With the 5G mobile broadband ramp accelerating at a much faster pace than expected, and 5G NR comprising a double-digit share of the overall 1Q19 to 3Q19 RAN, the time is right to discuss some of the key 5G projections for 2020.

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

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.

2) Early Adopters to Embrace 5G SA

The path toward 5G has become more straight forward 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 U.S. to launch 5G SA sometime in 2020.

3) More than 100 Million Transceivers

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.

4) Dynamic Spectrum Sharing Takes Off

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.

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

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.

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

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 Japan, Korea, and the U.S.

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

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; 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.

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

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.

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

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 to 3Q19 period is trending below the 2018 overall RAN HHI; however, we expect the 5G NR HHI to increase in 2020.

10) 5G NR Subscriptions to Approach 200 Million

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 U.S.

For more information about our 5G, Mobile RAN, and Mobile Core Network programs, please visit our website or please contact dgsales@delloro.com.

Whether spurred by the looming rollouts of 5G services or the continued attrition of video subscribers and revenue, fixed broadband technologies, services, and business strategies have changed. Whereas operators were once focused on driving scale across multiple areas of their business, in many cases, the focus currently is firmly squared on fixed broadband. And why not? For most North American operators, service margins for residential fixed broadband hover between 60-70%, while video margins have seen steady declines of approximately 15% over the last five years, pushing average margins below 15%, in some cases.

Scaling broadband services, however, is tricky because achieving scale involves any combination of bandwidth, network platforms, CPE, test and measurement equipment, as well as personnel to support both the upgrades and ongoing maintenance. These challenges are faced by all broadband service providers and are certainly not limited to cable or telco operators alone.

Shared challenges, as well as the standards and technologies to overcome them, is a big reason why I decided to combine my perspectives on the recent Cable-Tec Expo and Broadband World Forum shows into a single article. Because no matter where you look, the almost universal focus for all broadband service providers for addressing their scaling challenges is through virtualization. The topic occupied most of my discussions at both events and will only grow as we progress through 2020 and beyond.

Cable’s Clear Use Case for Virtualization

Cable operators are intimately familiar with the challenges of scaling their broadband networks to support downstream bandwidth consumption CAGRs still hovering in the 25-35% range. To deliver more bandwidth, MSOs traditionally have had to split their optical nodes to reduce service group sizes. Each node split, however, requires more passive and active equipment, including splitters, combiners, receivers, and transmitters. More importantly for opex is the need to increase the number of hardware-based CCAP platforms to support the additional bandwidth and service groups. The net result is a significant increase in space and power requirements in both headend and hub sites, as well as additional complexity in fiber cabling requirements.

With the ultimate goal of delivering multi-gigabit services to subscribers, this traditional model of adding hardware to enable a consistent increase in overall bandwidth is simply unsustainable, especially when cable operators are also trying to reduce their real estate footprint by reducing total headend and secondary hub site facilities.

Obviously, Comcast has taken a lead role in pushing virtualization and it provided an informative overview of its progress. For me, there were three key benefits Comcast either explicitly or implicitly communicated during the event about their virtualization efforts:

1. Even if Comcast moves away from its plan of delivering full-duplex (symmetric 10 Gbps) services in a node + zero environment, a virtualized CCAP core gives them the ability to scale at their own pace and at any location. Servers could still be located in existing headends or primary hub sites, or they could be deployed in centralized data centers. With workload balancing across their CCAP core servers, there are effectively no restrictions on where Comcast can grow its capacity.
2. The virtual CCAP core almost eliminates the extended maintenance windows often required for software and firmware upgrades of traditional CCAP platforms. With increasing restrictions on service downtimes, operators frequently push those limits when they have complex upgrades to complete across their entire CCAP footprint. The virtual CCAP core takes those software and firmware upgrades and makes them microservices, allowing them to be digested and completed without complete reboots of the platform. That results in almost minimal downtime for subscribers. Even if there is downtime, it can be isolated to a service group size of 250 homes or less (and declining,) as opposed to the potential 100k to 250k subscribers that are traditionally impacted when a CCAP chassis goes down.
3. Comcast fully believes that other cable operators can benefit from their virtual CCAP core architecture, and they intend to license it just as they have done with their X1 video platform. There are, of course, questions around just how that licensing model might work and how revenue might be distributed between Comcast and Harmonic, its vCCAP partner. But it’s clear that Comcast is leaving the door wide open to profiting from its software development work. Obviously, this could have negative impacts on the traditional CCAP vendors, as the size of their addressable market shrinks. However, only a few operators have thus far licensed Comcast’s X1 platform, and it stands to reason that an even smaller number would want to entrust the most important service in their portfolio to the operator.

