcom announced at the show silicon combines both flavors. The chips can be used in CPE, as well as in nodes, amplifiers, and Remote PHY Devices (RPDs). The new silicon is expected to be ready for trials in early 2024, with commercial deployments expected before the end of 2024.

Both Comcast and Broadcom emphasized that the unified silicon would provide operators “optionality,” allowing them to mix and match technologies based on the condition of their outside plant, the length of amplifier cascades, the overall cost to upgrade a particular system and, most importantly, the impact of competition. In theory, if an operator is facing competition from fiber overbuilders that have had success in stealing away subscribers based on the ability to deliver symmetric speeds, the cable operator could respond in targeted areas with FDX, while still pursuing a strategy of delivering ESD across the bulk of its footprint.

Unified FDX/ESD Chip Ideal for CPE, Though Questions Remain About Infrastructure

This type of optionality is a great fit for CPE, as it allows CPE vendors to reduce the number of individual products they have to develop and maintain, which is critical in the lower-margin business of consumer electronics. It also simplifies the inventory management process for operators, an important way for them to manage capex costs, particularly since CPE refresh cycles tend to occupy a significant portion of capital expenditures as they build up inventory.

But outside of CPE, it is difficult to see how the additional costs associated with supporting both DOCSIS 4.0 variants make sense. We are already expecting North American cable operators to shell out $5.8B on 1.2GHz, 1.2GHz FDX, and 1.8GHz amplifiers from 2023-2030. Those totals include our estimates for FDX amplifiers, which we expect will carry a $150 price premium over 1.8GHz amplifiers, due to the integration of DSPs (Digital Signal Processors). It is hard to imagine an operator who has committed to one DOCSIS 4.0 technology being willing to spend additional money on optionality it likely will never use in significant volumes.

Comcast reiterated that it is moving forward with FDX exclusively, so the added costs of supporting ESD across amplifiers, nodes, and RPDs makes little sense for the company, especially when the cost of FDX amplifiers already carries a significant premium over 1.8GHz ESD amps.

Although Charter, Cox, Liberty Global, and Rogers Communications have all signed on to a JDA (Joint Development Agreement) with Broadcom that includes some volume commitments and a certain level of funding for the unified silicon, it is very hard to believe that these operators, who have publicly stated a preference for ESD, would want to bear the additional cost of including FDX support across all of their outside plant when it would likely only be a deployed on a limited, case-by-case basis.

Of course, these operators haven’t ruled out FDX explicitly, so it is more likely that they are making some commitment to Broadcom so that the semiconductor company will go ahead and proceed with development. This has very much become Broadcom’s standard operating procedure when it comes to the cable infrastructure market. Broadcom had a similar JDA in place with nearly the same group of operators to commit to volume purchases of Remote MACPHY equipment and a second-generation R-MACPHY chipset from Broadcom. However, once Charter changed its technology strategy from R-MACPHY to Remote PHY, the JDA essentially dissolved, with the other operators also opting for R-PHY.

Operational Improvements a Goal For Unified Chip

The only way it makes sense for the ESD-focused operators to absorb the costs associated with a unified chipset is if they believe that the addition of an SoC (System on a Chip) which combines a DSP for echo cancellation as well as the downstream and upstream equalizers, provides them with enhanced telemetry and performance metrics that might improve overall reliability and uptime, as well as reducing the amount of money they spend on truck rolls and handheld test and measurement equipment. The FDX SoC also includes an embedded cable modem (eCM) function which can communicate with a centralized controller in the headend or data center to help automate the setup and topology of the amplifiers within a cascade—again without having to roll a truck.

So, there is potential value in paying upfront for a device that will likely be an integral part of an operator’s network for 10 years, if not more. There is also the potential for significant savings in operational costs by reducing truck rolls and technician visits to determine which amplifier in a cascade might be incorrectly configured or underperforming.

But, with Comcast having developed so much FDX technology alongside its vendor partners, other operators have to be concerned about whether Comcast would prefer to license elements of the FDX ecosystem—from RPDs to vCMTS platforms to amplifiers. Speculation on Comcast’s ambitions regarding the licensing of its broadband technologies has existed ever since it announced its warrant agreement and subsequent enterprise licensing expansion with Harmonic in 2016 and 2019. Its X1 video platform has been licensed by Cox, Shaw, and others. So, Comcast certainly has experience in this regard. Broadband is a different story, however. Unlike linear TV, which is seeing continued subscriber losses, broadband subscriptions and revenue continue to grow. Because of this, operators have been more reluctant to hand over any level of control via a similar licensing arrangement.

So, it will be interesting to see whether any of the ESD-committed operators adopt the more expensive, unified chipset from Broadcom. The operators that are part of the JDA will get first dibs on the chips when they become available, leaving those operators that aren’t part of the JDA on the outside looking in. That includes a substantial number of tier 2 and tier 3 operators all trying to determine their path forward from DOCSIS 3.1

Unlike Broadcom, MaxLinear also introduced its own Puma 8 chipset supporting only ESD that will not require a JDA. The chip is expected to reach production in the second half of 2024. At the show, MaxLinear announced that Askey, CommScope, and Sercomm are the initial CPE partners for the Puma 8. These vendors have historically maintained DOCSIS CPE lines that incorporate both MaxLinear and Broadcom chips and are likely to eventually do so to support the DOCSIS 4.0 evolution. Vantiva, which is in the process of acquiring the CommScope Connected Home division, has historically been a Broadcom-only supplier. But it remains to be seen how the vendor will move forward given CommScope’s historic support of both Broadcom and MaxLinear.

