Back in September 2020, CableLabs released the specifications for Flexible MAC Architecture (FMA). FMA defines the disaggregation of the CCAP into separate management, control, and data planes. Essentially, it is the next step in the evolution that was started years ago with M-CMTS architectures, followed by the move to DAA and Remote PHY, specifically. FMA expands the disaggregation of a traditional integrated CCAP platform into a combination of DAA, SDN, and NFV.

More importantly, it gives cable operators the flexibility they desperately need as they navigate how to prioritize current capacity upgrades through traditional node splits, mid-and high-splits, upcoming outside plant upgrades to 1.2Ghz and 1.8GHz, as well as determining whether their future access network relies on DOCSIS 4.0, fiber-to-the-home, or a combination of the two. FMA gives cable operators the flexibility to deliver Low Latency DOCSIS (LLD) as well as Mobile xHaul over DOCSIS, as well as far more flexibility in how they architect their CIN (Converged Interconnect Networks) with external switching elements that give them the ability to scale their interconnect networks more easily than ever before.

Finally, FMA opens the door to the true virtualization of cable access networks, supporting any number of use cases and any number of physical layer connections through the same disaggregated network functions, which can be placed in any physical location—node, hub site, headend, super headend, or data center. When cable operators faced a significant ramp in upstream bandwidth consumption in the early weeks of the COVID-19 pandemic, some had a difficult time being able to support that growth without the traditional tools of node splitting and increasing DOCSIS channels through the addition of CCAP line cards or new CCAP chassis in instances where current CCAP platforms are already maxed out. With FMA, operators have the ability to scale far more quickly, adding CPU cycles quickly to match the increase in service groups and bandwidth.

 

Vendor Interoperability a Key Tenet

The disaggregation of the traditional CCAP into multiple, discrete network functions allows for cable operators to mix and match those functions supplied by different vendors—similar to Open RAN architectures for mobile networks. For example, one vendor can provide the MAC manager function, another can provide the PacketCable aggregator, while multiple vendors can supply RPDs, RMDs, and OLTs. Again, the idea is to provide an evolution of the current generation of virtual CCAP platforms, completely disaggregated to match the operator’s use cases, business case, and overall architectural goals.

Vendors who have been providing virtual CCAP solutions to the market would appear to have a leg up on their competition, having gone through the paces of real-world deployments with all their challenges and variables. The disaggregated CCAP envisioned by the FMA specification clearly requires more than just taking existing CCAP software and porting it onto individual servers. It requires further disaggregation into discrete functions, such as a MAC manager, DOCSIS controller, video core, and out-of-band (OOB) controller. That effort takes time and a thorough understanding of docker containers, Kubernetes, and other microservice technologies and standards.

The focus on disaggregation also opens the door to new vendors and new approaches to architecting cable access and back-end management networks, just as remote PHY and remote MACPHY architectures did. For example, the video-core function could be handled by traditional CCAP vendors, or it could become a spin-off product for those suppliers focused on middleware, conditional access (CA), or video processing platforms. Video processing itself has become a largely software-based market. Whether a cable operator continues to deliver QAM-based broadcast video or shifts their focus to IP-based multicast video, the need for a flexible video core as part of FMA is critical.

Of course, the biggest question when it comes to disaggregated, virtualized implementations of core network functions is just how much vendor diversity operators are comfortable with. As data center technologies and principles have permeated telco networks, there has been a lot of open discussion about how vendor diversity benefits operators in areas such as supply-chain redundancy, release cycle acceleration, and, of course, lower prices due to more competitive bidding. But the reality has been a bit more conservative, with operators selecting specific areas of their network (metro edge) or platforms (BNG) to open up, rather than more wholesale changes. That is completely understandable, given the decades-long reliance on specific vendor and technology partnerships operators have had.

Cable operators tend to take conservative approaches to technology upgrades in an effort to avoid massive capex outlays that might disrupt the present mode of operation. And this approach, for the most part, has been incredibly successful—especially when it comes to broadband. But with their primary competitors finally making a wholesale shift away from copper and towards fiber, there is justifiable concern that the conservative approach might leave them at a competitive disadvantage that moderate upgrades to HFC just can’t overcome.