Really, Comcast’s progress on virtualization is just the beginning. Yes, it satisfies a short-term requirement to be able to scale to support consistent increases in fixed broadband speeds. But the longer-term potential for supporting edge computing and processing for more complex IoT and 5G backhaul applications also requires this transition away from dedicated hardware platforms.

Multi-Vendor, Multi-Service Requirements Drive Telcos’ Virtualization Efforts

Multi-service support, which is still on the horizon for most cable operators, is a reality today for a number of operators who are moving forward with the virtualization of their access networks. That reality has been reflected in increasing discussions and focuses on VOLTHA (Virtual OLT Hardware Abstraction,) currently for XGS-PON deployments, but with an eye towards G.fast deployments, as well.

VOLTHA is a well-known, open-source standard, at this point, designed to simplify traditional PON architectures by abstracting PON-related elements such as OMCI and GEM, and allowing an SDN controller to treat each PON OLT as a programmable switch, independent of any vendor’s hardware.

Whereas cable operators are virtualizing currently to scale for more bandwidth, for telcos, that is just one piece of the puzzle. They are virtualizing to scale for bandwidth, certainly, but also for 4G and 5G backhaul, and enterprise PON and WiFi backhaul. In addition, telco operators are also looking to more easily manage multi-vendor and multi-technology environments, where physical layer technologies, such as G.fast and GPON are all managed in a similar manner from a central location. In such cases, the elements associated with each physical layer technology are abstracted, allowing for easy migration from one technology to the next, as well as a unified management and troubleshooting plan across all technologies.

During Broadband World Forum, discussions centered on actual deployments of virtualized, software-defined access networks were plentiful. This was a significant change from previous years when the technologies were still relegated to lab environments. Beyond an increase in the maturity of the technologies, the focus on virtualization has come about partially because of how service providers are either deploying or accessing fiber assets. In a growing number of cases, service providers are leasing fiber to fill in service area gaps, or they are partnering with other operators to share the costs of deploying fiber. In these cases, where service providers have equipment on their own fiber, on leased fiber lines, or even leased access to the fiber owner’s OLTs, virtualized infrastructure simplifies the management of these network elements by abstracting the specific PON elements of multiple vendors and enabling their provisioning and management from a single, centralized controller.

For many years, multi-vendor access network deployments were a stated goal of major network operators. However, very few ever became reality, due to unique management complexities associated with each vendor’s implementation. Virtualization finally makes this a reality by essentially treating each active network element as an equal node. One node could be an OLT, another could be a DSLAM or G.fast DPU, while another could be a fixed wireless access point. All can be provided by different vendors, while still being managed centrally by a software controller.

Though multi-vendor, multi-service environments remain the exception rather than the rule, the progress being made to make these a reality through virtualization will continue to ramp up through 2020 and beyond. We should expect to see some novel business models emerge next year, especially in the areas of open access networks, where ISPs virtually lease access through network slicing. These models are already emerging in Europe and Latin America, and we expect them to expand in these two regions next year.

We have had a couple of interesting days both in Zurich and Los Angeles attending Huawei’s Global MBBF event and MWC19 Los Angeles. We are sharing a few quick highlights/notes below. If you have any questions or would like full access to the blog, please contact Daisy@delloro.com.

We plan to discuss some of these topics in more depth with the upcoming 3Q 2019 RAN report and the January 2020 5-year forecasts.