After initially considering skipping MWC Vegas due to declining attendance, we are pleased with our decision to attend this event in person. We had a rather productive day, with about ten meetings and various demos, mostly focusing on non-traditional suppliers and opportunities. Although we may not be the best source to capture all the announcements timed with this event, we want to share some high-level takeaways related to Fixed Wireless Access (FWA), neutral host, Open RAN, and private wireless, which could potentially impact the RAN market.

Interest in mmWave FWA is on the rise

The narrative around millimeter-wave (mmWave) technology has evolved since its initial commercial deployments in 2018. Currently, mmWave accounts for approximately 2% of the RAN market. While we maintain optimism about its long-term growth potential, short-term prospects have been adjusted downward due to slower activity in the first half of 2023.

There are currently two main tracks aimed at advancing the mmWave business case for both MBB and FWA use cases. These tracks involve boosting the RF output power and improving economics through repeaters and Reconfigurable Intelligent Surfaces (RIS). At the MWC event, the focus was primarily on the FWA opportunity. Verizon and T-Mobile announced that the average FWA user consumes 300 GB and 450 GB of data per month, respectively. This raises the question of how many subscribers the operators can target while maximizing profitability and whether mmWave spectrum can be an economically viable option in areas where the upper mid-band is exhausted. Operators still have some time, but it’s the right moment to start planning for the next steps.

The problem statement remains the same, but discussions at both MWC Vegas and the 5GAmericas event suggest reasons for optimism regarding near-term FWA RAN growth prospects.

Neutral Host – This time is different!

Those who aren’t jumping out of their chairs with excitement after reading neutral host-related press releases can be forgiven. After all, discussions about the win-win scenario with neutral host deployments have been ongoing for as long as I’ve been an analyst (I joined Dell’Oro in 2010).

One of the key differences this time is the target market and the potential TAM expansion. It’s no longer just about larger public venues. The improved economics, simplicity, scalability, and deployment times associated with recently announced neutral host offerings are expected to open up opportunities beyond the traditional DAS footprint. For example, Celona recently announced a neutral host-based partnership with a major US retailer with 4 K stores. It will be interesting to follow the progress and learn more about the value derived from improved indoor coverage and performance.

With the right ownership and partnership models, the differing ROIs between operators and building owners could change the likelihood of 5G proliferating indoors. WiredScore, an expert in property digitalization, estimates that well-connected buildings, such as the ones Ericsson and Proptivity launched in Stockholm in collaboration with Fastpartner, have the potential to increase rent levels by about 3%. Proptivity also announced plans to invest 3 billion SEK in the coming years to improve 5G connectivity across Nordic properties.

InfiniG unveiled its Neutral Host as a Service offering at MWC. The company believes that its “collaboration with the mobile operators, enterprises, commercial real estate owners, and partners has birthed an innovative new model.” According to InfiniG, the market opportunity spans 40 B+ sq ft of untapped commercial space.

The incumbents are now committing to Open RAN

Open RAN has come a long way in just a few years but at the same time, brownfields beyond the early adopters are still more comfortable with traditional RAN architectures. In addition to cost, timing, and performance parity, operators are waiting for “approval” from the established suppliers.

Although MWC Vegas had limited attendance from the top four RAN suppliers, Ericsson’s confirmation of its Cloud RAN/Open RAN fronthaul commitments was a major focus at the event. This was followed by Nokia’s recently announced paper clarifying its CloudRAN/Open RAN solution roadmap, validating the message we have communicated for some time, namely that Open RAN is here to stay and it is an architecture for both legacy and new suppliers. Importantly, with the top five suppliers still comprising around 95% of the RAN market, the incumbents are needed to accelerate O-RAN brownfield deployments.

Open RAN may not be as disruptive as some initially envisioned. But Ericsson and Nokia’s recent announcements taken together with Samsung’s Open RAN/vRAN portfolio readiness are significant validations of this movement and will help catalyze O-RAN-compatible brownfield deployments.

Private wireless goes smaller

As with most new opportunities, it always takes a while to figure out the right path. After initially trying to sell cellular connectivity as a Wi-Fi+ complement to enterprises with existing Wi-Fi, the focus over the past year shifted towards selling cellular connectivity to industrial sites where there is limited or no Wi-Fi/cellular connectivity. This pivot is accelerating the private wireless market, with preliminary findings suggesting that private RAN revenues increased around 60% YoY in the second quarter of 2023.

While the non-industrial market remains an essential part of the potential TAM, the focus is currently on low-hanging fruit. Nokia’s recently announced private wireless compact DAC, targeting “small” industrial sites, will likely expand the overlap with Wi-Fi. The focus remains on industrial sites such as warehouses, but it is also returning to selling Wi-Fi+ to places that may already have Wi-Fi.

Cost will be crucial for SMEs and Nokia estimates that its compact DAC PW can save enterprises 20% in TCO compared to Wi-Fi.

In summary, we are not adjusting any projections at this time based on these announcements/activities, but we see them as important validations of our RAN projections, especially for the upcoming growth engines. It will be key to monitor the progress with all of these potential revenue boosters, including neutral host, private wireless, and FWA (Open RAN is not a revenue booster).

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