Thus, the timing of the FMA specification and its focus on disaggregation of core access network platforms into discrete VNFs along with the emphasis on supporting multiple physical layer technologies (HFC, PON, wireless, etc.) couldn’t be better.

 

Hyperscaler Partnerships

Beyond an increase in the vendor ecosystem, the other possible by-product of FMA is a move by hyperscalers to partner with cable operators by either hosting elements of their FMA architectures in the public cloud or offering a completely hosted solution for operators who might be looking to outsource that portion of their network.

Hyperscalers are extremely adept and efficient at providing low-cost workloads and CPU cycles. They have proven their ability to do so with hosted video processing functions for OTT providers and broadcasters. So, why not attempt to do so with broadband services on platforms that are disaggregated and virtualized?

Of course, there is no evidence that any cable operator is actively seeking this type of solution or partnership. And it remains to be seen whether any operator would even consider outsourcing any portion of what has become their most important and profitable service.

Yet, cable operators also have a significant investment cycle ahead of them—whether it’s DOCSIS 4.0 or FTTH. Additionally, many of the larger operators continue down the path of consolidating their headends to reduce their real estate footprint and costs, as well as their operational costs. Offloading workloads to a hyperscaler partner could help them expedite additional headend consolidation efforts and further reduce operational costs.

Whether cable operators pursue these partnerships or not and whether they pursue true, multi-service access networks, the technology underlying these possibilities is FMA. As the FMA standard evolves and as vendors and operators begin to introduce products into their networks, it will be interesting to watch the new use cases—and possible partnerships—that develop.

We just wrapped up the 1Q21 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 & Switch – started the year on a high note, advancing 15% year-over-year (Y/Y) in the first quarter, reflecting positive activity in multiple segments and regions, lighter comparisons, and a weaker US Dollar (USD).

The analysis contained in these reports suggests the collective global share of the leading suppliers remained relatively stable between 2020 and 1Q21, with the top seven vendors comprising around ~80% of the total market. Not surprisingly, Huawei maintained its leading position. However, the gap between Nokia and Ericsson, which was around 5 percentage points back in 2015, continued to shrink and was essentially eliminated in the quarter. In addition, Samsung passed Ciena in the quarter to become the #6 supplier.

Excluding North America, we estimate Huawei’s revenue share was about 36% in the quarter, nearly the same as the combined share of Nokia, Ericsson, and ZTE.

Additional key takeaways from the 1Q21 reporting period include:

• Following three consecutive years of growth between 2018 and 2020, preliminary readings suggest the positive momentum that characterized the overall telco market in much of 2020 extended into the first quarter, underpinned by double-digit growth on a Y/Y basis in both wireless and wireline technologies including Broadband Access, Microwave Transport, Mobile Core Network, RAN, and SP Router & Switch.
• In addition to easier comparisons due to poor market conditions in 1Q20 as a result of supply chain disruptions impacting some segments, positive developments in the North America and Asia Pacific regions, both of which recorded growth in excess of 15% Y/Y during the first quarter, helped to explain the output acceleration in the first quarter.
• Aggregate gains in the North America region was driven by double-digit expansion in Broadband Access, RAN, and SP Routers & Switch.
• The results in the quarter surprised on the upside by about 2%, underpinned by stronger than expected activity in multiple technology domains including Broadband Access, Microwave Transport, RAN, and SP Routers & Switch.
• The shift from 4G to 5G continued to accelerate at a torrid pace, impacting not just RAN investments but is also spurring operators to upgrade their core and transport networks.
• At a high level, the suppliers did not report any material impact from the ongoing supply chain shortages in the first quarter. At the same time, multiple vendors did indicate that the visibility going into the second half is more limited.
• Overall, the Dell’Oro analyst team is adjusting the aggregate forecast upward and now project the total telecom equipment market to advance 5% to 10% in 2021, up from 3% to 5% with the last forecast.

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 & Switch.

Back in April, I wrote about the widening gap between the demand for new FTTH network buildouts and connections and the ability of equipment vendors to supply those network buildouts as well as the ability for network operators to find the necessary labor to complete those buildouts.

This discrepancy between supply and demand is in danger of increasing further based on pending and proposed funding and subsidization initiatives, which could total up to $16B in 2022, then gradually declining to $12B in 2025 as programs are phased out.