5G MBB is accelerating rapidly

The 5G ramp is accelerating at an extraordinary pace with large scale deployments underway in China, Korea, and the U.S. Nationwide MBB population coverage (≥70%) is expected by 2019 in the U.S (low-band), 2019 in Korea (mid-band), and 2022 in China (mid-band).

Interest in DSS is High

While there is no secret that operators with larger continuous swaths of mid-band assets will initially focus on the mid-band to optimize the cost per bit economics, the interest in dynamic spectrum sharing (DSS) is not only growing because the economics of improving the overall spectral efficiency of the LTE spectrum will eventually make sense from an efficiency perspective and/or there could be some value from a marketing point of view, operators also see the extended 5G NR coverage with lower band spectrum as a key enabler for 5G SA and network slicing.

Massive MIMO – Bandwidth, Cost, Performance, Power, Size

As we have discussed in our reports, we are confident Massive MIMO will play a pivotal role in extending the life of the macro utilizing the mid-band. Massive MIMO configured systems already comprised a double-digit share of the 1H19 RAN market. And over these past two weeks, we were particularly impressed with performance and form factor advancements.

During the MBB event, Huawei highlighted a 64T64R AAU weighing <30 kg, reflecting…for more details, please contact Daisy@delloro.com

The Value Proposition of Open and Virtual RAN is Morphing

There are multiple on-going Open RAN, O-RAN, and virtual RAN initiatives 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.

Initially, the value proposition of these next-generation architectures was heavily weighted towards the TCO benefits of using open interfaces, sharing resources, mixing and matching baseband and radio, and utilizing more general-purpose processors. What has stood out in our conversations over the past week or two is the notion that the performance per watt per dollar delta between x86 and ASICS is perhaps not converging as much as initially expected, resulting in an increased weight towards the demand side value upside as a result of easier access to the framework for 3^rd party application developers, etc.

To be clear, we are not saying there are no TCO benefits, we are just observing that there are some initial signs that the value narrative is morphing.

One of the fundamental key questions we are admittedly struggling a bit with is the fact that……for more details, please contact Daisy@delloro.com

Millimeter Wave (mmW)

Our overall position with mmW remains fairly unchanged – we believe the technology is developing at a much faster pace than initially expected and will play an extremely important role over the long-term. At the same time, mmW will face some near-term challenges but the economics will improve over time as the technology advances and inter-site distances shrink.

Over the past two weeks, we have learned more about the mmW roadmaps for some of the Korean and Japanese operators, reinforcing the thesis that deployments are spreading but the adoption will be gradual.

Nokia shared some very insightful and detailed analysis during the MWC event, suggesting that the mmW opportunity in the U.S. market will be limited, more so than initially expected, presenting some rather challenging capacity mathematics for the U.S. carriers without mid-band spectrum.

At the same time, we were encouraged by the progress of new extension technologies to address some of the mmW RAN related challenges. Pivotal Commware – a startup with the backing of Bill Gates – is working on “self-installable” extension technologies that ultimately will address some of the technical and economic outdoor and in-building coverage challenges with higher frequency technologies. During the MWC event, Pivotal Commware ran a demo utilizing Verizon’s live outdoor mmW Ericsson gNodeB outside the hotel in a non-line of sight configuration with the Pivotal extension products showcasing ~0.9 Gb/s indoors and ~0.7 Gb/s behind thick walls and doors.

5G Indoor

As we have discussed previously, the shift from 4G to 5G is accelerating rapidly indoors, more so than we initially expected.

We plan to discuss some of these topics in more depth with the upcoming 3Q 2019 RAN report and the January 2020 5-year forecasts. Get the latest in your inbox, subscribe to Dell’Oro Group’s hot topics

For many years now, the evolution of WiFi has been focused on improving two key technical attributes: speed and range. WiFi 6, however, is the first iteration to take a more holistic view of wireless technology that encompasses not only improvements in speed and range, but also network intelligence, analytics, and power efficiency. It is the first WiFi standard developed specifically for a world defined by the IoT and the consistent proliferation of connected devices.

WiFi 6 also comes at a critical time for global service providers looking to extend their broadband service portfolios into the home while facing increasing competition from other ISPs and consumer electronics providers also seeking to dominate that service space. WiFi 6 will undoubtedly boost the connected home service offerings of those service providers willing to embrace the technology, and make it available across their CPE and home networking equipment. It will quickly become a technology that subscribers will expect as a standard part of their in-home broadband experience. In fact, Dell’Oro Group expects that total WiFi 6 CPE shipments, including retail WiFi routers for residential and SOHO applications, will grow from just over 5 million units in 2019 to more than 23 million units in 2020, with further expansion expected through 2023.

WiFi 6 also has the capacity to dramatically improve how service providers will be able to provision, manage, troubleshoot, and analyze their in-home networking services. It provides options for the remote, zero-touch provisioning of devices and services, as well as the automatic adjustment of WiFi channels to ensure peak performance. As subscribers become savvier about broadband and WiFi, and as they become more reliant on broadband to enable multiple services in their home, they will demand uninterrupted service. With WiFi 6, service providers will finally have the power to deliver on those expectations.

New Features Deliver Speed Intelligently and Efficiently

Speed boosts are an essential feature of any new WiFi standard. Given its many key technical upgrades, WiFi 6 is quickly emerging as the first standard that is designed for the gigabit age and beyond, with a focus on providing a theoretical maximum of 10Gbps of throughput. The goal of this standard is to ensure that a customer’s WiFi network will not impede the delivery of high-bandwidth, latency-sensitive services such as cloud gaming, 8k video, and cloud VR services. These feature additions are especially critical for service providers that offer managed home networking services because subscribers have proven quite willing to use speed tests to verify the performance and value of their end-to-end broadband service.

But beyond increased speed and range, taken together, all of the features described above are designed to deliver stable, consistent performance not just to a handful of devices in the home, but potentially to hundreds of connected devices.

Perhaps the most important feature of WiFi 6 is OFDMA (Orthogonal Frequency Division Multiple Access). OFDMA allows WiFi routers and access points to divide multiple channels—on either the 2.4GHz or 5GHz frequency band—into smaller allocations called resource units (RUs). Each RU can then be divided into yet smaller channels, with that traffic earmarked simultaneously for multiple devices. Each of those devices can have dramatically different traffic profiles (e.g., a TV that is streaming an 8k movie and a connected thermostat communicating with a cloud-based analytics engine).

The net result is a reduction in latency for connected devices and an increase in the aggregate throughput across the wireless network. WiFi 6 adds both uplink and downlink OFDMA, meaning that routers and CPE can intelligently allocate different levels of transmit and receive power per connected device, depending on variables such as distance, noise, and other signal impediments.

OFDMA complements another feature that has been enhanced in WiFi 6: MU-MIMO (Multi-User, Multiple Input, Multiple Output). MU-MIMO was included as part of the WiFi 5 (802.11ac) standard, but it was limited to downlink signals from the router to end devices. WiFi 6 includes uplink signals from multiple devices, and it doubles the number of devices that can be supported from four to eight. While OFDMA divides channels into resource units to be allocated across multiple devices, MU-MIMO multiplexes transmit and receive traffic from multiple devices based on their proximity to the router and to each other. This streamlines traffic patterns and reduces latency by more intelligently allocating spectrum across multiple devices, as opposed to serving devices sequentially.

In addition, WiFi 6 adds the ability to support up to eight separate spatial streams using beamforming, which allows the router to allocate additional throughput to particular devices at a given range.

WiFi 6’s final major upgrade that improves overall speed and throughput is the increase in QAM (Quadrature Amplitude Modulation) from 256-QAM to 1024-QAM. This allows devices to send ten digits of binary code with each transmission to the router. According to the WiFi Alliance, this will increase throughput by 25-30% versus WiFi 5. This upgrade is critical for supporting today’s very high-bandwidth, latency-insensitive applications and services, as well as those anticipated in the next five years.

Smarter Management of Connected Devices

Of course, speed improvements are expected. Video streaming, online gaming, and other applications that continue to grow immensely in popularity and capability demand consistent speed and performance upgrades.