Adding more fuel to the fire has been the announcements in recent weeks by operators making strategic decisions to prioritize the expansion of their FTTH network buildouts to pass more homes in a shorter amount of time. In just the last three weeks, here is a quick summary of public announcements made by operators all planning to expand the reach of their fiber broadband services:

• AT&T announced that it was planning to more than double its fiber footprint to 30 million customer locations by the end of 2025 after it spun off its WarnerMedia unit in a combination with Discovery.
• Alaska’s GCI Communications announced that it will deliver 2Gig speeds to 77% of Alaskans in 2022 and that it will also provide 10Gig speeds in the next five years.
• TDS Telecom detailed plans to add more than 300k fiber locations by 2024, with 150k of those coming in 2021 alone
• Windstream revealed its plan to hire 1,000 new workers beginning in the fourth quarter of 2021 to support its five-year, $2B fiber expansion project, which would expand gigabit fiber services to 2 million locations by 2025.

These announcements follow others made in 2020, including Consolidated Communications detailing its plan to add 1.6 million new fiber passings in five years, with 300k of those being added in 2021.

Of course, these public announcements are a mere sampling of the substantial investments being made in FTTH network expansions throughout the United States both in 2021 and throughout the next five years. RDOF (Rural Digital Opportunity Fund), CARES (Coronavirus Aid Relief and Economic Security Act) and ARPA (American Rescue Plan Act) funds will go to further subsidize additional fiber projects in rural and underserved areas, as state legislatures prioritize the expansion of fiber broadband in the wake of the COVID-19 pandemic which highlighted the absolute for connectivity throughout their communities.

The concern for operators now suddenly ready to ditch their aging copper infrastructure and finally compete with cable operators who now hold a near-monopoly on fixed broadband subscribers is that supply chain and labor shortages will extend their fiber buildouts well beyond their announced target dates. Already, we are hearing anecdotally about the difficulty in hiring skilled workers in the fields of professional services and installation, as well as growing lead times for fiber, conduit, and ONTs. Also, equipment vendor backlogs are increasing at a rapid clip, as the gap between customer orders and finished goods they can ship for revenue widens.

The net result is that many of these fiber projects will take considerably longer to complete than the five-year deadlines the operators have set for themselves. Given some of the latest signals on inflation in the US, that might not be such a bad thing. Infrastructure projects such as these tend to ensure a sustained source of job creation over the course of multiple years, as opposed to a direct stimulus investment.

Even if project completion dates are pushed out due to supply chain and labor shortages, one possible outcome of this extensive and sustained fiber push is a similar switch to more fiber deployments by US cable operators. Though the larger operators have already signaled their intention to continue using HFC DOCSIS as their primary residential technology, with DOCSIS 4.0 as the next step that will get them to near-symmetric, multi-gigabit speeds, other smaller operators are moving more towards fiber. These operators talk about the fact that moving to a passive architecture in the outside plant and away from powered amplifiers helps them from an opex perspective.

DOCSIS 4.0 already represents a fork in the road, with operators having a choice between Extended Spectrum DOCSIS and Full-Duplex DOCSIS. But, if the competition from fiber providers ramps up faster than the availability of DOCSIS 4.0 equipment, there could be another fork in the road for multi-system operators (MSOs): A future based on DOCSIS or one on fiber. We have heard anecdotally that, where fiber providers have entered a broadband market previously dominated by a cable operator and have successfully stolen away a high percentage of broadband customers, the MSO has been forced to quickly do a node split to boost speeds. That will work in some systems and with certain subscriber bases, but it will fall short, especially when service is marketed as “True Fiber” and the other as just “Fiber-Like.”

Open RAN investments surged in the first quarter of 2021. Preliminary estimates suggest total Open RAN revenues – including O-RAN and OpenRAN compatible macro and small cells radios plus baseband hardware and software – increased around five-fold year-over-year. The uptake is uneven. In this blog, we will discuss four Open RAN related key takeaways with the 1Q21 quarter including 1) The Asia Pacific (APAC) region is driving the market, 2) Macro is dominating but small cell adoption is improving, 3) The Open RAN Massive MIMO landscape is evolving, and 4) Short-term outlook remains favorable.