But home and connectivity requirements are changing. Just as the use of high-end applications is increasing, so is consumer reliance on myriad connected devices, including smart speakers, sensors, thermostats, and home security systems. Indeed, these devices are quickly becoming the ones we interact with most often on a daily basis. Though our interactions with such devices are short in duration, we expect that they will work perfectly every single time we interact with them.

Poor battery life is one of the main culprits that causes connected devices to underperform or flat out the malfunction. To ensure that these devices draw as little power as possible, thus improving battery life, WiFi 6 incorporates a feature called target wake time (TWT). TWT allows the router to set a schedule for connected devices to ping it to report their status; thus, devices do not have to fight for the channel spectrum to complete their communication. Each device can be guaranteed an optimal slot to ping the router, and it can remain in battery-saving sleep mode for a longer time.

How Service Providers can use WiFi 6 to their Advantage

According to Dell’Oro Group, as of the first half of 2019, approximately 85% of all broadband CPE (Cable, DSL, and PON) includes embedded WLAN capabilities. That is up from 63% in 2015. As these percentages have increased, so has the number of operators providing managed home WiFi services to their customers to increase broadband service revenue while also reducing churn by anticipating and reducing WiFi outages.

Within that same time frame, broadband and WiFi have become essential applications and experience enablers. From social networking to cloud gaming, telemedicine, and VR, broadband and WiFi are viewed as critical offerings. Because of its enhanced throughput, range, and overall performance, WiFi 6 will open up a whole new world of applications and services formerly unavailable at consistent levels. Obviously, true gigabit broadband services throughout the home will serve as the backbone service for network operators and consumers. From there, cloud gaming across multiple devices and with simultaneous usage become available, followed by true virtual and augmented reality services. WiFi 6 is a necessary precursor for these advanced services.

Service providers can start with the rollout of WiFi 6-enabled CPE to demonstrate their commitment to delivering the best wireless networking experience for their subscribers. Once WiFi 6-enabled devices are in the home, additional services that take advantage of the technology’s enhancements are sure to follow. Providers can bundle smart home devices alongside their upgraded CPE, marketing those devices as ‘optimized for WiFi 6.’

In addition, service providers can offer a range of CPE that is customized to the unique needs of their subscribers’ homes. For example, mesh routers can be used to enhance coverage in larger homes, homes with a significant number of dead spots, or homes with 4k and 8k TVs and displays in multiple rooms. The goal, of course, is to deliver sustained and consistent gigabit access to every device that requires it.

The industry is already seeing tremendous growth in mesh routers, both in retail outlets and directly from service providers. Operators are becoming smarter about identifying when mesh routers are required through delivering apps that allow new subscribers to describe their homes, the placement of their routers, and the types of devices throughout the home that might require closer proximity to a mesh base station or satellite.

By providing this type of indirect network consulting, a service provider ensures that it is a trusted partner for its subscribers, instead of simply being a company that turns on broadband service and then sends a bill.

Beyond improving connectivity and WiFi performance through the deployment of new networking terminals, service providers must also layer in remote provisioning, troubleshooting, and advanced analytics to enable the zero-touch installation and management of WiFi services. As service providers expand their presence in the home, they want to avoid having to respond to a phone call or roll a truck every time network performance is impacted by weather, the addition of a new device, or channel contention with a neighbor’s access point.

WiFi 6 eliminates a number of these issues and allows operators to constantly monitor the performance of their CPE, including mesh base stations and satellites, and to verify a customer’s service level remotely. New broadband subscribers can request service, be sent the appropriate devices, and have service turned on in their homes, all with a simple phone call to their service provider. The service provider can offer a range of additional managed WiFi services, depending on the needs of each subscriber.

Service providers continue to invest in upgrades to their access network infrastructure to support gigabit speeds and services, and WiFi 6 home networking technology is ideal for extending this investment in-home service capabilities with reliability. The network no longer stops just outside the subscriber’s door. Instead, the service provider’s network extends into the home, creating and defining the subscriber’s daily interactions with that network operator. Thus, operators must treat their gigabit WiFi offerings just as they would any other network service. If a service provider’s throughput, reliability, and overall performance are underwhelming, subscribers will quickly cancel the service in favor of a competitor’s.