The operators in the APAC region are largely behind the surge, underpinned by a fairly synchronized migration from proprietary RAN towards Open RAN in Japan. In addition to Rakuten, which now has some 50 K radios up and running, other Japanese operators are increasingly optimistic about O-RAN and the role open interfaces will play with more advanced radio deployments.

 

 

Not surprisingly, macro deployments are dominating the Open RAN revenue mix both globally and in APAC, reflecting the state of the overall RAN market and the current focus by operators deploying Open RAN. This is also consistent with our own projections and the recently released Open RAN Technical Priorities Summary by the larger European telcos, suggesting Macro RAN is the primary target for the operators.

At the same time, Open RAN small cell activity is on the rise. Helping to drive this acceleration is faster growth with millimeter wave (mmWave) deployments in Japan, with multiple operators now embracing the benefits of combining the higher spectrum with the sub 6 GHz bands.

The traditional top 5 RAN vendors (Huawei, Ericsson, Nokia, ZTE, and Samsung) are dominating the $10 B+ Massive MIMO RAN market, however, Open RAN proponents remain optimistic the recent uptick in O-RAN related announcements will eventually lead to an improved supplier landscape. Predicated on the assumption that the shift towards wider bandwidths will be a catalyst for 5G SA, the asynchronous availability of the upper mid-band spectrum offers a window of opportunity for new entrants.

In other words, even if the Massive MIMO market is relatively mature and highly concentrated, it is not too late for suppliers with weaker RAN shares to use O-RAN combined with SA to enter this segment. And the number of suppliers that want to seize on this opportunity to bolster growth is increasing with multiple smaller non-top 5 RAN suppliers – including Airspan, Fujitsu, Mavenir, and NEC – announcing the availability or upcoming GA of O-RAN Massive MIMO antenna systems. And with the silicon providers also ramping up investments to accelerate the shift towards advanced Open RAN radios, we do expect this non-top 5 supplier O-RAN Massive MIMO list to evolve over time.

Since more operators are suggesting performance parity with “traditional systems” is expected, new Massive MIMO entrants know what they need to deliver in terms of IBW, weight, size, TRX configurations, power consumption, and spectral efficiency. In other words, the bar is high and it will continue to rise. So no one is under the impression this will be a trivial task. But at the same time, the Open RAN community has received the message loud and clear – broader Open RAN adoption is to some degree hinging on the success of Massive MIMO.

With the strong showing in the first quarter, we are adjusting the short-term outlook upward and now project total Open RAN revenues to nearly double in 2021. And while we are not revising the long-term Massive MIMO Open RAN projections at this time, we will of course continue to monitor the situation closely to better understand how the growing ORAN ecosystem will impact the overall vendor dynamics.

For more information about the Open RAN and Virtualized RAN forecast and assumptions, please visit our Open RAN page or please email us at dgmedia@delloro.com or dgsales@delloro.com.

 

Huawei recently held its annual analyst event. Even though we were not able to attend in person, it was an informative event. Below we will discuss some of the RAN-related takeaways touching on 6 GHz and general FDD trends.

6 GHz

Current sub 6 GHz 5G NR deployments utilizing both the FDD bands and the upper mid-band will go a long way in addressing continued data traffic growth. At the same time, the upside is limited and will likely not be enough to meet the capacity demands of the next decade, and as a result, both suppliers and operators are assessing their capacity roadmaps. Operators have three basic tools at their disposal to manage traffic growth including leveraging more efficient technologies, deploying more cells, and using more spectrum. So in addition to increasing the reliance on small cells, operators will from a licensed spectrum perspective have three high-level options once the upper mid-band has been exhausted including maximizing efficiency with the FDD spectrum (using 8T8R and/or Massive MIMO), deploying millimeter wave (mmWave) systems, and using the upcoming 6 GHz spectrum.

Given the lack of tools in the toolkit and the overlap on the demand side, operators and regulators typically converge towards similar approaches when it comes to balancing ROI and spectral efficiency. It is not a coincidence that operators increasingly rely on 4T4R radios to build the LTE base layer with FDD networks or that 64T64R became the de-facto configuration for operators with larger swaths of upper mid-band assets.

Yet for some reason, there is not much consensus when it comes to optimizing the use of the 6 GHz spectrum (5.925-7.125 GHz). China appears to favor licensed 5G for the entire 6 GHz spectrum, while the FCC and MSIT have made the decision to make the entire 1200 MHz of spectrum in the 6 GHz available for unlicensed use. Other countries/regions and the GSMA are considering a more balanced approach between the unlicensed and licensed spectrum, allocating possibly up to half or 600 MHz for licensed use. According to a GSMA survey, 90% of MNO’s responses placed the 6425-7125 MHz as a high priority for IMT.

To be fair, it is not trivial. On the one hand, Wi-Fi is a major success story and it remains the de-facto indoor connectivity technology for enterprises and consumers. And the unlicensed spectrum is increasingly congested. Meanwhile, mobile data traffic continues to grow at an unabated pace and there are few signs that traffic growth will slow enough to obviate the need for a more valuable spectrum.

Huawei is a strong proponent of using a more balanced approach with the 6 GHz spectrum. And during HAS2021, Huawei shared some preliminary and rather insightful findings from early tests that could prove to be extremely valuable for other countries that have not finalized their 6 GHz plans.

Huawei estimates that the 6 GHz spectrum could deliver 10x of incremental capacity relative to the C-band with similar coverage using higher-order MIMO and more antenna arrays. In other words, preliminary findings suggest technology advancements can compensate for the 9 dB delta between 3.5 and 6 GHz and ultimately enable operators to reuse a significant portion of the existing macro grid without compromising coverage.

And it is more than a PowerPoint. Initial tests using 5 macro sites in Hangzhou support the premise that the 6 GHz spectrum can achieve similar coverage as the C-band. Huawei has been working on prototypes and 6 GHz trials will be conducted in China during 1H21 to verify coverage, capacity, and coexistence interference. Field tests for the 6425-7125 MHz spectrum will also be conducted in Russia during 2H21.

These developments could turn out to be a game-changer not just for the operators but also for the suppliers because it would create another major macro 5G wave with potentially millions of advanced Massive MIMO systems deployed after the 64T64R and 32T32R upper mid-band rollout phase.

The initial 6 GHz Massive MIMO prototype is fairly large now, however, Huawei remains optimistic that the form factor will improve. Keeping in mind that Huawei and Ericsson now offer TDD Massive MIMO products in the 20 kg range, down from ~40 kg in just a few years, we don’t have too many reasons to doubt this assumption. Commercial products and deployments could be a reality by the 2023-2025 time frame, aligned with the WRC-23 6 GHz IMT identification.

In other words, the technology progress remains on track. Unfortunately, there is still some risk that the decisions made by some countries to allocate all of the 6 GHz spectrum for unlicensed use could impact the momentum and the ecosystem. More countries will finalize their 6 GHz plans in 2021. Hopefully, these preliminary findings will help regulators make data-driven decisions and ultimately optimize the use of the 6 GHz spectrum for both outdoor and indoor environments.

FDD Improvements

In addition to the potential upside with the upper mid-band and the 6 GHz spectrum, operators will continue to improve the efficiency with the FDD spectrum. Upgrading the sub 1 GHz sites to 4T4R will help to improve the experience by ~80%. Furthermore, Huawei estimates operators can squeeze another ~1.7x of capacity by upgrading the 2 GHz base layer from 4T4R to 8T8R. This combined with FDD Massive MIMO (~3x to 5x relative to 2T2R) will provide the carriers with a solid near-term and long-term FDD capacity roadmap for the sub 1 GHz and 2 GHz spectrum.

Huawei’s FDD portfolio and roadmap align well with its vision for this spectrum. It is also consistent with our projections. We still believe it is unlikely that FDD Massive MIMO will become the base layer and instead anticipate these will be deployed in hotspots along with an upgraded base layer. Though of course, it is worth reminding everyone that the consensus three to four years ago was that TDD Massive MIMO would only make sense in hotspots.

In short, some of the keys RAN takeaways from Huawei’s 2021 HAS event are consistent with the message that we have communicated for some time, namely that the overall 5G RAN capex cycle will be longer and steeper than the 4G cycle, underpinned by multiple asynchronous 5G waves including: (1) sub 1 GHz NR; (2) upper mid-band Massive MIMO; (3) 2 GHz 4T4R; (4) 8T8R and FDD Massive MIMO; (5) 6 GHz NR; and (6) mmWave.